Fishing for Answers

"I miss the peace of fishing, like when I was a boy.
--Captain Marko Ramius

Great piece by Kevin Depew on the mechanism behind the debt crisis. In it, Pep cites work by economist Irving Fisher in the late 1930s published in Econometrica that outlines Fisher's 'debt-deflation' theory of a depression.

Fisher pinned the deflation dynamic primarily on the creation and destruction of debt, which certainly appears 'right' to me. Parenthetically, Fisher suggests early in his piece that his ideas were unique, although in my readings a number of others at the time were focused on similar thoughts.

Pep notes that the rising dollar step in Fisher's sequence is the one he's focused on. He sees DeMark trend exhaustion data lining up to support a major bottom in the USD in upcoming months.

Near the end of his piece, Kevin concludes that the debt-deflation phase will inevitably end in inflation, but that those positioning for that inflationary phase now are likely to feel significant pain.

I'm coming to a similar conclusion.

position in USD