WJH
Too many paper dollars are being created. Its resulting, currently, in financial assets inflation. Hence, the large bonuses for the Wall Street shills pushing financial assets. In other days it was brokers in real estate, art, breeding horses, collectible cars, etc., collecting the big money for shilling.
All inflation cycles end - the Dow will likely top once the retraction of Asian investment money has run its course. Financial assets deflation will set in with a vengence as the earnings hit (from Asian deflation) impacts the multi-nationals.
Will gold move up or will it be US Treasuries? Most Governments don't mine gold. If they do, its usually not in large quantity, so they must assure that the item they produce to finance their game - bonds - is preferred by investors. Hence, during a financial assets deflation Governments will drop interest rates sharply in order to a) produce increases in principal price for existing bonds, and, b) sharply reduce Government debt service costs at a time when tax receipts are likely to shrink sharply.
Capital gains potential in bonds will, for a time, create a huge investment demand for bonds. Its already visible. This will help governments pay the support costs for a populace out of work during an ensuing serious recession.
I'm buying bonds in the belief that after the deflation I will be able to sell the bonds higher, or let them mature, and buy real estate after its price is marked down sharply.
RH |
