While the recent history suggests a modest setback, the Credit Suisse economists note that a big pullback in recent European data (not helped by an unresolved situation in Cyprus and new pressure against Slovenia) "have increased the risk that the downturn could become more significant."

The situation in China is also worrisome. After a trip to the Middle Kingdom, Credit Suisse analysts noted that steel inventories have been overbuilt on soft demand and that demand for copper remains sluggish.

Real-world data points are disappointing. Chinese electricity output has collapsed to early 2011 levels, ending a parabolic uptrend going back to 2000. Chinese copper imports are down to early 2011 levels. Commodity railcar loads in the United States recently hit 2010 levels. U.S. containerboard shipments have returned to 2011 and 2012 lows. And Chinese lead-battery production has stalled.

What's next?

So, a decline in real economic activity shocks investors out of their complacency via dramatic moves in the commodities markets. That, in turn, shakes a stock market that had been, for months, protected from selling pressure -- reminding investors that not all is well in the world, as the situation on the ground is decidedly less upbeat than the market cheerleaders would lead you to believe.

How does this mix with my discussion from last week on cost-push inflation limiting the central banks? Clearly, lower commodity prices will take some pressure off of the Fed and other central banks. But structural limits -- on the labor force, industrial production capacity and the economy's non-inflationary growth rate -- remain.

Businesses are having such a hard time finding qualified workers that the average workweek surged to a post-World War II high in February. And low business confidence has resulting in weak capital expenditures, making it that much more difficult for the economy to regain its vigor.

Perhaps the path forward is a near-term lull that could develop into a minor recession and stock-market pullback. In this scenario, the Federal Reserve and other central banks would respond with even more aggressive monetary policy stimulus, reflating commodities and stocks (but doing little to address the structural impediments to growth).

Then, maybe in mid-to-late 2014, cost-push inflation will finally force the cheap-money charade to end, as inflation kicks higher. The Fed will be forced to back off and -- gasp! -- raise interest rates. The bond market will be roiled, not unlike what's happening in Japan right now. Only it'll be much worse.

For now, investors should maintain a defensive posture, resisting the urge to be complacent, raising cash and nipping at gold and silver down at these levels to build a position for the surge of inflation yet to come.

At the time of publication, Anthony Mirhaydari did not own or control shares of any company or fund mentioned in this column in his personal portfolio.

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