Summary: The world’s debt load has grown since the GFC and eventually needs to be pared back, although debt repayment is deflationary because it requires increased savings at the expense of consumption. Another deflationary force is the ageing population as retirees tend to be thrifty. The build-up of liquidity after QE programs is an inflationary threat that could disrupt markets after deflation has run its course.
Key take-out: Considering the major structural problems in the world economy, disinflation has the upper hand to date, but the coin can quickly flip.
Key beneficiaries: General investors. Category: Shares.