Commodity Bubble Proponent

What's in Store for 2009? Gold, Metals and Other Markets

Interest piece...just a quick comment.

One of the big things you (and most of the inflation proponents) are missing is that we have a massive delevering going on right now in the system. The trillions of dollars of asset backed securities, derivatives, bad commodity investment instruments, stock market and real estate declines are far outweighing the stimulus that the Fed is putting into the system. Much of the run-up in a lot of the investment ideas you have up here was based on being able to leverage 20-30 to 1 with tons of hedge fund money.

My take is that there is going to be a massive shortage of dollars in the system because the Feds are not going to be able to paper over the trillions of dollars of losses. I expect alot of the fear in the system to continue for the foreseeable future.

That being said, I'm not sure how you would take these points into account in your analysis. I guess you would almost have to look at total losses v. new money inserted into the system to really get a good sense of whether or not inflation is really occuring or about to occur.

People are taking a too simplistic approach to analyzing the issue. Its too easy just to point at the fed's money pumping and not look at the other side of the equation