Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: Mike Johnston who wrote (72653)	12/22/2007 8:49:48 AM
From: westpacific	Read Replies (2) of 116555

Remember - hyperinflations can happen in a matter of just days! What I see is the first, declining asset prices (deflation) while we have inflation in consumer goods (inflation). Simply because there will be more and more dollars chasing fewer goods (products that cannot be created out of thin air, like fiat money) and deflation of asset prices as the consumer stops the buying binge (70% of GDP) leading to a decline of profits for many publicly traded firms. The key will be finding the stories not effected by this decline in spending........such as healthcare for example or defense related, perhaps energy (depending on oil and/or Nat Gas. price.) You have to search out and buy assets with clean balance sheets and business models that will continue to draw revenue via government spending. Even overseas investments that are more reliant on local markets to drive revenue. However, if this banking monster is even bigger then we think and the FED opens the printing press or this derivative monster implodes, we are DOA. If you are sitting in cash and a hyperinflation occurs, they happened in a matter of 3 days in Brazil, you will be wiped out. You must have your money protected at all times in some way, which means invested. Can you say tricky waters ahead! This means cash sitting in sweep accounts or in money market funds is history if this occurs. You must hold cash in another source at all times - ETFs may prove the answer. No doubt we are heading for some very scary times, indeed. While I do not see a hyperinflation in the US, it cannot be ruled out - once they take hold, the FED cannot stop it. China had a net negative number for 2007, as far as, net purchases of US Treasuries! I find this trend showing that the last buyer of Treasuries will have to be the FED itself. West

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