johngonole

How the U.S. Financial Crisis Resembles Japan’s 'Lost Decade' - And How to Play It, Part II

I think his overall point is that we need to decouple from the dollar. Foreign investments, gold, etc will hedge us against a falling dollar. Also high monetary induce inflation can lead to stagflation or worse depression. Its like a standing wave. As time goes on the waves get larger and largers. We've been on the up wave as monetary supply increases but so have debts. As debts contract we will have deflation. His point is that the FED will try to avoid the impending massive quick deflation by inflating our currency further. This will continue to put pressure on commodity prices and will extend the amount of time it takes the country to move past this slow down. The new increase in monetary supply will most likely go into commodities or paying down debt...or banks recapitalizing. In the long run the monetary policies may work however the ups and downs are going to be more violent versus just letting the markets work because the FED can't control how the new dollars are spent or used. I'm not a pro when in comes to monetary policy but the whole thing stinks to high heaven if you ask me. We actually need a currency that super slowing gets more valuable. This will encourage good investment versus the investment environment we have today where everyone is taking on huge risky loans cause they know this is the way to play the system....bailouts, bankrupcy protection, etc...

We'd be better off without the Federal Reserve or fractional reserve banking. What good is a currency who's value fluctuates the way ours does or is doing now. Speculation is all that it left. Too many investments depend on ever diluted currency.

It seems to me that our monetary policy boils down to protecting the nation from deflation be ever increasing monetary debt. problem is interest must be paid on that debt. Most of the debt is increasing in the form of government. So we are socializing risk which results in more bad debts...and they cycle could go on till the taxpayers own nothing.