What am I missing? Is that a train coming at me or am I Chicken Little?

[kewp]

…there’s speculation that the recent price drops of 10%+ are the result of hedge funds and institutional investors liquidating due to margin calls and capital requirements.

I’m almost certain thats it. Great buying opportunity if you aren’t in yet.

[Coronita]

Well I am not quite J6P nor a moron. I am a master of self-deprecation.

I didn't try to imply you were. You said you were average joe. Assuming that statement is accurate (I don't know) and that average joe and the rest of average j6p hears/reads/sees (ok maybe j6p doesn't read) on paper/internet/tv touting "BUY COMMODITIES NOW, GET RICH QUICK", to me that means that mainstream has caught up to this "next big thing", and that sooner or later prices are going to be driven up to insane levels and then fall.

Come on folks, don't you think that mass media has gotten hold of this next "big thing" and is now touting it? I can't count how many spam emails, junk snail mail, advertisements I'm seeing,hearing, watching touting "buy gold, buy silver, buy energy, get rich, beat inflation, beat blah blah blah.." It seems it's ominous of the next hype. There was even an cnn article about how folks/one should dig up old gold jewelry and try to sell them to capitalize on the recent run-up in gold prices (forgetting the fact that most accessory jewelry is like 14k and pretty useless).

 

As far as high oil prices. I think long term that might be a good thing. One thing that I think is that Americans are very creative, and if oil/gas is going to be insane, markets will bring the need for alternative energy.

 

echo, I think your analysis for buying gold/precious metals (in 20/20 hindsight :)) would have yielded you incredible gains 3 years ago. I'm not so sure if the runup will continue. But what do I know, I'm a lazy union worker j6p 🙂 Plus as someone once pointed out, opinions are like ….

 

So here's an idea (albeit terrible). Why not starting to move a (small) amount into REITS :)….Seriously, what do you have to lose? Things are so low across the board, not everything can be terrible. And no one is looking there these days…And if it is, it's just a small amount, who cares if it gets halved? (no I'm not doing this myself. Are you insane? 🙂 ) Or why not buy some low priced banks. Not every bank is going to default and end up like BSC.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Well I am not quite J6P nor a moron. I am a master of self-deprecation.

I didn't try to imply you were. You said you were average joe. Assuming that statement is accurate (I don't know) and that average joe and the rest of average j6p hears/reads/sees (ok maybe j6p doesn't read) on paper/internet/tv touting "BUY COMMODITIES NOW, GET RICH QUICK", to me that means that mainstream has caught up to this "next big thing", and that sooner or later prices are going to be driven up to insane levels and then fall.

Come on folks, don't you think that mass media has gotten hold of this next "big thing" and is now touting it? I can't count how many spam emails, junk snail mail, advertisements I'm seeing,hearing, watching touting "buy gold, buy silver, buy energy, get rich, beat inflation, beat blah blah blah.." It seems it's ominous of the next hype. There was even an cnn article about how folks/one should dig up old gold jewelry and try to sell them to capitalize on the recent run-up in gold prices (forgetting the fact that most accessory jewelry is like 14k and pretty useless).

 

As far as high oil prices. I think long term that might be a good thing. One thing that I think is that Americans are very creative, and if oil/gas is going to be insane, markets will bring the need for alternative energy.

 

echo, I think your analysis for buying gold/precious metals (in 20/20 hindsight :)) would have yielded you incredible gains 3 years ago. I'm not so sure if the runup will continue. But what do I know, I'm a lazy union worker j6p 🙂 Plus as someone once pointed out, opinions are like ….

 

So here's an idea (albeit terrible). Why not starting to move a (small) amount into REITS :)….Seriously, what do you have to lose? Things are so low across the board, not everything can be terrible. And no one is looking there these days…And if it is, it's just a small amount, who cares if it gets halved? (no I'm not doing this myself. Are you insane? 🙂 ) Or why not buy some low priced banks. Not every bank is going to default and end up like BSC.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Well I am not quite J6P nor a moron. I am a master of self-deprecation.

I didn't try to imply you were. You said you were average joe. Assuming that statement is accurate (I don't know) and that average joe and the rest of average j6p hears/reads/sees (ok maybe j6p doesn't read) on paper/internet/tv touting "BUY COMMODITIES NOW, GET RICH QUICK", to me that means that mainstream has caught up to this "next big thing", and that sooner or later prices are going to be driven up to insane levels and then fall.

Come on folks, don't you think that mass media has gotten hold of this next "big thing" and is now touting it? I can't count how many spam emails, junk snail mail, advertisements I'm seeing,hearing, watching touting "buy gold, buy silver, buy energy, get rich, beat inflation, beat blah blah blah.." It seems it's ominous of the next hype. There was even an cnn article about how folks/one should dig up old gold jewelry and try to sell them to capitalize on the recent run-up in gold prices (forgetting the fact that most accessory jewelry is like 14k and pretty useless).

 

As far as high oil prices. I think long term that might be a good thing. One thing that I think is that Americans are very creative, and if oil/gas is going to be insane, markets will bring the need for alternative energy.

 

echo, I think your analysis for buying gold/precious metals (in 20/20 hindsight :)) would have yielded you incredible gains 3 years ago. I'm not so sure if the runup will continue. But what do I know, I'm a lazy union worker j6p 🙂 Plus as someone once pointed out, opinions are like ….

 

So here's an idea (albeit terrible). Why not starting to move a (small) amount into REITS :)….Seriously, what do you have to lose? Things are so low across the board, not everything can be terrible. And no one is looking there these days…And if it is, it's just a small amount, who cares if it gets halved? (no I'm not doing this myself. Are you insane? 🙂 ) Or why not buy some low priced banks. Not every bank is going to default and end up like BSC.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Well I am not quite J6P nor a moron. I am a master of self-deprecation.

I didn't try to imply you were. You said you were average joe. Assuming that statement is accurate (I don't know) and that average joe and the rest of average j6p hears/reads/sees (ok maybe j6p doesn't read) on paper/internet/tv touting "BUY COMMODITIES NOW, GET RICH QUICK", to me that means that mainstream has caught up to this "next big thing", and that sooner or later prices are going to be driven up to insane levels and then fall.

Come on folks, don't you think that mass media has gotten hold of this next "big thing" and is now touting it? I can't count how many spam emails, junk snail mail, advertisements I'm seeing,hearing, watching touting "buy gold, buy silver, buy energy, get rich, beat inflation, beat blah blah blah.." It seems it's ominous of the next hype. There was even an cnn article about how folks/one should dig up old gold jewelry and try to sell them to capitalize on the recent run-up in gold prices (forgetting the fact that most accessory jewelry is like 14k and pretty useless).

 

As far as high oil prices. I think long term that might be a good thing. One thing that I think is that Americans are very creative, and if oil/gas is going to be insane, markets will bring the need for alternative energy.

 

echo, I think your analysis for buying gold/precious metals (in 20/20 hindsight :)) would have yielded you incredible gains 3 years ago. I'm not so sure if the runup will continue. But what do I know, I'm a lazy union worker j6p 🙂 Plus as someone once pointed out, opinions are like ….

 

So here's an idea (albeit terrible). Why not starting to move a (small) amount into REITS :)….Seriously, what do you have to lose? Things are so low across the board, not everything can be terrible. And no one is looking there these days…And if it is, it's just a small amount, who cares if it gets halved? (no I'm not doing this myself. Are you insane? 🙂 ) Or why not buy some low priced banks. Not every bank is going to default and end up like BSC.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Well I am not quite J6P nor a moron. I am a master of self-deprecation.

I didn't try to imply you were. You said you were average joe. Assuming that statement is accurate (I don't know) and that average joe and the rest of average j6p hears/reads/sees (ok maybe j6p doesn't read) on paper/internet/tv touting "BUY COMMODITIES NOW, GET RICH QUICK", to me that means that mainstream has caught up to this "next big thing", and that sooner or later prices are going to be driven up to insane levels and then fall.

Come on folks, don't you think that mass media has gotten hold of this next "big thing" and is now touting it? I can't count how many spam emails, junk snail mail, advertisements I'm seeing,hearing, watching touting "buy gold, buy silver, buy energy, get rich, beat inflation, beat blah blah blah.." It seems it's ominous of the next hype. There was even an cnn article about how folks/one should dig up old gold jewelry and try to sell them to capitalize on the recent run-up in gold prices (forgetting the fact that most accessory jewelry is like 14k and pretty useless).

 

As far as high oil prices. I think long term that might be a good thing. One thing that I think is that Americans are very creative, and if oil/gas is going to be insane, markets will bring the need for alternative energy.

 

echo, I think your analysis for buying gold/precious metals (in 20/20 hindsight :)) would have yielded you incredible gains 3 years ago. I'm not so sure if the runup will continue. But what do I know, I'm a lazy union worker j6p 🙂 Plus as someone once pointed out, opinions are like ….

 

So here's an idea (albeit terrible). Why not starting to move a (small) amount into REITS :)….Seriously, what do you have to lose? Things are so low across the board, not everything can be terrible. And no one is looking there these days…And if it is, it's just a small amount, who cares if it gets halved? (no I'm not doing this myself. Are you insane? 🙂 ) Or why not buy some low priced banks. Not every bank is going to default and end up like BSC.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[jonnycsd]

I am semi-educated in finance – books more than practice. 3 years of public accounting and an MBA in finance from a very prestigious Ivy League school notorious for producing Wall Street types who end up in federal prison for white collar crime. Might be a few alumni on the hook at BSC. The following is my (lengthy) and humble opinion:

My take is that our fiat money will allow the necessary pain of correction to be spread over time and across several diverse groups – domestic and foreign. The powers that be can generate literally an endless supply of dollars to keep things from seizing up the way they did in November 1929. Economic activity was so frozen that it was difficult for farmers to get money to plant food, and there were tremendous dislocations of families and communities. No one came out a winner – well almost no one. We may have dodged a similar bullet last week. There may be a few more bullets to dodge. My take is that the current bear market rally is the market’s recognition that this Fed is willing to print as much money as needed to keep the economy from locking up. That’s the good thing about fiat money, and Heli-Ben is no Roy Young. The financial system will be kept lubricated and running. Period. Even it the dollar gets beat up in the process and hurts dollar savers, T-bill investors, CMO investors, foreign manufacturers, and domestic fixed income retirees and wage earners.

The bad thing about fiat money is that it does not function as a perfect store of value. Over time inflation erodes the value. Right now, the rate of erosion is increasing and that is destroying some wealth but not nearly as much as would be lost in a 1930s style scenario. People on this board write glibly about the ’30s, but the truth is there was not enough food to go around then. Like parts of Africa today people went hungry. Try telling your kids that they aren’t getting dinner for a couple nights in a row. Inflation is a lot better than food riots.

So, even if we end up with South American style hyper-inflation (extremely unlikely), the sun will come up every morning and people will go to work, earn wages and engage in economic activity. Period. Everyone should take comfort in this.

As far as how to hedge against further declines in the dollar – hell, one of the best dollar shorts around is a fixed rate 30 year mortgage. Fiat money begs to be gambled, borrowed and lent – after all, it is not real – it is ephemeral and meaningless – it is just an image, a shell, an emotion and a feeling. If you think the dollar is going down the toilet, just short it (i.e., borrow it at a low fixed rate of interest and pay it back later using post-inflation money). Lock in 5.75% for 30 years and laugh as inflation reduces the true value of what you owe. And you even get an income tax break along the way. Just gotta find the right situation so the depreciation of the collateral asset you purchase doesn’t eat into the gains from your short position. I did this and got a nice 30 year fixed on a property one block from the beach with a good future as a weekly rental – or a vacation home if I don’t need the income. Bring it on Bennie – drive that dollar into the dirt! After inflation and after taxes my cost of money is right about zero and may soon go negative. I think I’ll go sneak a corona on the sand tomorrow afternoon and think about this with a smile. I love getting a “free” 30 year short position on the dollar, especially when the valuation cycle of the collateral used to buy the position is 5 to 10 years.

If you have a more immediate investment horizon, you could look at equities, which tend to do OK during inflation. Double down with foreign companies. Look at some Hong Kong equities. China has a real economy now so even if the USA stops buying from them you could get some good exposure there. The patriotic way to play the declining dollar would be to buy shares in a domestic company with dollar costs and non-dollar pricing (i.e., they make stuff here, not in Mexico and sell it anywhere but the US off a price sheet that uses the buyer’s currency). Great concept, not so sure too many of these exists. Not yet anyway, but they may soon evolve.

Rather than dig a fox hole you should get flexible, diversified and fight a guerrilla war – hit and move, don’t play by the “rules”. Spread your chips around the table and expect to take some hits. And don’t forget that the Fed is going to do whatever it takes to keep the market liquid – $200BB, $600BB, $1TT, $2TT – whatever it takes – even if it means hyper-inflation (it won’t). It’s a no limit table and there will be no food riots. Inflation will take its vigorish and we will all be bit poorer because of wasteful practices like war. Despite Ron Paul’s protestations to the contrary, the shell game of fiat money makes us wealthier not poorer.

[jonnycsd]

I am semi-educated in finance – books more than practice. 3 years of public accounting and an MBA in finance from a very prestigious Ivy League school notorious for producing Wall Street types who end up in federal prison for white collar crime. Might be a few alumni on the hook at BSC. The following is my (lengthy) and humble opinion:

My take is that our fiat money will allow the necessary pain of correction to be spread over time and across several diverse groups – domestic and foreign. The powers that be can generate literally an endless supply of dollars to keep things from seizing up the way they did in November 1929. Economic activity was so frozen that it was difficult for farmers to get money to plant food, and there were tremendous dislocations of families and communities. No one came out a winner – well almost no one. We may have dodged a similar bullet last week. There may be a few more bullets to dodge. My take is that the current bear market rally is the market’s recognition that this Fed is willing to print as much money as needed to keep the economy from locking up. That’s the good thing about fiat money, and Heli-Ben is no Roy Young. The financial system will be kept lubricated and running. Period. Even it the dollar gets beat up in the process and hurts dollar savers, T-bill investors, CMO investors, foreign manufacturers, and domestic fixed income retirees and wage earners.

The bad thing about fiat money is that it does not function as a perfect store of value. Over time inflation erodes the value. Right now, the rate of erosion is increasing and that is destroying some wealth but not nearly as much as would be lost in a 1930s style scenario. People on this board write glibly about the ’30s, but the truth is there was not enough food to go around then. Like parts of Africa today people went hungry. Try telling your kids that they aren’t getting dinner for a couple nights in a row. Inflation is a lot better than food riots.

So, even if we end up with South American style hyper-inflation (extremely unlikely), the sun will come up every morning and people will go to work, earn wages and engage in economic activity. Period. Everyone should take comfort in this.

As far as how to hedge against further declines in the dollar – hell, one of the best dollar shorts around is a fixed rate 30 year mortgage. Fiat money begs to be gambled, borrowed and lent – after all, it is not real – it is ephemeral and meaningless – it is just an image, a shell, an emotion and a feeling. If you think the dollar is going down the toilet, just short it (i.e., borrow it at a low fixed rate of interest and pay it back later using post-inflation money). Lock in 5.75% for 30 years and laugh as inflation reduces the true value of what you owe. And you even get an income tax break along the way. Just gotta find the right situation so the depreciation of the collateral asset you purchase doesn’t eat into the gains from your short position. I did this and got a nice 30 year fixed on a property one block from the beach with a good future as a weekly rental – or a vacation home if I don’t need the income. Bring it on Bennie – drive that dollar into the dirt! After inflation and after taxes my cost of money is right about zero and may soon go negative. I think I’ll go sneak a corona on the sand tomorrow afternoon and think about this with a smile. I love getting a “free” 30 year short position on the dollar, especially when the valuation cycle of the collateral used to buy the position is 5 to 10 years.

If you have a more immediate investment horizon, you could look at equities, which tend to do OK during inflation. Double down with foreign companies. Look at some Hong Kong equities. China has a real economy now so even if the USA stops buying from them you could get some good exposure there. The patriotic way to play the declining dollar would be to buy shares in a domestic company with dollar costs and non-dollar pricing (i.e., they make stuff here, not in Mexico and sell it anywhere but the US off a price sheet that uses the buyer’s currency). Great concept, not so sure too many of these exists. Not yet anyway, but they may soon evolve.

Rather than dig a fox hole you should get flexible, diversified and fight a guerrilla war – hit and move, don’t play by the “rules”. Spread your chips around the table and expect to take some hits. And don’t forget that the Fed is going to do whatever it takes to keep the market liquid – $200BB, $600BB, $1TT, $2TT – whatever it takes – even if it means hyper-inflation (it won’t). It’s a no limit table and there will be no food riots. Inflation will take its vigorish and we will all be bit poorer because of wasteful practices like war. Despite Ron Paul’s protestations to the contrary, the shell game of fiat money makes us wealthier not poorer.

[jonnycsd]

I am semi-educated in finance – books more than practice. 3 years of public accounting and an MBA in finance from a very prestigious Ivy League school notorious for producing Wall Street types who end up in federal prison for white collar crime. Might be a few alumni on the hook at BSC. The following is my (lengthy) and humble opinion:

My take is that our fiat money will allow the necessary pain of correction to be spread over time and across several diverse groups – domestic and foreign. The powers that be can generate literally an endless supply of dollars to keep things from seizing up the way they did in November 1929. Economic activity was so frozen that it was difficult for farmers to get money to plant food, and there were tremendous dislocations of families and communities. No one came out a winner – well almost no one. We may have dodged a similar bullet last week. There may be a few more bullets to dodge. My take is that the current bear market rally is the market’s recognition that this Fed is willing to print as much money as needed to keep the economy from locking up. That’s the good thing about fiat money, and Heli-Ben is no Roy Young. The financial system will be kept lubricated and running. Period. Even it the dollar gets beat up in the process and hurts dollar savers, T-bill investors, CMO investors, foreign manufacturers, and domestic fixed income retirees and wage earners.

The bad thing about fiat money is that it does not function as a perfect store of value. Over time inflation erodes the value. Right now, the rate of erosion is increasing and that is destroying some wealth but not nearly as much as would be lost in a 1930s style scenario. People on this board write glibly about the ’30s, but the truth is there was not enough food to go around then. Like parts of Africa today people went hungry. Try telling your kids that they aren’t getting dinner for a couple nights in a row. Inflation is a lot better than food riots.

So, even if we end up with South American style hyper-inflation (extremely unlikely), the sun will come up every morning and people will go to work, earn wages and engage in economic activity. Period. Everyone should take comfort in this.

As far as how to hedge against further declines in the dollar – hell, one of the best dollar shorts around is a fixed rate 30 year mortgage. Fiat money begs to be gambled, borrowed and lent – after all, it is not real – it is ephemeral and meaningless – it is just an image, a shell, an emotion and a feeling. If you think the dollar is going down the toilet, just short it (i.e., borrow it at a low fixed rate of interest and pay it back later using post-inflation money). Lock in 5.75% for 30 years and laugh as inflation reduces the true value of what you owe. And you even get an income tax break along the way. Just gotta find the right situation so the depreciation of the collateral asset you purchase doesn’t eat into the gains from your short position. I did this and got a nice 30 year fixed on a property one block from the beach with a good future as a weekly rental – or a vacation home if I don’t need the income. Bring it on Bennie – drive that dollar into the dirt! After inflation and after taxes my cost of money is right about zero and may soon go negative. I think I’ll go sneak a corona on the sand tomorrow afternoon and think about this with a smile. I love getting a “free” 30 year short position on the dollar, especially when the valuation cycle of the collateral used to buy the position is 5 to 10 years.

If you have a more immediate investment horizon, you could look at equities, which tend to do OK during inflation. Double down with foreign companies. Look at some Hong Kong equities. China has a real economy now so even if the USA stops buying from them you could get some good exposure there. The patriotic way to play the declining dollar would be to buy shares in a domestic company with dollar costs and non-dollar pricing (i.e., they make stuff here, not in Mexico and sell it anywhere but the US off a price sheet that uses the buyer’s currency). Great concept, not so sure too many of these exists. Not yet anyway, but they may soon evolve.

Rather than dig a fox hole you should get flexible, diversified and fight a guerrilla war – hit and move, don’t play by the “rules”. Spread your chips around the table and expect to take some hits. And don’t forget that the Fed is going to do whatever it takes to keep the market liquid – $200BB, $600BB, $1TT, $2TT – whatever it takes – even if it means hyper-inflation (it won’t). It’s a no limit table and there will be no food riots. Inflation will take its vigorish and we will all be bit poorer because of wasteful practices like war. Despite Ron Paul’s protestations to the contrary, the shell game of fiat money makes us wealthier not poorer.

[jonnycsd]

I am semi-educated in finance – books more than practice. 3 years of public accounting and an MBA in finance from a very prestigious Ivy League school notorious for producing Wall Street types who end up in federal prison for white collar crime. Might be a few alumni on the hook at BSC. The following is my (lengthy) and humble opinion:

My take is that our fiat money will allow the necessary pain of correction to be spread over time and across several diverse groups – domestic and foreign. The powers that be can generate literally an endless supply of dollars to keep things from seizing up the way they did in November 1929. Economic activity was so frozen that it was difficult for farmers to get money to plant food, and there were tremendous dislocations of families and communities. No one came out a winner – well almost no one. We may have dodged a similar bullet last week. There may be a few more bullets to dodge. My take is that the current bear market rally is the market’s recognition that this Fed is willing to print as much money as needed to keep the economy from locking up. That’s the good thing about fiat money, and Heli-Ben is no Roy Young. The financial system will be kept lubricated and running. Period. Even it the dollar gets beat up in the process and hurts dollar savers, T-bill investors, CMO investors, foreign manufacturers, and domestic fixed income retirees and wage earners.

The bad thing about fiat money is that it does not function as a perfect store of value. Over time inflation erodes the value. Right now, the rate of erosion is increasing and that is destroying some wealth but not nearly as much as would be lost in a 1930s style scenario. People on this board write glibly about the ’30s, but the truth is there was not enough food to go around then. Like parts of Africa today people went hungry. Try telling your kids that they aren’t getting dinner for a couple nights in a row. Inflation is a lot better than food riots.

So, even if we end up with South American style hyper-inflation (extremely unlikely), the sun will come up every morning and people will go to work, earn wages and engage in economic activity. Period. Everyone should take comfort in this.

As far as how to hedge against further declines in the dollar – hell, one of the best dollar shorts around is a fixed rate 30 year mortgage. Fiat money begs to be gambled, borrowed and lent – after all, it is not real – it is ephemeral and meaningless – it is just an image, a shell, an emotion and a feeling. If you think the dollar is going down the toilet, just short it (i.e., borrow it at a low fixed rate of interest and pay it back later using post-inflation money). Lock in 5.75% for 30 years and laugh as inflation reduces the true value of what you owe. And you even get an income tax break along the way. Just gotta find the right situation so the depreciation of the collateral asset you purchase doesn’t eat into the gains from your short position. I did this and got a nice 30 year fixed on a property one block from the beach with a good future as a weekly rental – or a vacation home if I don’t need the income. Bring it on Bennie – drive that dollar into the dirt! After inflation and after taxes my cost of money is right about zero and may soon go negative. I think I’ll go sneak a corona on the sand tomorrow afternoon and think about this with a smile. I love getting a “free” 30 year short position on the dollar, especially when the valuation cycle of the collateral used to buy the position is 5 to 10 years.

If you have a more immediate investment horizon, you could look at equities, which tend to do OK during inflation. Double down with foreign companies. Look at some Hong Kong equities. China has a real economy now so even if the USA stops buying from them you could get some good exposure there. The patriotic way to play the declining dollar would be to buy shares in a domestic company with dollar costs and non-dollar pricing (i.e., they make stuff here, not in Mexico and sell it anywhere but the US off a price sheet that uses the buyer’s currency). Great concept, not so sure too many of these exists. Not yet anyway, but they may soon evolve.

Rather than dig a fox hole you should get flexible, diversified and fight a guerrilla war – hit and move, don’t play by the “rules”. Spread your chips around the table and expect to take some hits. And don’t forget that the Fed is going to do whatever it takes to keep the market liquid – $200BB, $600BB, $1TT, $2TT – whatever it takes – even if it means hyper-inflation (it won’t). It’s a no limit table and there will be no food riots. Inflation will take its vigorish and we will all be bit poorer because of wasteful practices like war. Despite Ron Paul’s protestations to the contrary, the shell game of fiat money makes us wealthier not poorer.

[jonnycsd]

I am semi-educated in finance – books more than practice. 3 years of public accounting and an MBA in finance from a very prestigious Ivy League school notorious for producing Wall Street types who end up in federal prison for white collar crime. Might be a few alumni on the hook at BSC. The following is my (lengthy) and humble opinion:

My take is that our fiat money will allow the necessary pain of correction to be spread over time and across several diverse groups – domestic and foreign. The powers that be can generate literally an endless supply of dollars to keep things from seizing up the way they did in November 1929. Economic activity was so frozen that it was difficult for farmers to get money to plant food, and there were tremendous dislocations of families and communities. No one came out a winner – well almost no one. We may have dodged a similar bullet last week. There may be a few more bullets to dodge. My take is that the current bear market rally is the market’s recognition that this Fed is willing to print as much money as needed to keep the economy from locking up. That’s the good thing about fiat money, and Heli-Ben is no Roy Young. The financial system will be kept lubricated and running. Period. Even it the dollar gets beat up in the process and hurts dollar savers, T-bill investors, CMO investors, foreign manufacturers, and domestic fixed income retirees and wage earners.

The bad thing about fiat money is that it does not function as a perfect store of value. Over time inflation erodes the value. Right now, the rate of erosion is increasing and that is destroying some wealth but not nearly as much as would be lost in a 1930s style scenario. People on this board write glibly about the ’30s, but the truth is there was not enough food to go around then. Like parts of Africa today people went hungry. Try telling your kids that they aren’t getting dinner for a couple nights in a row. Inflation is a lot better than food riots.

So, even if we end up with South American style hyper-inflation (extremely unlikely), the sun will come up every morning and people will go to work, earn wages and engage in economic activity. Period. Everyone should take comfort in this.

As far as how to hedge against further declines in the dollar – hell, one of the best dollar shorts around is a fixed rate 30 year mortgage. Fiat money begs to be gambled, borrowed and lent – after all, it is not real – it is ephemeral and meaningless – it is just an image, a shell, an emotion and a feeling. If you think the dollar is going down the toilet, just short it (i.e., borrow it at a low fixed rate of interest and pay it back later using post-inflation money). Lock in 5.75% for 30 years and laugh as inflation reduces the true value of what you owe. And you even get an income tax break along the way. Just gotta find the right situation so the depreciation of the collateral asset you purchase doesn’t eat into the gains from your short position. I did this and got a nice 30 year fixed on a property one block from the beach with a good future as a weekly rental – or a vacation home if I don’t need the income. Bring it on Bennie – drive that dollar into the dirt! After inflation and after taxes my cost of money is right about zero and may soon go negative. I think I’ll go sneak a corona on the sand tomorrow afternoon and think about this with a smile. I love getting a “free” 30 year short position on the dollar, especially when the valuation cycle of the collateral used to buy the position is 5 to 10 years.

If you have a more immediate investment horizon, you could look at equities, which tend to do OK during inflation. Double down with foreign companies. Look at some Hong Kong equities. China has a real economy now so even if the USA stops buying from them you could get some good exposure there. The patriotic way to play the declining dollar would be to buy shares in a domestic company with dollar costs and non-dollar pricing (i.e., they make stuff here, not in Mexico and sell it anywhere but the US off a price sheet that uses the buyer’s currency). Great concept, not so sure too many of these exists. Not yet anyway, but they may soon evolve.

Rather than dig a fox hole you should get flexible, diversified and fight a guerrilla war – hit and move, don’t play by the “rules”. Spread your chips around the table and expect to take some hits. And don’t forget that the Fed is going to do whatever it takes to keep the market liquid – $200BB, $600BB, $1TT, $2TT – whatever it takes – even if it means hyper-inflation (it won’t). It’s a no limit table and there will be no food riots. Inflation will take its vigorish and we will all be bit poorer because of wasteful practices like war. Despite Ron Paul’s protestations to the contrary, the shell game of fiat money makes us wealthier not poorer.

[jonnycsd]

PS – Um, one other thing . . .

The other traditional “safe haven” against inflation . . .

um, that other one, the one that is not metals, is, um . . .

[whisper] real estate.

(the Pigs are gonna masacre me)

[jonnycsd]

PS – Um, one other thing . . .

The other traditional “safe haven” against inflation . . .

um, that other one, the one that is not metals, is, um . . .

[whisper] real estate.

(the Pigs are gonna masacre me)

[jonnycsd]

PS – Um, one other thing . . .

The other traditional “safe haven” against inflation . . .

um, that other one, the one that is not metals, is, um . . .

[whisper] real estate.

(the Pigs are gonna masacre me)

[jonnycsd]

PS – Um, one other thing . . .

The other traditional “safe haven” against inflation . . .

um, that other one, the one that is not metals, is, um . . .

[whisper] real estate.

(the Pigs are gonna masacre me)

[Author]

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