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Strategies & Market Trends : US Inflation and What To Do About It -- Ignore unavailable to you. Want to Upgrade?

To: Archie Meeties who wrote (14)	4/27/2010 1:19:38 PM
From: Eric	Respond to of 1504

Archie I just happen to agree with you. IMHO inflation will be tame for at least another year, possibly longer. We need employment to come back to some degree, here and in Europe. The euro zone has a lot of work to get the southern contingent in order (if at all) which should continue to be a drag there. I am worried about China though.. Their real estate market is getting too hot. Eric

To: Archie Meeties who wrote (14)	4/27/2010 4:05:03 PM
From: RetiredNow	Read Replies (1) \| Respond to of 1504

That's what is very interesting to me. Lot's of economists are currently saying that inflation will be tame for the next couple of years. But how in the world can that be? Here's why I think they are misreading the situation: 1) Prices are rising: I routinely read articles by US manufacturers who are reporting that the inputs to their processes are getting more expensive. 2) Debt and deficits are rising: Our government has increased the national debt from $5T to $13T in 1.5 years and printed money along the way at an unprecedented rate. Deficits go out as far as the eye can see. 3) Leading indicators are rising: ECRI's Future Inflation Gauge continues to tick up inexorably. It isn't flashing red yet, but the trend is undeniably up 102 for Mar'10 up from 99 for Feb'10 and up from 80 a year ago): businesscycle.com 4) Easy money policy continues: The US Fed has kept rates at near zero for a prolonged period and still has no plans to raise it. The odds of them overshooting is high considering that unemployment is so high and they are likely to focus on bringing unemployment down before they worry about inflation. By the time they make progress, it will be too late to put a lid on inflation without a lot of pain. 5) Free markets are signaling inflation: Yields on long bonds are already turning upwards based on market pressures. So the market is already telling us that inflation pressure exists. minyanville.com So my guess is that inflation is coming and we may have to have another Volcker type period of high rates to squelch it back down to acceptable levels. Bernanke is an easy money Fed with no spine to do what Volcker did. So he'll move to late and won't move hard enough when he realizes he has to, which means inflation will get out of control. Just my two cents.

To: Archie Meeties who wrote (14)	4/27/2010 9:27:56 PM
From: John Vosilla	Read Replies (2) \| Respond to of 1504

Hard to beat the compound equity from leveraged fixed rate cash flowing real estate in worst hit still fast growing markets as you well know. I'm still thinking we are 2-4 years away as we have to get through another wave or two of distressed asset sales in the states, several more crisis' worldwide including several bursting of housing bubbles in fast growing far east and south america, chronic high unemployment, continued deleveraging of excess debt plus the constraining factors in a new age order of high productivity gains, globalization and instantaneous information courtesy of the internet all of which were not present in the 1970's + anything else I missed that deflationary king Mish points out on his blogs... One thing I could never get an answer to was why interest rates remained so low after WWII till the late 1960's even though we had record total debt to GDP well above even today, inflation remained high and the all pent up demand coming out of 15 years of hell plus the baby boom as well as rebuilding of Europe and Japan.