December 4, 2013 at 7:27 pm #17664
Some gold bugs, like Bill :-), think that inflation and rising gold prices are the logical consequence of monetizing, or QE or whatever the quants call it. More printing must lead to higher prices for gold because cash is trash. Any other thought is sacrilege. Okay, fine, buy gold.
When gold hit $1650, I sold the gold in my Mother’s teeth. I should have waited to get a higher price, but now the price of gold is down. Mum wants her teeth filled again. I tell her she needs to wait.
Talking about reality may be sacrilege, or for some more like abuse, but the reality is that the world is deflating. The credit cycle is ending, the growth model is groaning, the energy supply is peaking. Yes, I have heard about the new fricking fracking. I have also seen that in many parts of the world things look bad, and slow. People are getting poorer and more angry.
If the manipulators run the money pumps by holding their finger on the zero key of the Fed computer for hours “printing” money, it may add a lot of numbers, but it is nothing compared to the rate of deflation. Imagine the loss of 30% of the value of 150 million houses just in the US. $16T, or whatever the total dept is now, is like a baby puffing into a hot air balloon.
Here is what the brilliant Feds and lawmakers can not do: make wealth. They can’t even make real demand. The public does not want more credit. They want to be free of debt. The mood has changed. There is not enough cheap energy left to have a GROWTH model such as we have had for the last fifty years. It’s over. In the 1929 market crash the underlying economy was still healthy and growing so the crash was just a release of excess. That is not the situation now. They underlying economy is in deep doo doo (technical term).
This whole big mess will end soon enough. There is no point in gambling with it. We are in the twilight of socialism and all the silly policies that go with it. Even Maynard Keynes would be embarrassed with the current crooked economic schemes.
Chris and Rob have been taking some heat for not chasing the market. They probably deserve it, but losing a little on the upside is better than losing a lot on the downside. If deflation is the major force in this “global” economy, then it is only a matter of time before prices go down. Twenty years? No. Five? No. One? Maybe, ask Abe in Japan (How about those Chinese competitors?). One month? Could be.February 21, 2014 at 2:53 pm #27343
There must be good choices for productive, wealth generating investment that withstand the tests of inflation and/or deflation. We must all still eat, dress, have a residence, communicate, be entertained, care for health, vacation…etc, etc. The economy is not dying.February 24, 2014 at 3:33 pm #18161
Threre must be… ?
Citizens of the Central African Republic have food, clothes, a mud hut, a cell phone and an ox cart for an ambulance. They also have war, famine and some ethnic problems.
The US enjoys the advantages of having the reserve currency and still being the center of the world economy, the safe haven, but that does not mean we have a healthy economy. We have one that has been manipulated and now at great risk. The stock market is reflecting all good news.
We are at the end of the credit cycle which has favored the financial “industry”. The productive economy in the US is not doing so well, in spite of QE. Some FOMC members are resisting continued QE, so in the short term we still have lowered interest rates, but they have to rise over time… and they will. QE is not working, at least it is not making new “jobs”.
Once the market starts to correct, even the desirable biotech companies will be big losers. It seems to me that all the markets are declining now, and on very little volume. I think the big guys are out.
Be patient. Hold your cash.
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