SMLL - The Inflation Vs. Deflation Tug Of War

The most widely-debated topic among macroeconomic analysts and investors is whether the global economy or US economy, more specifically, will experience inflation or deflation as a result of the current economic crisis and resulting policy response.

Starting in the 1980s, the US economy has been grappling with persistent disinflation, resulting in lower risk-free bond yields. The Federal Funds Rate "FFR" is now pinned at the zero-lower-bound "ZLB" and most of the Treasury curve is firmly below 1%.

Secular economic trends, including deteriorating demographics and a continued build-up of unproductive debt, have contributed to weaker economic