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Staying Short Switzerland: What a Mess

With the amount of their leverage - why not just do a straight short of one of the banks like Credit Suisse?

Dent, Napier, and Prechter - Wise to Heed Their Predictions

Thanks for the good article.

Is Gold on a Deflationary Death Watch?

Don't forget that there is a little country called China that is already threatening that we must honor our debts and not devalue the dollar. The idea that the Fed can restart inflation anytime it wants is true in theory, but is very dangerous in the real world and is politically a high risk proposition.

Is Gold on a Deflationary Death Watch?

Don't forget though, there is a little country called China that is already threatening that we honor our debts and not devalue the dollar. The idea that the Fed can start inflation anytime it wants would lead to political instability and is very dangerous.

Berkshire's Huge Exposure? Nonsense

I have been wanting to look at this deal, but never took the time. Thanks for the good analysis. I wonder who is on the other side of this bet.

S&P 500 Earnings: 'The Pain of Mean Reversion'

nice article - any guess on the ultimate bottom?

Spot VIX vs. VIX 5-Month Futures

Do I understand this right? So the expected volatility five months out is about the same as it is today? .976 approximating 1:1. A reading of .75 would be bearish and a reading of 1.25 bullish for example.?

De-Leveraging Is Not Deflation

Your definition of inflation "means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check." This is the definition of M1. It is not M2, M3, Monetary base or any other measure whose growth you are fearing. As I stated in my blog, which I hope you read - it is M1 that we should all be following. See web.me.com/voorheesfam...

I would have left the TBT trade on and taken the gold trade off. Doesn't matter. This is a great time to debate theory - we will all be right and wrong at times. Best advice is risk management and treat everything as a trade with stops.

Gold Cannot Be Inflationary, But the Dollar Sure Can

Hey Paco, G3 it is. Very cool finding you posting articles on here.

Being Austrian in your approach is great, but for me your definition of money supply is to narrow for our monetary and banking system. Read my blog if you get a chance for my current stance. Great stuff to debate about. Thanks for the article. If you read my blog, it is just a private blog for family and a couple friends (although I put it on my reply for you and the world). Nice to see you throw your hat in the Seeking Alpha ring. You are right that the turn will be hard and fast, but you are really early (I think).


On Jan 19 04:15 PM Paco Ahlgren (Bona Fide) wrote:

> G III, I presume? :-)
>
> Try to remember that I define inflation and deflation as an Austrian
> -- the expansion or destruction of the money supply. We are not in
> a deflationary period, but an inflationary one. The collapse of prices
> is from de-leveraging, not deflation.
>
> When people start to perceive that asset prices are increasing again,
> the velocity of money will speed up, and it's going to come hard
> and fast. The Fed is not going to be able to control rising prices.
>
>
> Add to this the Treasury tinderbox, and it doesn't bode well for
> the future of the dollar or the global economy.
>
>

Gold Cannot Be Inflationary, But the Dollar Sure Can

Deflation is front and center, all asset prices are falling, yet gold is hanging by its fingernails because of fear. Gold will follow all other assets and fall as well. The demand for dollars comes from the amount of debt within the system denominated in dollars. As a country we have a higher debt to asset ratio than a year ago and thus dollars are in greater demand to pay those debts. We also have greatly decreased the velocity of money in the system due to deleveraging, fear, etc... Many people confuse the monetary base with the money supply. A huge increase in bank reserves does not add to inflation if those funds can not be loaned out into the economy (thus adding to the money supply). Right now these banks are measured based on survival. They are just praying they are building up enough in reserves for the additional commercial writedowns that are around the corner. Stagnate money supply or a stagnate monetary base does not lead to inflation even if they are increasing (it has to be spent and start turning over in the economy). Remember a simplistic measure of GDP equals money supply X velocity. Right now the velocity decrease has overwhelmed the money supply increase. I have no doubt that the fed will eventually win the deflation war. This is a long war though and will need to be measured by following M1 (and who own M1) and not just M2 or M3 estimates, which are really stores of value just like stocks, bonds, houses, etc. With less value in all these assets on a combined basis there is less fuel to create money supply and thus inflation. Nice post, but deflation is not leaving yet. There will be a time for your trade though. p.s. say hi to your Dad - I heard he left EP

Which Is Headed Higher: Gold or Oil?

I think he probably meant 6 DXO to 1 DZZ.

Tuesday Outlook: Commodities, Emerging Markets

Are the volume numbers on the NYSE correct? The up volume almost 90% and down volume 10% - Not sure these are right - if so would bode well for a short term bounce - unless the big three are allowed to drown.

S&P 500 Earnings vs. Valuation Matrix

It would be nice to see this with the XLF and XLE carved out.

The Case for Shorting Long Dated U.S. Treasuries

Are there any ETF's that short treasuries. Also would you not be better off shorting short term treasuries instead of 10 year plus?

Bad News for the Economy Is Good News for the Dollar

How will we know when it is time to exit the dollar