Inflation or deflation? Here's one essay:

[Auggie]

From InvestorsInsight.com:
Quarterly Review and Outlook - Second Quarter 2008

Widespread is the notion that inflation is back for good. Many assume that the relative price stability of the past two decades has been irrevocably shattered by "peak oil" and the surging demand by developing economies. Improvement of living standards in those developing countries has caused, and will continue to cause, increasing demand for calories, and final demand for food will outstrip supply. Additionally, the cost of basic materials is lifting production costs, and the cycle of higher food and fuel costs means that the prices of all imported goods to the United States will continue to rise. The fixed income investment conclusion is that inflation is endemic, and since the market does not currently reflect such dire inflation prospects, long dated Treasury securities should be sold. We would be among the first to move to the short dated part of the curve if the economic statistics supported the above view. Our conclusion is that deflation, not inflation, is, and will continue to be, the essential problem for the U.S. economy and that the optimum fixed income portfolio should consist of treasuries with the longest possible maturities.

Lots more: http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2008/07/07/quarterly-review-and-outlook-second-quarter-2008.aspx

[funflower]

1. Excellent. K&R . Will re-read when I get a minute.

[Karl_Bonner_1982]

2. I just skimmed through it quickly

But I understand the basic argument. Aggregate demand, they argue, will weaken more than aggregate supply will, so the result will be lower prices (and less output).

Not sure if I agree with their predictions for demand and supply, but it's interesting nonetheless...

But it's actually normal for inflation to die down during recessions, so this may be just what happens.

[Auggie]

3. I was wondering if inflation protected securities might be a good investment

One fund I looked at is up 14% for the year. But that's behind us already.

[Karl_Bonner_1982]

4. You mean where inflation adjustments are written into the payment contract?

That sounds kind of difficult to write up, but I guess it can be done...