09/04/2010 – Market Myths Exposed: Inflation Is Not A Threat, Deflation Is

But what about this sentence: Inflation
is the number one threat to the US economy? Ask the mainstream
experts, and this statement is in no way a fabrication of the
truth; it is truth itself. Case in point, this recent insight
from a reputable news source:

“Given the extraordinary
amounts of government spending, we believe inflation is likely
to rear its ugly head.” (CNBC)

It looks reliable. It sounds reliable.
But the reality is different. That fact is the subject of Chapter
Three in Club EWI’s free educational eBook Market
Myths Exposed, aptly titled “Myth No.
3: Worry About Inflation Rather Than Deflation.”

With groundbreaking insight from EWI’s
president Bob Prechter, this chapter reveals how the most vital
financial players have been led right up to the water of easy
money. Yet, like the saying goes, no amount of incentive — be
it record low interest rates or trillions of dollars in federal
bailouts — has gotten them to “drink.” Here, the “Market
Myths” chapter sheds light on this global leverage fast:

• Banks: The premier dispensers of credit are
  about “95% invested in mortgages,” which can fall
  in dollar value at the start of a crisis. Also, a chart of Credit
  Standards At All Banks since 1997 reveals a new trend of tighter
  lending criterion. Both are deflationary.

• Consumers: The premier devourers of credit
  are paying off their balances. See: chart of Total Consumer
  Credit (Annual Rate of Change) since 2000. This is deflationary.

• Private Equity: “Of the ten largest
  leveraged buyout deals since 2007, four have defaulted and two
  are in distress. Just in this small group, there is nearly one-half
  a trillion dollars worth of loans headed for the dump.”
  

• Small Businesses are self-liquidating; meaning,
  they create profits to pay back loans versus consumers. YET,
  “Market Myths” Chart of Bank Loan Availability to
  these small Enterprises contains a big, black arrow pointing
  DOWN. This is deflationary.

• Home owners: Real estate values continue
  to fall, foreclosures continue to soar. Mortgage delinquencies
  are rising, and more and more people are walking away from their
  properties. All of these conditions are deflationary.

Six pages of riveting charts and commentary
later and there’s no putting the pieces of this shattered myth
back together: One by one, the key players in the creation and
expansion of credit are adopting a stance of conservation and
conservatism. This ultimately leads to a decline in the value
of outstanding debt — a precondition of deflation, not inflation.

Believe it or not, this is just the
beginning. In all, Market
Myths Exposed throws light on the TEN most common financial
misconceptions via excerpts and charts from EWI’s most popular
editorial material of the last decade. Such as:

• Myth No. 1: Earnings Drive Stock Prices

• Myth No. 5: To Do Well In Investing, You Have To Diversify

• Myth No. 8: Bubbles Can Unwind Slowly

The complete, NO-COST report is just a Club EWI sign-up away.
Simply
click here to get started.