‘EXCESS’ INFLATION: Inflation creation when the business cycle needs to contract.(ie 2% targets during systemic deleveraging.)

• This is because the Prime Directive of central banks is to make it ever easier to service yesterday’s debt.
• Excessive inflation results from central banks being forced to push negative real interest rates too low (to protect debt holders) relative to real economic expansion and capital wealth creation.

DEFLATION:

“Any increase in the purchasing power of nominal wages”.

• The rise of software, robotics and global wage arbitrage is resulting in wages not rising along with prices. As a result, everyone who depends on earned income is getting poorer.
• For the actual real-world the result of central banks easing, money pumping and zero interest rates is Deflation.
• Central bank easing and zero-interest rate policy (ZIRP) fuel over-capacity which leads to declining prices: deflation with a capital D.
• Central bank easing and zero-interest rate policy (ZIRP) additionally fuels malinvestment which leads to over valued collateral and an eventual collateral collapse as NPL (non-performing loans) debt cannot to “rolled” (ie no one no longer wants to risk financing)

PURCHASING POWER: The store of Purchasing Power is true WEALTH which governments are trasnferring.

All the phantom collateral constructed with mal-invested free money for financiers will also implode.