sickofthehype

The End of Gold, Part Three

Interest rates will eventually go throught the roof, absolutely. It's the mid 70's again in a way, but it is possible to have asset inflation all while rates are soaring. They won't go from 4-5% to 20% overnight, so there will be many jumping on the train as it moves up to that point.

But of course, in the end, the high rates needed to combat that inevitable inflation, will create yet another recession. Think 1982.


On Feb 11 02:15 PM wengem wrote:

> Lance & sickofthehype... correct me if I'm wrong, but if inflation
> went as high as you say, wouldn't interest rates also go through
> the roof? As a result, only those homeowners with fixed rate mortgages
> would benefit. Anybody with a variable rate would get slammed...
> unless the lenders voluntarily let them off the hook by refinancing
> them into a fixed mortgage at the pre-inflation rate. And if they
> were willing to do that, then why not just let the underwater homeowners
> off the hook now?

The End of Gold, Part Three

I think you're exactly right Lance. The money supply is already up, what, 98% in 2008 alone! Sure there's deleveraging hiding the inflationary beast for now, but sooner or later (probably SOONER) inflation will roar back into place. That's the game plan.

50% inflation over 4 years would bring 11 million homeowners back into above-water territory on their home mortgages, and it would cut trillions in debts. Precisely what is in the books. The fix is in people, get ready.


On Feb 11 12:51 PM lance sjogren wrote:

> And the other thing:
>
> I do not buy the notion that deflation is an inexorable process that
> can't be stopped.
>
> Print enough money and I guarantee you will lick deflation.
>
> And, I also guarantee that the Fed will do that up the yin yang,
> and we will have heavy inflation, not deflation.