Hi John,

Where is the rest of the clip re the above, the first bit was a good intro to deflation, it looked like there was more coming (re the how to profit from it bit)... are you suggesting puts on a particular ETF or ticker?

Jade.

This is a multipart article. I will be making some suggestions over the next couple of articles this week about how to prepare for and profit from the effects of deflation. I first wanted to clarify what it is and to make the point that we are seeing these symptoms currently.

This is a controversial subject. Most analysts in the US will say that deflation is impossible here but I think they are wrong.

Fortunately there are some relatively simple ways to take advantage of the situation with gov't notes and bonds, options on yields and a couple interesting ETFs.

More to come.

Thanks.

I liked the Citi clip too.

You are razor sharp.

In deflationary environment, government loses because it taxes nominal interest rates. You hold cash at 6% interest during times of 5% inflation. However, during times of deflation you hold cash at 0% while inflation is -2%.