At a recent event in Buenos Aires, investment guru John Mauldin delivered an excellent presentation titled “Thoughts on the Continuing Crisis.”
Through a series of charts, he lays out his case that we are indeed entering a long, Japan-like period of deflation. Everywhere you look, you see undercapacity and lower monetary velocity, and more debt.
Without wage pressure, there is little chance of inflation. Look at how few strikes there are these days.
Mauldin's overall sentiment seems to be that we're not ending this recession anytime soon as long as the Fed keeps handing out free money. He likens it to that of Japan's economic crisis from the early 1990s:
'Total Japanese debt to GDP is about where it was 20 years ago, but the government debt to GDP has risen from 51% to 178% and rising fast. What did they get for all that debt? The Japanese have not added any jobs for two decades, and their nominal GDP is where it was 17 years ago.'