IronMeteor

Monetary Madness in a Single Chart: Hyperinflation's Just Around the Corner

Timing, Timing, Timing. I want an exact year, not around the corner. I am just too leveraged to screw up the timing and be BK. So predictions like this do nothing for me. Give me a date or at least a year. Otherwise, its useless info.

If "around the corner means this year", I disagree. But is around the corner 3-10 yrs, then seems plausible if things go bad. But how do I play that. 3-10 yrs is an eternity in the markets with this volitility.

I will be broke before it ever happens if I listen to the doom-sayers who predict it every year.

Julian Robertson Bets the Farm on Inflation

One day this will be right, but damn that might be a long time. Julian is a billionaire. I hate following billionaires. They can lose 100M and still buy my house 10000X over. I lose 100K on this trade and I just lost my house. I will stick with betting on things I understand. This trade is more complicated than it first seems. Even if you are right on the macro, this trade might still cost you plenty if the Fed doesn't play ball and raise rates. Isn't it true that the yield spread just hit a 7 yr high. Julian needs someone to sell to as he exits. You are it! These guys always have an agenda when they broadcast their views.

Why You Should Stick With the Dollar and the U.S.

I'm not really long Aussie. But I would probably consider it because of the carry before I buy the Euro. I am mainly FX.

But as of last week, I am now long the Dollar, GBP vs Euro and GBP vs NZ and some US stocks from March.

(I am not short the Aus or Cad right now. Too fanatical a following. I am waiting for that final massive blow-off before I go short)

But I will not sell the BRIC's short. I think China is way overbuilt, but the reserves are huge and its not worth shorting. Plus, there are much better shorts to be had like the Euro Zone and Yen. The exporters who have nobody to export to anymore.

Why You Should Stick With the Dollar and the U.S.

I am not sure how my commentary is in anyway related to why we are going down the sinkhole.

I freely admit the US sucks. I am not in denial. But I think germany is in far worse shape. They built up their entire economy to supply us with goods. Now that's over - what's next. Nobody has answered that for me. I might go with long with Australia, but the Euro zone, I don't get it. Their demographics are pathetic, 2nd only Japan for a coming disaster. Their whole economic model is built on exports to anglo countries (UK and US) that can't afford them anymore.

Whats the encore. The Euro is at $1.40 here, not .83 like in 2001. There is no easy solution for them going forward. The export model is dead and their currency is sky high right now against their #1 and #2 trading partners, namely the UK and US.

What am I missing. All those Euro countires have debt loads as big as the US and even worse in some cases. Italy is a joke, their demographics are the worst in Europe and they have promised full pensions to everyone over 55. The US has tiny issues on S.S. compared to half of Europe. The US also has the best companies in the world. Lets not forget that. If we raised taxes to 50%, like Europe already has, our issues are gone. We have the resources to recover. We can reinvent ourselves to recover. I want to know how Germany does that. Export more! Good luck. I won't even talk about Japan, even Europe looks great compared to them.

So now the cabose is being let go - good grief. What a bunch of crap.

As for my investments, I was long gold since 2001 (sold late 2008), and short the dollar during that time. Very few stocks. But I change when the facts change. I am now long the dollar, long stocks and short the Euro. I make money, not friends. Buying the S&P below 700 was a steal, too bad Peter Schiff was still telling you to short.

Peter Schiff and his cabose idea is not even new. I read that same comment in 1981 about the US. I wonder how that turned out.

Why You Should Stick With the Dollar and the U.S.

With all due respect

In the words of Peter Shiff, "We are not the engine, We are the caboose, and we are being cut loose."

Peter Schiif is an idiot. That is the dumbest comment ever. Have you ever been to Europe, Japan, China, South-East Asia. I have been to all them. We are the engine, the cabose and the whole damn train to those export driven regions. I dare them to cut us loose. I will laugh as our manufacturing ramps back up and they die on the vine.

Come on, lets stop this fantasyland crap. China owns 2T in US assets because they sold us 2T dollars worth of junk the last 10 yrs. Who is going to buy 2T in the next ten. Their own citizens. Give me a break. Go visit China. They are poor and save every nickel. How about BMW, they going to sell all those expensive cars to China. Right.

Come on, the reason the world economy has tanked is the US consumer has tanked. They accounted for 60% of the growth from 2000-2008. Who is going to take that slack up. Its sure easy to run surpluses when you have a credit debt bubble in the US and debt addicted consumers buying it all. But now what, those US consumers are down and out (it's true) but so are all those export driven areas. I want to see Japan and Germany be so smug when we aren't buying their stuff. Those surpluses will be deficits (they now are, amazing). Who would you rather be, a recovering drug addict or the drug dealer who has no more customers.

We suck, we were drug addicts. But they suck even worse, they were the dealers.

Please, stop the insanity. Its hurting my ears.

Go ahead and listen to Peter Schiff, I guess losing 1/2 your money last year wasn't enough. You want to lose it all.

FX Picks for 5/13/09

So far so good. I am not selling anyone of these.

GBP/NZ looks good to 2.75 or 2.85 by summer. Eur/Gbp is rolling over and will be .82 within 6 months. The other smaller positions all look good. Only USD/JPY is suspect, but I only have one lot and would just pray that it gets taken down to 90 or even 88. What a dream come true. Last time I made a killing riding it from 88 to 98. Lets see Japan compete at 88. At some point, the JCB does step in and stops this madness for the sake of exports. I want to be long for that.

I see no reason to have a stop on anything. I am comfortable with these positions. Better have the bankroll for it though. The dollar is so long here that a temporary deep spike is possible on a squeeze.

Prices Continue to Rise: Only a Matter of Time Before Dollar Gets Pressured

I have no problem with the story, but the conclusion is suspect. If US rates are up big and get to 500 BPS over the Euro Zone, there is no way the dollar weakens on that. Who the heck will pay that carry. This is real money, not fantasyland.

This scenario played out in 78-85, please go read the history books and really look at those charts. Huge fiscal deficits with tight monetary policy is an FX traders dream come true. Maybe not for Iceland, but yes for the UK, US, Euro zone, Japan.

It means a roaring or decent economy and a huge carry for me if I am long. Loose monetary policy is not my dream, especially coupled with huge deficits.

I guess we will see, I can accept the story might come some day, but I know when the fed starts to move, I am going long the dollar big time. Go ahead and pay the 5K carry every year on a 1K lot. Its your money. After 5 yrs, you will be broke I don't care what the dollar does.

Jim Rogers: U.S. About to Have a Currency Crisis

Broken Record.

This made sense a month ago, now its old news and so I am going long the dollar. This guy has a terrible track record if you actually look at his picks and not his hype.

What huge dollar rally. Yen is still below 100, Franc is in top 10 percentile for last 15 yrs. Aussie dollar is now in the top 25 percentile for the last 15 years. Loonie is in top 20 percentile. The Euro is close to its all time high if you remove the bubble of 07-08. In 1985, the dollar index was at 160, now its 84. Come talk to me about a huge rally when we at least break 100.

This guy will never change. He was on Bloomberg in July 08 saying commodities were the place to be and a dollar crises was coming. We know how that worked out.

He is famous because of George Soros and it turns out he is no George Soros.

Two Economic Theories You Shouldn't Listen To

The inflation argument is debatable, the stock idea is just plain stupid. Whatever the Fed targets, stocks would immediately go there and sit. The morons would hold while the smart money sold everything to the fed and forced them to load up. Then after that, who would buy anything new. Eventually the fed would have to buy everything as even the morons got tired of the lack of action. The public is used to 10% per year, not 3%.
How about IPO's, What sector needs more purchasing, do they target energy, banking, retail. The indices are not entities, they are composed of hundreds of companies. You can't target an index and buy it.
But it doesn't matter what I think, Hong Kong did this and at first it worked, but 15 yrs later the market retraced. So much for Gov. intervention.
I think the FED understands that we need a functioning stock market to keep the dollar stable. If our market was at full value and foreigners didn't see a chance for a decent return, then I do believe the dollar would really fall. I'm not even a dollar bear, but I can see that happening in that scenario. (those dollars need to go somewhere, normally it's the capital markets)

Wednesday FX View: Currency Direction Up in the Air

I think to many dollar bears are cheering for a global currency without realizing the ramifications.

The Euro zone will not let the US and UK get fixed at this exchange rate. Neither would Japan or the Swiss. The dollar would soar to 1.18 to the Euro, exactly where the Europeans wanted it in the first place. Plus, once we set that rate, then there is nothing to stop countries from printing at will. This is exactly why we have floating currencies and can't have a fixed rate system.

The US after the Brenton Woods agreement is the best example of why we can't have one. That gave us the green light to print at will.

Only the market can discipline a central bank. The IMF or World Bank are political and gutless. Can you imagine the fight that would insue if the IMF tried to reign in central banks and control fiscal deficits. One country after another would leave it. The idea is DOA. Great theory, but not practical in a world dominated by politicians and bankers. The Chinese need to stop yapping about other countries until they let the Yuan float. Talk about the ultimate in manipulation. Its exactly this mercantile policy of having a cheap currency that is distorting international trade and turning westerners into indebted consumers.

They won't stop buying dollars, they can't. If they do, the Yuan rises and they sell less goods. But if they ever do, then watch out below. But what year is that, 2020.

U.S. Dollar to Weaken - TD Economics Report

I love it when people suggest the "The World is Fed up with the US and the Dolllar". I don't see it. Nobody is talking up their own currency that I have read.

Maybe they should be fed up with their own export driven economies that rely on the US consumer to buy everything they make. It's quite funny to see an export driven country like China rip the US for running deficits and consuming too much. Its like a drug dealer ripping his client. But a drug user needs a dealer, he can't be an addict without one.

But notice that China didn't actually do anything. They didn't allow their currency to float, they didn't stop buying treasuries. They can't, they are the drug dealer and they make no money without the addicts buying.

So I will know the "World is Fed up", when China lets the Yuan float and the rest of the world stops pushing their crap on the US consumer. Until then, please save the hyberpole for your friends.

(I am fed up with the US and the deficits, but I am one fool in a sea of billions. I am me, I am not the world)

Gary Shilling Continues to See Deflation on the Horizon

This guy is the worst forecaster on Wall St. I should know, I listened to him in the early 2000's and it cost me huge money.
So why should one correct call last year make up for ten wrong ones. As a prognosticator, he is a waste of time. I am not an inflation hawk either, so I have no axe to grind on his current forecast.
But this guy will cost you. Here is his recommendation in 2001-2003 (I stopped following after that, I am sure it never changed) Sell Housing, Short Oil - its going to $10. Short Gold - its dropping to $120 and worst of all, the worst call of all time - short the Euro at .90. He was a mega dollar bull all through the 2000's.
I subscribed to his newsletter then, every issue was buy the dollar and bonds, sell your home and short Gold, Oil and foreign currencies. The losses were horrific.

There should be a law against allowing this guy on TV. I am unsure how he gets those spots. With his track record, he should be banned along with the Enron execs. He certainly has cost investors just as much money. Since his book in 98', he has been calling for deflation. Now he wants credit. Look at the CPI, its still a mile above the 98' level. He is broken record. Even when this recovery is roaring ahead in some future year he will still be crying deflation.

So listen to him at your own peril, his forecasting is worthless. Its hard to be as wrong as he has been since 98'. In fact, his track record might be some kind of record. Even coin flipping is 50-50. His only right investment was long bonds, but that doesn't make up for the other horrendous calls.

For anyone who thinks I am off base, just read his book - "Deflation", which was published in 1998, not 2008. Thats the key fact and one which he will not mention, he published in 1998. Since then, Gold - went to $1000 from $270, Oil - went to $147 from $10, Euro - went to $1.60 from $.83. Housing - doubled or tripled since 2000. If you did any one item he recommended, you probably lost your investment, if you did all three, you are BK now.

Please stop quoting him, lets all forget he exists and maybe he will stop showing up on TV. Lord knows I want to forget.

Is China the Next Great Bubble?

Right on.

Imagine expanding into the teeth of the worst global downturn since the 30's. Only the Chinese are doing it and in the process they will start dumping their cheap goods onto the global market and start a trade war. The first shot was their dumping of steel onto Europe. The Euro zone is already complaining. You can't expand into a massive contraction. Free markets wouldn't do it, but the China command economy is different. But does that make it right. They can control supply, but what about demand.

I think the best analogy is one that everyone here would understand. Could the US have avoided a depression after the 29' crash by forcing banks to loan and companies to expand and not layoff. Ben Bernanke believes the 30's could have been avoided by that exact thing. I am in the camp that the Fed mistakes were made in the 20's, not the 30's. Which camp are you in.

China thinks they can avoid this downturn by expanding supply. I am sorry, but that is as dumb as thinking the US can avoid this downturn by more consumption. Both are pathetic.

Why High Inflation Will Not Take Hold

Great analysis. Amazing, actual analysis and not just a few hyped opinions.

The analysis you give is quite good and really does back up the common sense view that inflation is dead for now. But I will admit that this all depends on the status quo for the dollar and foreigners. Where as the velocity for the US consumer will stay at the new lower level, will the foreigners with US dollars continue to hold them or try and recycle them at a higher rate, thus negating the US consumer velocity drop.

Nobody can predict the future on that, but I favor the benign outcome as nobody has any vested interest right now to upset the apple cart and create a dollar panic. So the foreigners will continue to hold the dollars and the Velocity of dollar transactions will slow for all.

I also think the common sense view is easier to get. Why would consumers, who are losing trillions on investments and housing, losing jobs, health care, and their pensions, pay more for goods. They won't. You can already see it. Amazon's sales are climbing. Price is king. Their is absolutely no way that higher prices will stick right now. The Mets and Yankees can't even sale out their home games now after the montrous price hikes. They are now lowering prices, not raising them.

Can anyone explain how prices will climb in the next few years. Anyone. Please. I want a detailed outline of the process. How Fed printing gets into my pocket and makes me buy things that are higher and more importantly, makes the stores raise prices too. Wages aren't climbing, commodities are way down and seem to be stable enough. Where is this phantom urge to raise prices. Where and how.

For every dollar the Fed prints, the credit markets are destroying 3. For anyone who reads Doug Casey of the prudent bear, you should remember that the shadow banking system controlled credit creation, not the fed (that was true up until 2008). The fed was nothing compared to the shadow system. Now the shadow banking system is dead. So the Fed is printing like mad but its useless. They would have to print 10T or more to just keep it stable. They are so behind the curve its not even funny. Maybe in a few years they catch up, but not this year or next.

Again, please prove me wrong with a detailed write-up of how fed printing will make manufacturers raise prices, stores pass them on and consumers go ahead and pay them. I have trouble seeing it. It won't happen for a long time.

Gold Should Be at the Heart of a New Global Reserve Currency

Gold is dead as a backing standard. Just too small and too concentrated. Why bother even wasting the ink, or pixels.

I would say Oil, but it's the same problem, too concentrated and way too risky for the western world to agree on. A basket of commodities - maybe, but way too complicated and how could you ever redeem. Would the Fed have a bushel of wheat they could give you.
Backing a currency with some arbitary commodity is worthless without a redemption mechanism. Otherwise its implied fiat.
There isn't enough Gold to back the worlds currencies. Only 4.2 Trillion has been mined total. That wouldn't even cover the US outstanding dollars. Decent world economic growth would be impossible with a gold standard. Even worse, gold hoarding would make it impossible for a new country to ever get any.

This idea ia DOA. Not only DOA, a waste of time. Move on to something more realistic.

You all need to face reality, the US Dollar will stay the world's reserve currency until China gets its act together and wants a stronger currency. But that might take 20 yrs. So you have 20 more yrs of the dollar being the king. It might be ugly, but its already in place. What's the alternative -Yen, Euro, Sterling, Real. Only the Euro has a chance, but its dimming as this whole crises gets worse.