In my opinion, deflation poses a far bigger risk than inflation. Consumers will not respond to the govt market incentives unless they feel confident in the market recovery and hence the stability of their jobs.Therefore houses, cars, consumer goods etc. will not move in big enough volumes and prices will concomittantly fall. Some of the states in good ol' USA are financially in a worse position than much maligned Greece. Because of this, Americans are concerned about their pensions etc. The SEC action against Goldman creates negativity, sends markets into a tailspin, confidence evaporates and presto, the situation I have sketched above may unfortunately, become a reality. The timing of the SEC announcement therefore to me, also does not make sense, especially since they were aware of these shenanigans since 2008.
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