Unknown Unknowns

Earlier today, Vince emailed to ask, “A while back you wrote about Deflation. With the current economic turmoil do you see any threat from deflation?”

I’m no expert, but here’s my take.

We’re seeing a pretty big asset deflation right now, but monetary deflation is the kind to worry about. And the way the Fed is pumping liquidity into the markets, there’s not much danger of that. We’ve learned a lot since 1929, fortunately.

Of course, what we don’t know is the lessons we haven’t yet learned. And those are the ones that can bite you on the butt.