Merk Notes Inflation Risk

July 13, 2010 at 08:00 PM
Share & Print

Currency experts at Merk Mutual Funds have an interesting point of view on the inflation-deflation debate. In an outlook article on their Web site, "Inflation: The Runaway Train,"analyst Kieran Osborne notes that because there are currently, "$1.1 trillion of bank reserves just sitting on the sidelines waiting to be deployed," due to banks' unwillingness to lend right now, and that once they become less afraid to lend, this liquidity would pour into the U.S. economy and create an inflationary environment.

The environment would be caused by an increase in the "velocity of money" in the economy, "which slowed down considerably throughout the crisis (a key reason why all the additional money printing has not yet been inflationary)," according to the article.

Comments? Please send them to [email protected]. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Related Stories

Resource Center