Gary Shilling Predicts Deflation; Bullish on Long Treasuries

Published on November 15, 2009

Over the past several months, there has been a lively debate between those who see rampant inflation ahead and others who believe that deflation is more likely.  While inflation expectations implied by the bond market are still relatively tame, the market price for gold, oil, and other commodities have been increasing while the dollar has been in decline.

Warren Buffett has commented on massive “greenback emissions” and the tendency of politicians for favor monetizing debt rather than imposing more obvious choices such as tax increases or spending cuts.  Gary Shilling, President of A. Gary Shilling & Co. has taken the other side of the debate in a recent interview with Steve Forbes.  Mr. Shilling has a long track record of prescient macroeconomic forecasts and was one of the few economists to predict the disinflation of the 1980s.

Yesterday, we discussed the topic of confirmation bias and the danger this psychological tendency can present for investors.  From our observations, it appears that the case for high inflation is very strong.  However, part of this belief clearly is related to the strong influence of Mr. Buffett’s views.  It is important to seek out opposing points of view in such circumstances.  In that spirit, please view Mr. Shilling’s views on inflation among many other topics by clicking on the image displayed below or reading the interview transcript.

Gary Shilling

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Gary Shilling Predicts Deflation; Bullish on Long Treasuries
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