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The Moore Inflation Predictor forecasts the inflation rate one year into the future with 97% accuracy.
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What is the Moore Inflation Predictor©?February 19, 2009 The Moore Inflation Predictor© (MIP) is a highly accurate graphical representation forecasting the future direction of the inflation rate. It has a 97%+ accuracy rate on forecasting inflation rate direction & turning points. And over 90% of the time the inflation rate falls within the projected "likely" range and 7% of the time it falls within the "possible" range. By watching the turning points, we can profit from inflation hedges (like Gold, Real Estate and Energy Producers) when the inflation rate is trending up and from Bonds when the inflation rate is trending down. In addition, the Moore Inflation Predictor forecast could be used to judge whether to lock in a mortgage rate or wait a month or two for a better rate. To see how well the MIP has done in predicting inflation see some previous MIP inflation forecasts with a reality line added. Note: Last month we added a blue shaded (under water) region to the MIP to indicate deflation. Current Inflation Prediction for 2009Current Inflation ForecastInflation fell slightly from 2.72% in December to 2.63% in January. Our MIP last month predicted a "Likely" of 2.58% and a "Likely High" of 2.66%. So we were right in the middle of our middle range. Can't do much better than that. Long run we are still expecting inflation but short run we could see a flat period followed by a dip before inflation starts setting in. But then it gets more difficult. Will the monetary expansion send us into hyperinflation? Or will inflation just continue to be "ordinary"? Or perhaps the deflationary forces will win and the economy will just implode. Unfortunately, the MIP is limited by what it has seen over the last 11 months which has been inflationary but not excessively so. It has no way to factor in the massive monetary expansion, actions by China and other countries to remove "reserve status" from the U.S. dollar etc. History has shown that hyperinflation is like a dam breaking first there is a minor trickle but before you know it the whole river is trying to come through that little crack. At this point the MIP is projecting that at the high end a year from now we could once more be at 5˝% inflation just as we were a year ago. But my personal opinion is that once the effects of the "stimulus" package kick in we will probably see massive inflation (perhaps even hyperinflation). Generally, it takes about 2 years for monetary stimulus to result in inflation, so we could begin seeing massive inflation just beyond the MIP's current window. The MIP's major limitation is that it can't factor in things like government actions so we must "mentally note" that the MIP could be way low on its projections starting a year from now. Robert Prechter of the Elliotwave Theorist is forecasting deflation in spite of government actions to the contrary. To read his excellent arguments on why the government can't stop Deflation even with massive increases in the money supply Click Here. Doug Casey on the other hand has good arguments for an inflationary crisis- get his free report Crisis in Pictures. Elliotwave is offering a free 100+ pages of global market perspective report . Tim McMahon, Editor Disclaimer: At Financial Trend Forecaster we are not registered investment advisors and do not provide any individualized advice. Past performance is not necessarily indicative of future performance and future accuracy and profitable results cannot be guaranteed. Note: We are a compensated affiliate of Elliottwave International and Casey research, meaning we may receive a commission if you use our links to their site. |
 (click on chart for larger image) Don't miss next month's MIP Inflation Forecast! Yes, Notify Me when the new inflation forecast chart comes out!
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