Money Supply

[peterb]

I’ll give Schiff credit for calling this contraction when it was not the popular thing to do. But, he was dead wrong on decoupling and he has a really sorry excuse for getting it wrong. Also, his book is not that impressive. He’s a generalist. For more in-depth information and analysis, Marc Faber and Bob Hoye are a lot sharper then Schiff. And of coures, Roubini is the most accurate economist being listen to on MSM.

This is looking like a global recession at the very least. And that means everything goes down for a while. All currencies are looking flawed. So the US$ is gaining back some of it’s losses over the last 4 years.
Hyperinflation means a basic collapse of the currency. I dont think we’ll get that bad, but you never know. I would not doubt the US$ losing half it’s purchasing power in a few years, though.
But it’s all relative. If people will not borrow and lenders wont lend, where’s the money going? Nowhere, and thus prices are going down. But, if this changes and all these funds are directed at some asset or some investment, then whatever that thing is, it’s going to rise in price. This is really how we got out of the 2002 recession. The Fed put out free money and it took about 8 months before it started to find a home in RE. Then we were off to the races on RE prices. I suspect that gold may find itself in a similar situation. If it gathers popularity and there’s nothing else rising, cheap money will be forced into it and perhaps oil as well. Especially since all the currencies of the world are being inflated. It’s kind of a natural shift anyway…..too much paper and gold looks safer, and it’s going up in price. So it may feed on itself in that way and become self-fullfilling.

[patientrenter]

Great discussion. I agree with short-term deflation followed by long-term inflation. Not because I have worked out the mechanics of the various actions taken already, but because that’s where the dominant incentives lead us.

My personal hedging instrument against inflation, besides real businesses (e.g. equities), is the Yen. It’s still relatively cheap on a purchasing power basis, and the government and people of Japan seem a lot less prone to high inflation than the US govt and people. I’d be happy to diversify amongst the cheaper currencies (on a PPP basis) of other inflation-allergic countries, but the instruments are not all as easy to use as Yen/dollar futures.

[patientrenter]

Great discussion. I agree with short-term deflation followed by long-term inflation. Not because I have worked out the mechanics of the various actions taken already, but because that’s where the dominant incentives lead us.

My personal hedging instrument against inflation, besides real businesses (e.g. equities), is the Yen. It’s still relatively cheap on a purchasing power basis, and the government and people of Japan seem a lot less prone to high inflation than the US govt and people. I’d be happy to diversify amongst the cheaper currencies (on a PPP basis) of other inflation-allergic countries, but the instruments are not all as easy to use as Yen/dollar futures.

[patientrenter]

Great discussion. I agree with short-term deflation followed by long-term inflation. Not because I have worked out the mechanics of the various actions taken already, but because that’s where the dominant incentives lead us.

My personal hedging instrument against inflation, besides real businesses (e.g. equities), is the Yen. It’s still relatively cheap on a purchasing power basis, and the government and people of Japan seem a lot less prone to high inflation than the US govt and people. I’d be happy to diversify amongst the cheaper currencies (on a PPP basis) of other inflation-allergic countries, but the instruments are not all as easy to use as Yen/dollar futures.

[patientrenter]

Great discussion. I agree with short-term deflation followed by long-term inflation. Not because I have worked out the mechanics of the various actions taken already, but because that’s where the dominant incentives lead us.

My personal hedging instrument against inflation, besides real businesses (e.g. equities), is the Yen. It’s still relatively cheap on a purchasing power basis, and the government and people of Japan seem a lot less prone to high inflation than the US govt and people. I’d be happy to diversify amongst the cheaper currencies (on a PPP basis) of other inflation-allergic countries, but the instruments are not all as easy to use as Yen/dollar futures.

[patientrenter]

Great discussion. I agree with short-term deflation followed by long-term inflation. Not because I have worked out the mechanics of the various actions taken already, but because that’s where the dominant incentives lead us.

My personal hedging instrument against inflation, besides real businesses (e.g. equities), is the Yen. It’s still relatively cheap on a purchasing power basis, and the government and people of Japan seem a lot less prone to high inflation than the US govt and people. I’d be happy to diversify amongst the cheaper currencies (on a PPP basis) of other inflation-allergic countries, but the instruments are not all as easy to use as Yen/dollar futures.

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