"My expectation is that we will see parallel inflation and deflation."
we have had that for 12 years. Money pushed out into the global economy since the GFC hasn't increased inflation due, in some part, to massive deleveraging and reducing consumption. Things just got worse, the distortion of stimulus and global slowdown of consumption will be evident sooner rather than later.
Once the effects of stimulus works through economies, and with unemployment rising, consumption will drop. It's even being touted now.
Recession is in most of, if not all of, the global economy. Consumption will drop, QE stimulus will become less effective as past experience has shown so there will be more recession. Once deflation takes hold it's as hard to shift, like inflation.
Should there be a run on Tbills and the like it is likely the USD will fall as it's dumped. As the yuan isn't a tradeable currency, money will be looking for a safe place.
We assume that the Euro would be the target of choice but should there be a EZ breakup, as is possible, money could flow into deutschmarks, swiss francs and possibly the AUD.
Pass that off if you will but on the 27th February would you have though the the global economy would be in dire straits come March 27?
