Shilling's case for deflation

Deflation's Coming, Says Gary Shilling, And It's Going To Clobber The Stock Market
Posted Aug 12, 2010 03:16pm EDT by Henry Blodget in Investing, Recession
All through the market rally and budding economic recovery of the past 18 months, most people concluded that the crisis was over and it was time to start worrying about inflation again. But strategist Gary Shilling of A. Gary Shilling & Co. stuck by his guns:
It was DEFLATION we needed to worry about, Gary said. And it was BONDS, not stocks, that investors should be buying.
Well, Gary's bearishness on the stock market caused him to miss a nice run, but he has been dead right about bonds. And he has also been right about the potential for deflation--as evidenced by the recent Consumer Price Index numbers and the fact that most other strategists have come to agree with him.
So what's Gary's current outlook?
Same as it ever was:
Prepare for chronic deflation, buy bonds, and sell stocks.
Full text
Comment: I do not know whether it will be hyperinflation or deflation, yet I do know that it will be a disaster. As of now I am preparing for both: inflation and deflation. Nobody knows for sure to which side the ball at the top of pyramid will fall.