There is a saying about not seeing the forest for the trees. This concept is very applicable in today’s investing climate. Simply put, most people are oblivious to the fact that there is a forest, let alone trees. And those that are paying attention, are looking at the leaves of the trees for any sign of change in direction. Yet what has remained constant since Q1 2009, the people in this world with power will opt for inflation over depression in attempting to solve the world’s problems.
To make this more complicated than it needs to be might make one feel smarter. But in reality, the simplest conclusion is not only the most efficient, but also the easiest way to strategically deploy investment capital. The thesis is:
The powers that be (TPTB) must choose between
1) inflating assets values and creating money (to deceive people about the true state of affairs), or
2) the depressionary consequences of letting the system adjust on it own.
Every action that TPTB have undertaken since March 2009 suggests they chose #1, but yet many treewatchers still wonder what they will do next. Looking at the situation from 30,000 feet, why would we think that “this time is different”?
Today is just another day on the path to inflating our assets. For the last 100 years the US has devalued its currency, and exported its structural monetary system throughout the world. To think that all of the sudden TPTB will get fiscal religion and let the economic forces ravage their power is overthinking the evidence all around us.
The powers that are in charge have set their course, it is through the inflation of assets, and the people should protect their standing by investing accordingly.