The stock markets are volatile in a way they have not been in 75 years. Commodities are getting beaten up. World wide, we are experiencing an influx of liquidity into the economy that has never happened before. Leading the charge is the United States Treasury, pumping trillions of dollars a week into World banking institutions. They're buying all the bad bonds. They are insuring all deposits. Everybody wins. Nobody loses. We're in the money. All the while, they are still warning about a continuing lack of funds and the threat of deflation. They have taken leave of their senses.
The result of this huge, continuing influx of cash can only be an inflationary holocaust such as has never been seen before. Normally it takes at least eighteen months for inflation to show up in a system after the addition of new money. I don't know if it will take that long this time. I do know that when it comes, it will come like a tsunami, sweeping everything in its path away.
Do not be distracted by the pretty shells on the beach. Seek high ground.
1 comment:
It's the offshore dollars and bonds that worry me.
What if China presented her AAA rated Agency [Freddie and Fannie] bonds to the US Treasury for payoff at par? And she later exchanged these dollars she gets for euros or yen?
All these awash dollars will end up coming back to the US to buy goods or assets that can't be printed away.
Then we will have to deal with a whirlwind of inflation, if the new president Obama can handle it.
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