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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (70127)	1/1/2011 9:48:04 AM
From: carranza2	2 Recommendations Read Replies (1) \| Respond to of 218050

Happy New Year, Jay, and to everyone here, too. Deflation kills demand, production falls, unemployment soars, tax revenues fall, the populace starves, businesses fail, creditors foreclose, etc. In a word, economic activity simply stops. The only ones who benefit are the wealthy, who use their resources to buy even more assets but at a lesser price. Dynasties get reinforced, not broken up or weakened. The danger is that a deflationary spiral could begin, with the fall in demand creating even more trouble in a vicious loop where things simply get worse and worse. I don't think there has ever been a true deflationary spiral. If we ever see one, expect Bernank to let loose his helicopters. In a word, the common man suffers enormously during deflation, which is a godsend to those with cash, i.e., the rich. Creditors foreclose, and assets can be bought for a song. The chances of a true deflation happening are very slim, IMO, and the chances of a deflationary spiral even less. Hyperinflation is more likely, not that it is very likely itself. I think we are going to see inflation, and lots of it in 2011. This is really the time to be in commodities. Gold, silver and copper should surge forward like they did last year. The Euro is in real trouble this year. Gold rose substantially more in terms of the Euro and the pound sterling than it did in terms of the USD. This is likely to continue for the Eurozone is screwed. Buying gold or silver with Euros might be a very profitable trade. I don't know about the USD if the Euro tanks. I somehow intuit that flight to USD safety might not be the same as in 2008, that the flight to safety might be to gold this time around. The US has its own problems, and we are not putting our house in order. Since 2008, we have taken no steps to right ourselves. If anything, we did the exact opposite of what should have been done. We shall see.