Click graphic below and check out the inflation 'heat map' at the WSJ, which I first came across @ Zero Hedge).
First off, a qualification. This is not a map of inflation, it is a map of the global effects of inflation, including places like Egypt, like Pakistan, like Venezuela, like Nigeria, where the effects (chronically high prices) have saturated and become deeply embedded.
Egypt is a country in which around 40% of the people live below the poverty line. Add the effects of inflation, rising and battering day after day, month after month, year after year… and you have a cauldron more than ready to boil over. Not that the people in the street are economists or even financial students like us, but consider that the global economic revival currently in progress is aimed at asset owners and the most powerful financial entities – at the expense of people the world over just trying to make their already stretched Pound (Egypt's currency), Rupee, Rial or what have you – buy the necessary things in life.
Check out the sedate looking 'inflation effects' status of the US, which the Fed Chairman either pretends is real or worse yet, is stupid enough to actually believe, and you can clearly see why he has an implied carte blanche to keep on the current inflationary process of monetizing debt and printing money. Deflation is the handy dandy threat used to support this. The question is, when will the US saturation point be attained? When will the same happen for other developed nations?
In NFTRH, this is the overriding long term theme as we move further along the continuum of conventional slumber we currently enjoy. Things change, and sometimes they change radically and seemingly out of nowhere. But we know better. We watched the 2008 mess put a punctuation on years of degradation. We do the same now for what comes next.
Money supply will eventually be followed by supply/demand dynamics, with prices getting out of control to a degree that even the official, massaged numbers will look bad. Asset owners are being rewarded and speculators are being encouraged the world over.
Our ultimate trigger, the monthly EMA 100 on the long bond, along with several other indicators, is at an inflection point but not yet activated. So, there remains an opportunity for the guys who EVERYBODY KNOWS are wrong – the deflationists – to get very right in the interim. Think about it, from a contrarian perspective, EVERYBODY is (rightly) concerned about inflation.
It's a crowded trade, to say the least. And now whole countries are starting to boil over. Like I said, 2011 is going to be one supremely interesting year and you just gotta love this or get the hell away from it. Pretend it doesn't exist and let your financial professional handle the murky details. Because the Devil is in the details.