David Stockman is a bit bewildered: <DS If the bond market goes into a dislocation, it will spread like a contagion to all of the other asset markets. There will be a massive selloff.
I think everything in the world is overvalued—stocks, bonds, commodities, currencies. Too much money printing and debt expansion drove the prices of all asset classes to artificial, non-economic levels. The danger to the world is not classic inflation or deflation of goods and services; it's a drastic downward re-pricing of inflated financial assets.>
So he is saying sell all those assets and hold US$.
Later in the article: <TGR: But if the government keeps printing money, cash will not be worth as much, either, right?
DS: No, I do not think we will have hyperinflation. I think the financial system will break down before it can even get started. Then the economy will go into paralysis until we find the courage, focus and resolution to do something about it. Instead of hyperinflation or deflation there will be a major financial dislocation, which means painful re-pricing of financial assets.
....
DS: My investing model is ABCD: Anything Bernanke Cannot Destroy: flashlight batteries, canned beans, bottled water, gold, a cabin in the mountains>
A "painful repricing of financial assets" means either inflation or deflation of them. It can't be both or neither.
Bottled water as an investment? He's crazy. Batteries? They don't store well. A cabin in the mountains won't be any more valuable than it was 100 years ago. Or maybe he simply means get some survival rations together.
That guy I met here in February [the American with the red convertible Mercedes, gold jewelry by the pound who was saying those same things to me during my "Occupy Coronation Park" effort] was on the same wavelength as David Stockman. But if he is still hiding in Coromandel with beans, bottled water, batteries and gold, he is about to experience some miserable NZ winter weather. I'm heading to Europe and sunshine with credit cards. Woohoo!!
40 years ago I had figured out the game having seen my hard-earned cash diminished by the depredations of the constant inflation. By the late 1970s they were going berserk. None of this is news. Big Ben will do as he has promised and as they all do all around the world all the time. They dilute and rob the people who work and save. They are doing it now and will do more of it. They will do as much as it takes. The politicians will do as Margaret Thatcher said socialists always do, which is run out of opm. People who learned to have a life of unearned leisure in the lap of luxury in the world's richest ever country will find they are competing with Made in China and no visible means of support. The USA is armed to the teeth. This should be interesting. By unearned leisure I include the legions of feather-bedded government "workers" and pensioners. They will find themselves repriced, not necessarily their advantage.
Mqurice |
