OldLimey

Crossing the Rubicon: Monetizing the Long Bond

Watching BB speak last week, what was perhaps even more worrying than his restated willingness to monetise was the supreme confidence he exuded about the ease with which such a step could be reversed once markets normalise. I know central bankers are paid to exude confidence, but on this occasion I would have thought that some expressed appreciation of the dangers would have been more reassuring than an attitude which seemed to me to border on bravado.

Beware, 'Quantitative Easing' is Hallucinogenic

Outstanding piece of work. Many thanks for the time and effort.

The Fear Bubble: Treasuries and Gold

Buying gold and being fearful are not necessarily the same. I own some physical gold because I don't believe the deflation spin and I do think inflation is likely, but I'm far too ignorant to be fearful. I simply have no idea what's going to happen. (By the way, I lived in the Middle East and Asia for over two decades and I can guarantee the author that some of the folks I know there who are moving out of USD and into gold are not bit players. That doesn't mean their timing is right, of course, but marginal actors they most certainly are not.)

Deflation Is Just Around the Corner

Deflation is a scam. Just as the the threat of terrorism was used to frighten people into accepting draconian curtailment of basic liberties, so deflation is being used to frighten people into accepting a coordinated attempt to reflate asset values to their unrealistic 2007 levels. Why? Because the world has no viable alternative economic model other than to have asset bubbles back borrowing binges by consumers.

As user 55065 and others above have explicitly or implicitly asked, where is this deflation? Drops in excessively high commodity, stock, and real estate prices are not evidence of monetary deflation. Here in the UK, petrol (gas) prices are down but not a huge amount because of sterling's death march, utility bills are higher than a year ago, food bills are flat to slightly higher than a year ago, and seasonal stuff (e.g., Christmas cards) has not dropped in price. I was looking at a piece of stereo equipment on the Web yesterday, with a 10% discount off 'recommended' price; alongside it was a (legally required) notice that it had previously been offered at a LOWER price. I'm still waiting for deflation (and no, the 16% decline in a UK property market that has trebled over the last ten years ain't evidence); but my guess is that when the pump primers in Washington and London get done kick-starting the movement of all that extra real money they've created - supposedly to fill the black hole left by evaporating funny money - inflation will get to the tape first.