Prem Watsa, known as the  “Canadian Warren Buffett”, appears to be making a big bet that the U.S. will be hit by an extended period of deflation.

According to The Wall Street Journal, Watsa’s firm, Fairfax Financial Holdings, “has spent nearly $200 million to buy derivative contracts wagering on a decline in the consumer-price index, an inflation indicator. … Fairfax paid $174 million in upfront fees to protect $22 billion of its investment portfolio against the possibility of deflation over the next decade. In exchange, Fairfax will receive a payment amounting to the drop in CPI below 2% — the level of inflation when Fairfax bought its contracts — multiplied by the $22 billion.”

The Journal says Fairfax thinks U.S. households are only in the beginning phases of reducing borrowing and increasing savings. It thinks that will lead to less consumer spending, higher unemployment and deflation.