Russell Roberts, Cafe Hayek

Greg Mankiw notes that deflation worries have subsided and points to this chart showing that inflation-adjusted Treasuries (blue line) no longer have a higher yield (anticipating deflation) than unadjusted Treasuries:

Mankiw writes:

The negative inflation compensation that showed up a few months ago (when the blue line was well above the red) has shrunk to about zero. These relative yields are moving back toward a more normal, and healthier, alignment.

I have a feeling the word "healthier" isn't going to be accurate for very long. Yes, the red line will be above the blue one, meaning that the market is anticipating...  full article