TarCottage

Why High Inflation Will Not Take Hold

Comments I have read so far are quite interesting.

I agree we are in a secular bear market for stocks and a secular bull market for commodities that started in 2000.

Regarding the statement that from 2000 on, growth in real corporate earnings has been low, is probably correct if you factor in the large devaluation of the U.S. dollar during this period.

However I disagree with the author that since 2000 inflation has not been a concern. I estimate, based upon the increase in the price of gold expressed in U.S. dollars, that real inflation has been near double digits since 2000.

The real problem we all face in trying to figure out the true rate of inflation in a fiat money world is that, except for maybe gold, we have no reliable fixed horizon on which to benchmark inflation against.

The annolgy I use is this. Imagine Uncle Sam, Mr. Yen, Mr. Euro, Mr, Pound, Mr. Ruble, etc. all falling in space. Without a fixed horizon to reference to, if Uncle Sam is falling faster than Mr. Yen and company, then at least two observations could be made. One, Uncle Sam is falling faster than Mr. Yen and company. Or two, if uncle Sam isn't falling, then Mr. Yen and comapany must be going up. Your answer probably has a lot to do with how you preceive things.

My view is that all the currencies are constantly being inflated, some faster than others. I use gold as my fixed horizon.

Best Regards to All