Inflation or Deflation? Which is the Consensual Opinion? Weekly Chart Update 12/3/11
Here are the updated google insights charts for the inflation/deflation debate:
EDIT: Although the second chart says ‘ROC’ and ‘rate of change’, it is in fact a measure of ‘deflation’ and ‘inflation’ search volumes relative to the ‘finance’ category search volumes. The rudimentary principle still applies (yellow line up => inflation worries, yellow line down => deflation fears).
For a quick explanation of these charts, see the previous update here.
According to the above charts, inflation fears still dominate the consensual mind compared to deflation fears. The implication for the contrarian investor is that it might pay to underwrite the risk of inflation and insure against deflation. Of course, we could have some way to go with regards to the magnitude of inflation fears.
[Note: these charts are dependent on the data from google insights. They sometimes change the structure of the index, which can change the look of the above charts to a small extent.]
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