Making the Deflationary Case

Last week I cited a welling@weeden interview with two Credit Suisse strategists that made the case for inflation rapidly coming down, here is a Gavel report — albeit somewhat graph-happy — that makes the same case.

The crux of the piece is the following two graphs. The first shows the role of banks in expanding credit in the economy and helping drive inflation, and the second argues that the velocity of such credit expansion has gone nastily negative.

 

Read on.

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