The inflation vs. deflation debate is only confusing if you equate dollar bills with wealth. The government and its go-fer, the Fed, cannot create wealth, but it can easily create dollar bills, which it is doing daily by the truckloads.
For a time, people can be fooled into believing that dollar bills are wealth. But Bernanke hears the laughter of the Chinese, and sees the bond market start to demand higher interest rates, and realizes that he is rapidly running out of suckers, so he is trying to insulate himself from the rapidly approaching tsunami of U.S. currency collapse and squalor which may persist for a generation.
To believe that hyperinflation is impossible is to believe that politicians only have the best interests of the people at heart. One needs only look at the intractable out-of-control spending by the California legislature, or the demands by the UAW even as they face bankruptcy, to realize that Liberals will never reign in spending until we are all insolvent like Zimbawe.
If you believe that merely by printing money we can rescue the economy, then you were not paying attention when the stagflation of the 1970s discredited Keynesian economics "forever".
Prosperity is created by the private sector when encouraged to produce real wealth and manufacture products suitable for export. But King Obama is not trying to create prosperity, he is doing his utmost to destroy wealth and punish its producers. He welcomes the economic crisis as an opportunity to "save" us with eternal dependence upon big government, run by corrupt Chicago machine politicians, eagerly supported by Keynesian "economists" like Paul Krugman and Marxist tools like Keith Olbermann.
Our current out-of-control spending is not being done to fix the economy. Rather, it is a remarkably swift and brutal implementation of the Cloward-Piven strategy to buy votes and power and replace the free market system in the U.S. with socialism.
That is why massive spending will continue long after the destructive end game is apparent to even the dimmest bulbs among us.
So Bernanke soon will step down, honor intact, and let Summers take the hit in the history textbooks.
TIPS and Gold as Inflation Hedges: Risk and Rewards [View article]
The author misunderstands the value of gold in a deflationary environment. In deflation, cash is king. People confuse gold and silver with commodities, but gold has little use except as money, and money does well in a deflation.
So gold does well in deflation, and extremely well in inflation, but does poorly when the economy is robust as the U.S. economy was from 1982-2000.
Gold will only fall if the world economy provides alternative investments with growth potential sufficient to offset the additional risk. Gold will get hurt temporarily with higher interest rates, but interest rates would need to remain consistently higher than inflation, which I doubt.
Politicians have saddled the U.S. economy with so much debt, regulations, lawsuits, green nonsense, wasteful spending and taxation, that we will limp along for several years and gold will continue to do fine.
Think about it: If gold was one of the best things you could have owned in the last decade when the world economy was reasonably good, think how well it will do in the next decade when the economy sux.
The reversion to mean argument is nonsense. As with anything, the price will be determined by supply and demand. Gold will be overpriced when people hold gold tupperware parties and gold goes hyperbolic like it did in 1980.
China is the world's largest producer of gold and they are not sharing; instead they are importing ore to refine into gold off the record. If you were China wouldn't you be trying to unload some of your massive U.S. dollar reserves while the U.S. bond market was at a record high? What would you replace the dollars with? Euro? Yen? No, gold. Also they will need fewer dollars as the U.S. scales back its importing and China expands their domestic market.
Most likely, we will see deflation in real estate, but inflation in commodities and everything else. Meanwhile the Fed will print paper to fool folks into believing they still have wealth, while ordinary citizens get squeezed from both sides.
Gold will remain in a secular bull because all the fundamentals are excellent.
6 Ways to Short the Obama Health Plan [View article]
Nothing will be so expensive as "free" government health care.
But why should Obama not take over the American health care industry? He already has taken over or plans to take over automobile manufacturing, banking, insurance and energy.
King Obama has the "calm" confidence of an elitist who has never failed at anything because he has never actually accomplished anything in the real world. But I agree he is "masterful" at spending other people's money ... plus earnings of their unborn children.
Maybe Libs will not like it when he takes over their own business and snuffs out their liberty, but by then it will be too late.
I agree, short anything to do with U.S. health care. But also short all U.S. companies which are subject to the whims of King Obama and his Marxist minions. Short the U.S. dollar and Treasuries.
Buy China and India which will leave the U.S. in the dust as Obama shackles us with his job-killing Crap-and-Tax and various intentional wealth destruction policies. Buy commodities and gold because your currency will be worthless soon.
The Free Market Votes: Still No Change We Can Believe In [View article]
Glass-Steagal was repealed in 1999, genius. Bush didn't take office from Clinton until 2001. (Also Bush didn't cause Katrina or plan the WTC attack.)
Yes free markets are terrible at producing wealth, which is why Cuba and the Soviet Union are examples of glittering utopias, whereas the Reagan economic boom lasted "only" 25 years.
But of course you are absolutely right that everyone else is a fool ... except you.
"We are wallowing in the Prop 13 collateral damage to the physical and education infrastructure." -UbuTranscen
How many more times must we hear this egregious liberal lie?
"California's state/local tax burden percentage stands at 6th highest nationally, above the national average of 9.7%. Californians pay $5,028 per capita in state and local taxes. " -www.taxfoundation.org/...
As with the Reagan tax cuts and W's tax cuts, which actually increased revenue, the problem is NEVER LACK OF REVENUE.
It is the insatiable appetite of corrupt politicians for wasteful spending, and strangulation by the lazy public employee union bullies.
Here's a way to stop this travesty: Cut their pay and send them home! The less time they have, the less damage they will be able to do to the citizens of California.
Sign the petition to return California to a PART TIME legislature: www.reformcal.com/cms
Richelson: 100% Bond Allocation Is Appropriate [View article]
<i>We believe a 100% allocation to bonds is appropriate and proper. If there's no proof that stocks will outperform bonds going forward, why not protect your principal and know what you have, particularly in the current environment of recession and fear?</i> -Stan Richelson
Owning fixed income securities in a hyper-inflationary environment is truly nuts. Add to that the fact that with King Obama in power, bondholders no longer have any lawfully secured interest during bankruptcy, and you have a recipe for disaster.
Excellent article! However it is exact opposite of what "economist" Paul Krugman believes:
"It’s important to realize that there’s no hint of inflationary pressures in the economy right now. Consumer prices are lower now than they were a year ago, and wage increases have stalled in the face of high unemployment. Deflation, not inflation, is the clear and present danger." -Paul Krugman, "The Big Inflation Scare", May 29, 2009
Krugman ignores the core rate of inflation and looks only at the last 12 months of total CPI which declined only due the the collapse of oil prices (which are now skyrocketting).
Krugman says there is no inflation, just politics. He is amazed that interest rates are rising. He surmises that the world is not behaving as he predicted because everyone else is just not as smart as he.
Why do people continue to listen to the NY Times and their foolish Marxist tools?
Soros is trying to encourage Germany to be an incontinent spendthrift like Obama so Soros can profit on his gold and short-Euro positions. In January Soros called gold the "ultimate bubble", implying that it was overbought. After helping to drive down prices short term, in February we learned that Soros had added dramatically to his long gold position.
Soros would sell his grandma to make a buck; Soros' advice is always aimed at helping Soros -- no one else.
Perhaps Obama should advise him that "at a certain point you’ve made enough money".
Weekly Trading Outlook: January 17 - 22, 2010 [View article]
Look for the U.S. markets to skyrocket Wednesday if Scott Brown beats Martha Coakley in Massachusetts Tuesday. It would mark the end of ObamaCare, Cap-And-Tax and the rest of Obama's job-killing agenda.
For a preview, check out the Indian market (PIN) on May 18, 2009 after they booted out their communists.
Yes, Gold Is a Decent Inflation Hedge, But It's a Lousy Investment [View article]
Gold is the best thing to own when the global economy is poor and the political and economic climate is uncertain.
This article only talks about gold as an inflation hedge. Look at the price of gold during the deflationary 1930's; gold also did fine.
The worst time to own gold is in a healthy economy, such as during the 30 years of the greatest economic prosperity in history which began when Reagan-Volker broke the back of the Nixon-Carter stagflation, then adult leaders like Thatcher and Gingrich allowed the free market expansion to continue.
Today, under the leadership of Obama, the U.S. has abdicated its leadership role in promoting freedom, ensuring international political stability, and responsible fiscal policy.
Therefore, gold is the best thing to own right now, whether we are to experience inflation or deflation.
We will know exactly when to dump gold: When the Obammunists are thrown out of office and no one will publish any Krugman articles.
I agree. The biggest threat to our economy is that people have selfishly kept too much of their own earnings from government.
Government is always much more efficient and much wiser than the private sector in spending money, because the private sector is concerned about taking risks and making icky profits, while government is concerned about everyone's welfare and happy children.
So what we need are bigger and more powerful public sector unions with larger pensions and more middle management. We need card-check legislation to force all workers to join unions.
Yes, California is now bankrupt because prop 13 kept the politicians from taking more taxes and requiring a 2/3 majority to raise more taxes. True California has the second highest income tax in the country, some of the highest sales taxes, and high business taxes, but its property taxes are only average. This is wrong because our public servants need more money so that they can continue to enjoy the sensible, lavish lifestyles to which they have become accustomed. This will keep our public servant bureaucrats happy and more productive so they can retire at age 50 with 100% salaries and full medical care. If only we could hire more unionized bureaucrats who work 40-hour weeks while charging 10 hours of overtime, then California will return to fiscal health.
If only the government would tax me more, I know I would immediately become more productive and prosperous.
I'm sure that government bureaucrats will spend my money and my grandchildrens' money much better than we ordinary citizens ever could. So please, please raise my taxes.
This is an excellent article and you are obviously a genius.
Why Did Bernanke Say What He Said? [View article]
For a time, people can be fooled into believing that dollar bills are wealth. But Bernanke hears the laughter of the Chinese, and sees the bond market start to demand higher interest rates, and realizes that he is rapidly running out of suckers, so he is trying to insulate himself from the rapidly approaching tsunami of U.S. currency collapse and squalor which may persist for a generation.
To believe that hyperinflation is impossible is to believe that politicians only have the best interests of the people at heart. One needs only look at the intractable out-of-control spending by the California legislature, or the demands by the UAW even as they face bankruptcy, to realize that Liberals will never reign in spending until we are all insolvent like Zimbawe.
If you believe that merely by printing money we can rescue the economy, then you were not paying attention when the stagflation of the 1970s discredited Keynesian economics "forever".
Prosperity is created by the private sector when encouraged to produce real wealth and manufacture products suitable for export. But King Obama is not trying to create prosperity, he is doing his utmost to destroy wealth and punish its producers. He welcomes the economic crisis as an opportunity to "save" us with eternal dependence upon big government, run by corrupt Chicago machine politicians, eagerly supported by Keynesian "economists" like Paul Krugman and Marxist tools like Keith Olbermann.
Our current out-of-control spending is not being done to fix the economy. Rather, it is a remarkably swift and brutal implementation of the Cloward-Piven strategy to buy votes and power and replace the free market system in the U.S. with socialism.
That is why massive spending will continue long after the destructive end game is apparent to even the dimmest bulbs among us.
So Bernanke soon will step down, honor intact, and let Summers take the hit in the history textbooks.
TIPS and Gold as Inflation Hedges: Risk and Rewards [View article]
So gold does well in deflation, and extremely well in inflation, but does poorly when the economy is robust as the U.S. economy was from 1982-2000.
Gold will only fall if the world economy provides alternative investments with growth potential sufficient to offset the additional risk. Gold will get hurt temporarily with higher interest rates, but interest rates would need to remain consistently higher than inflation, which I doubt.
Politicians have saddled the U.S. economy with so much debt, regulations, lawsuits, green nonsense, wasteful spending and taxation, that we will limp along for several years and gold will continue to do fine.
Think about it: If gold was one of the best things you could have owned in the last decade when the world economy was reasonably good, think how well it will do in the next decade when the economy sux.
The reversion to mean argument is nonsense. As with anything, the price will be determined by supply and demand. Gold will be overpriced when people hold gold tupperware parties and gold goes hyperbolic like it did in 1980.
China is the world's largest producer of gold and they are not sharing; instead they are importing ore to refine into gold off the record. If you were China wouldn't you be trying to unload some of your massive U.S. dollar reserves while the U.S. bond market was at a record high? What would you replace the dollars with? Euro? Yen? No, gold. Also they will need fewer dollars as the U.S. scales back its importing and China expands their domestic market.
Most likely, we will see deflation in real estate, but inflation in commodities and everything else. Meanwhile the Fed will print paper to fool folks into believing they still have wealth, while ordinary citizens get squeezed from both sides.
Gold will remain in a secular bull because all the fundamentals are excellent.
6 Ways to Short the Obama Health Plan [View article]
But why should Obama not take over the American health care industry? He already has taken over or plans to take over automobile manufacturing, banking, insurance and energy.
King Obama has the "calm" confidence of an elitist who has never failed at anything because he has never actually accomplished anything in the real world. But I agree he is "masterful" at spending other people's money ... plus earnings of their unborn children.
Maybe Libs will not like it when he takes over their own business and snuffs out their liberty, but by then it will be too late.
I agree, short anything to do with U.S. health care. But also short all U.S. companies which are subject to the whims of King Obama and his Marxist minions. Short the U.S. dollar and Treasuries.
Buy China and India which will leave the U.S. in the dust as Obama shackles us with his job-killing Crap-and-Tax and various intentional wealth destruction policies. Buy commodities and gold because your currency will be worthless soon.
The Free Market Votes: Still No Change We Can Believe In [View article]
Yes free markets are terrible at producing wealth, which is why Cuba and the Soviet Union are examples of glittering utopias, whereas the Reagan economic boom lasted "only" 25 years.
But of course you are absolutely right that everyone else is a fool ... except you.
California's Pension Problem: Shockingly Irresponsible [View article]
-UbuTranscen
How many more times must we hear this egregious liberal lie?
"California's state/local tax burden percentage stands at 6th highest nationally, above the national average of 9.7%. Californians pay $5,028 per capita in state and local taxes. "
-www.taxfoundation.org/...
As with the Reagan tax cuts and W's tax cuts, which actually increased revenue, the problem is NEVER LACK OF REVENUE.
It is the insatiable appetite of corrupt politicians for wasteful spending, and strangulation by the lazy public employee union bullies.
Here's a way to stop this travesty: Cut their pay and send them home! The less time they have, the less damage they will be able to do to the citizens of California.
Sign the petition to return California to a PART TIME legislature: www.reformcal.com/cms
Richelson: 100% Bond Allocation Is Appropriate [View article]
-Stan Richelson
Owning fixed income securities in a hyper-inflationary environment is truly nuts. Add to that the fact that with King Obama in power, bondholders no longer have any lawfully secured interest during bankruptcy, and you have a recipe for disaster.
So good luck wit dat Stan and Hildy.
Core Inflation Picks Up [View article]
"It’s important to realize that there’s no hint of inflationary pressures in the economy right now. Consumer prices are lower now than they were a year ago, and wage increases have stalled in the face of high unemployment. Deflation, not inflation, is the clear and present danger."
-Paul Krugman, "The Big Inflation Scare", May 29, 2009
Krugman ignores the core rate of inflation and looks only at the last 12 months of total CPI which declined only due the the collapse of oil prices (which are now skyrocketting).
Krugman says there is no inflation, just politics. He is amazed that interest rates are rising. He surmises that the world is not behaving as he predicted because everyone else is just not as smart as he.
Why do people continue to listen to the NY Times and their foolish Marxist tools?
TIPS and Gold as Inflation Hedges: Risk and Rewards [View article]
Then again, perhaps the paper in your wallet is in a bubble. I'll hold gold because the politicians can't just print gold to buy votes.
Soros Attacks Germany’s Hair-Shirt Politics [View article]
Soros would sell his grandma to make a buck; Soros' advice is always aimed at helping Soros -- no one else.
Perhaps Obama should advise him that "at a certain point you’ve made enough money".
Weekly Trading Outlook: January 17 - 22, 2010 [View article]
For a preview, check out the Indian market (PIN) on May 18, 2009 after they booted out their communists.
10 Reasons This Is Not a Sustainable Rally [View article]
The Tea Party movement will crush the Obammunists in 54 days.
Note that the market collapsed about the time that Obama rose decisively in the 2008 polls.
The market is really about attitudes, trust and confidence; everything else is short term noise.
TIPS and Gold as Inflation Hedges: Risk and Rewards [View article]
Why Stocks Are Falling After Bernanke Testimony [View article]
Yes, Gold Is a Decent Inflation Hedge, But It's a Lousy Investment [View article]
This article only talks about gold as an inflation hedge. Look at the price of gold during the deflationary 1930's; gold also did fine.
The worst time to own gold is in a healthy economy, such as during the 30 years of the greatest economic prosperity in history which began when Reagan-Volker broke the back of the Nixon-Carter stagflation, then adult leaders like Thatcher and Gingrich allowed the free market expansion to continue.
Today, under the leadership of Obama, the U.S. has abdicated its leadership role in promoting freedom, ensuring international political stability, and responsible fiscal policy.
Therefore, gold is the best thing to own right now, whether we are to experience inflation or deflation.
We will know exactly when to dump gold: When the Obammunists are thrown out of office and no one will publish any Krugman articles.
Why Economic Dogma Threatens Our Future Prosperity [View article]
Government is always much more efficient and much wiser than the private sector in spending money, because the private sector is concerned about taking risks and making icky profits, while government is concerned about everyone's welfare and happy children.
So what we need are bigger and more powerful public sector unions with larger pensions and more middle management. We need card-check legislation to force all workers to join unions.
Yes, California is now bankrupt because prop 13 kept the politicians from taking more taxes and requiring a 2/3 majority to raise more taxes. True California has the second highest income tax in the country, some of the highest sales taxes, and high business taxes, but its property taxes are only average. This is wrong because our public servants need more money so that they can continue to enjoy the sensible, lavish lifestyles to which they have become accustomed. This will keep our public servant bureaucrats happy and more productive so they can retire at age 50 with 100% salaries and full medical care. If only we could hire more unionized bureaucrats who work 40-hour weeks while charging 10 hours of overtime, then California will return to fiscal health.
If only the government would tax me more, I know I would immediately become more productive and prosperous.
I'm sure that government bureaucrats will spend my money and my grandchildrens' money much better than we ordinary citizens ever could. So please, please raise my taxes.
This is an excellent article and you are obviously a genius.