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Deflation Is Coming and There's Nothing Bernanke Can Do About It, Says Robert Prechter

Posted Feb 24, 2010 11:44am EST by Peter Gorenstein in Investing, Recession, Banking
Related: TIP, GLD, TBT, TLT, UUP, ^DJI, ^GSPC

Contrary to popular belief, noted technical analyst Robert Prechter says the extraordinary action taken by the Federal Reserve to bail out the economy will not lead to runaway inflation.

"Deflation is gaining the upper hand very, very slowly, but it's happening," Prechter the founder of Elliott Wave International tells Tech Ticker.  Of course, as anyone familiar with his work knows, he's been saying this for years.

Why should we believe him now?

For the first time since 1982 core inflation fell in January as measured by the consumer price index. Prechter says it's even more noteworthy that it's happening "in the face of this tremendous amount of stimulus...from the government and a real attempt at stimulus from the central bank."

Prechter describes the forces of deflation as a "socio-nomic" shift in social mood that will prevent Federal Reserve Chairman from printing too much money. "At some point, the voters - as you can already see from the Tea Parties - are going to start saying we've had enough" with government spending and bailouts.

How should you invest in a deflationary environment?  We'll get to that in a forthcoming clip.

Also from this interview:

Bullish a Year Ago, Robert Prechter Now Sees "the Biggest Bubble in History"

 

 

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