“It’s tough to make predictions, especially about the future” – Yogi Berra
One of the models of the future that I favor is the Ka-Poom theory put out by Erik Janszen of iTulip.com back in 1999.
Basically it states that the end of a bubble era begins with a sharp deflationary event (the ‘Ka’ part of the title), but ends in a highly inflationary blow-off, (the ‘Poom’).
It’s a one-two punch. Down then up.
The reason you get the deflationary portion is simply because bubbles always burst. They are seeking a pin from the moment they are born.
The logic for the inflationary secondary reaction is that the central banks always respond to deflation with more money printing. Ironically, this is a doomed attempt to stem the damage caused by their prior money printing efforts.
They never learn.
So that’s what we’re looking for here at Peak Prosperity: a deflationary crunch savage enough to scare the central banks into opening the monetary spigots even wider. But this next time, we think they'll seek to goose economic growth by giving money directly to the people as well as non-bank corporations.
And we think that deflationary bust has already begun. Our record-high stock markets simply somehow haven't gotten the memo yet.
Some Anecdotes
Adam and I recently spent time with some very high net worth investors including a real estate expert who has been in the business a long time, navigating several boom/bust cycles.
by cmartenson 
