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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Wyätt Gwyön who wrote (3954)12/28/2003 10:41:19 AM
From: el_gaviero  Read Replies (1) of 110194
 
Darfot, thanks for Hoisington link.

Of the material presented, the two most relevant charts (for the short term) surely have to be the ones on p. 32, showing “Commercial Bank Total Loans and Leases," and below it, the chart showing M2 and M3 in free fall.

If the Ms continue on present trajectory, there is going to be a re-pricing of assets. Has to be. Too much now hinges on the assumption of continuous money infusion. Since it’s hard to see how the process can be gradual once underway, looks to me like we’re setting up for a 1987 type event --- a lot of re-pricing in a big hurry.

I have long believed (with Fleck among others) that “in a social democracy all roads lead to inflation,” but now find my beliefs assailed with doubt.

Some say the world will end with inflationary fire;
Some say with deflationary ice.

I’m coming around to the notion that ice is in our future, at least for a while. My change in thinking has led to a change in portfolio allocations --- am now over 50% cash, with the rest in gold and energy shares. Not sure this is the best approach, but am uncomfortable with, and not smart enough for, complex strategies. Just want to make sure I have a few chips at hand to get back into the game after the re-pricing event.

Of course,my belief in the Market Gods remains unshaken. And you know about them. They love for us to think we have things figured out -- makes possible some of their most hilarious moments.
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