- Deflation replaces inflation;
- Ultra low interest rates replace medium to high rates;
- Real economic activity declines;
- Asset (share, property and commodity) values fall.
"One key indicator of deflation that seems to be even more worrisome to investors, however, is global commodity prices and what commodity price weakness suggests for demand. Copper fell over 12% in 2014, largely due to slumping demand in China and other industrial economies."Natural gas prices have fallen more than 12% this year. And oil prices have fallen by over 40% due to a glut of new supply and weak demand growth in many developing economies. The International Energy Agency has cut its estimates for demand for crude five times in the past six months, The Wall Street Journal reports."
"China has big deflationary problems and cannot tolerate any further rise in the Renminbi. Indeed, on one key measure, China is already in outright deflation."
"...the incredibly important fact [is] China's GDP deflator had lurched into deep deflation, declining 1.2% year on year..."