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Hyper-Inflation vs. Deflation vs.....
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Inflationary Depression
Hyper-Inflationary Depression
Deflationary Depression
Stagflationary Depression
Which one of these are you convinced will occur and why in 2009 and 2010?
And how are you positioning yourself to profit from it?
I think Jim Rogers is right. We're in a temporary deflationary period currently caused de-leveraging and 'assumed' flight to safety, but this deflation isn't based on fundamentals. It's a result of forced liquidation because of asset re-valuation within the past few months (level 3 assets mostly), and once this de-leveraging is completed by mid 2009 (we're about to enter a second wave of de-leveraging right now which should artificially drive the dollar higher temporarily), there will be a sharp reverse in trend and we will see hyper-inflation because the monetary base is being inflated astronomically, but it's not visible in the real economy because of the artificial deflationary pressures.
Also, remember that the Christmas retail figures report which comes out in February will be dismal, even mainstream puppetheads on the media are saying it. If you read into the plans of the large corporations, they are planning to lay-off 30% or more of their workforces after that report comes out, so late spring and summer will when we absolutely horrible for employment, there is little debate on that.
Today, the former credit controller for Freddie Mac in testimony before congress said we're looking at 8 MILLION more forclosues in 2009. Home prices will continue to drop and even if the government steps in to freeze forclosures or even bail out homeowners, you can expect another sharp increase in the monetary base because Quantitative Easing (printing money) is the only way to fund such high cost programs. Obamas insane proposal to add 2 million government workers and infrastructure programs will put us even more into debt (if they choose to fund it using paper) or debase the currency even more (if they choose the QE path). All these bailouts cost us over 7 trillion already and counting. Thats more money than all the wars America has ever fought combined!
Treasury yields on short term paper is basically in the negative if you factor in transaction fees. The only ones buying our debt are foreign holders who fear their own currencies rising sharply against the dollar which would hurt their exporters. So, the arabs and asians are stuck in a slight corner right now. But, they're not stupid. While they're reluctantly financing our debt, they're also hoarding gold like there is no tomorrow. Venezuela, Iran, China, Saudis, Russia, etc... hoarding gold at unprecedented levels.
There's a run happening on the Comex even now and for the first time in it's history we're seeing backwardation in that market (spot price above futures price indicating lost faith for paper backed gold and demand for physical delivery)The game is up pretty much. People want their physical gold because the price manipulation of Comex has become too blatant. No longer can the Rothschilds sink the Comex price by flooding it with short positions. The last delivery for this month on comex is December 31st and there's a likely chance that after that Comex will burst. As you know the dollar holds any value whatsoever is because gold is depressed artificially since the 70's. In fact, if it weren't for the artificial low Comex prices, the dollar wouldn't even be the reserve currency.
Anyway, if it's any sign of 'prophecy' or whatever look to what the top 10% of the wealthiest people are doing. They're liquidating and moving into hard assets. Now, do you think they would be doing that if we were headed into deflation? I don't think so, and the top 10% are all insiders. They're gearing up for hyper-inflation. The latest developments in the gold market are pointing to that. The Fed actions are pointing to that. The Treasury actions are pointing to that. Obama is pointing to that.
For a while, I was convinced that we were headed into permanent deflation because I thought all this deleveraging would be far greater than all the money being created out of thin air, alot of the deleveraging is almost over, and we're not even done with all the bailouts and so on. Deflation makes less and less sense.
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