If you look at this chart, you’ll notice that during dollar rallies where the dollar (the pink line) showed signs of strength and recovery, the Big Boyz actually INCREASED their positions betting AGAINST the U.S. Dollar (blue line). Basically, the insiders are showing us that they know that the dollar’s demise is coming soon and that any rallies the dollar can muster should be used to increase their leveraged bets against it. But Wall Street in conjunction with CNBC, MSNBC, and all of them would never broadcast this inconvenient truth, would they?
So if you could piece together the puzzle and realize that all life necessities like food and energy will become more expensive in terms of U.S. Dollars, you would stock up on certain important foods and fuels while it was cheap to do so, right?
.jpg){kind=small}
That's Bro'. Keep telling us the truth.
You should see my food pantry. I told my wife the very same thing and added: if we have the money now to buy 6 months or a year's worth of food, let's do it. For in 6 months, the price will double, at least and we will have saved money.
This, on top of my garden (and my three used pieces of gutter that will become my herb garden and the PVC pipe/plastic sheeting that is to make my greenhouse).
People better get ready. And even if this is a blip, you have lost nothing. Just eat the shit.
But this ain't no blip and my post at my place this morning my work along side this one, in a way.
Should have said, Thank's Bro':. Duh
Money is a supply and demand function, and short-term market fluctuations in the price of the dollar relative to other currencies has little to say about the long-term strength of the dollar as a currency. What you appear to be stating is that we are going to have inflation in the long term. And that is true. On the other hand, in the long term, we are all dead.
The current situation we have in the USA today is that we lost $6 *TRILLION* in asset values over the past three years, but the Federal Reserve has recapitalized by only $2 trillion in printing. In short, the current risk is deflation, which has not occurred only because demand has collapsed by $4 trillion also, thereby matching demand with supply of money.
In short, the fact that there are short-term fluctuations in the price of the dollar around a mean due to market imperfections is meaningless. You do, however, have one thing right: what has value is what you can buy with money, not money itself. Money itself is just pieces of colored toilet paper with pictures of dead people on it, with no intrinsic value. Putting your money to work buying actual assets is always better than stuffing money under your mattress, with the slight exception that if we actually *do* slide into deflation, it may be a good short-term strategy to do a bit of mattress-stuffing.
As for the predictive value of markets, these are the same morons who were trading CDO's in 2006 and who said "housing prices never go down" when peddling their bundled liar loans to investors as "AAA" grade investments. "The market" eventually trends towards a mean that is what an asset is actually worth -- see the market for CDO's as an example (the market value of which is, err, $0, right now) -- but short-term excursions often occur which take asset values *way* out of whack compared to the fundamentals. I suggest that you look at the fundamentals, not at short-term market excursions, as your strategy. That's what I did in 2004 when it became clear to me that the market fundamentals would not support housing prices at the level they were reaching, i.e., that we were in a bubble and it was going to pop. I knew this THREE YEARS before the rest of the market apparently did because I looked at the fundamentals -- asset values relative to income, the quality of the loans being issued, etc. -- rather than allow myself to be distracted by flashy short-term fluctuations. Thus I lost $0 to the housing crash -- something *not* true of most of those who listened to the "housing never goes down in price!" morons.
JAY: Please send me a copy of your post on the naked anti-dollar positions table of big banks. Either here or on facebook.
Thanks, buddy
Thanks BADTUX for leaving a comment!
I agree I usually look at the fundamentals and that's why I can see inflation except I see it occurring NOW and much faster during the next 3 years.
Watching short term fluctuations is NOT the way to judge a market especially the currency markets if the aim is to see long term. I agree. You'll definitely see that I usually DON'T write about these types of day to day fluctuations and I usually stick to looking down the road.
I don't see deflation in anything except unnecessary consumer items I define as things that don't provide nutrition and don't provide fuel/energy.
Bernanke has made it clear that the Great Depression will not be repeated and basically sworn to prevent a deflationary collapse... So the fed will do whatever it can to ensure hyperinflation.
B-Man what foods should I focus on stocking FIRST. I have an idea but wanna see if i'm right.
The basics depend upon how you live and your storage capacity.
No brainers are rice and beans. Wheat (as in the video you shared with me) is good if you plan to make your own bread, cereal, etc.
I have enough canned foods, to last at least 6 months (and ready to get more). Stuff with low sugar and salt content is best (and simply look at the expiration date and I found stuff easily 2-3 years out). Soups (low sodium) are always good.
Like I said before, to me, I have the money now and as the prices continue to go up, I am saving money in the long run by buying now. Gonna eat it anyway.
A weird investment, but in 12 months, I doubt the pricing will look anything near the same or if it does, the dollar is so devalued that the same thing occurs.
Right now I have a feezer and as long as I can power it, I have last year's garden crop, fish and meat in the freezer (but I can catch or kill either of these as needed).
Power is the missing quotient in which they still own me.
I have all my garden seeds, fertilizers, etc ready. Gas for the tiller.
Jay, there's currently two problems you're overlooking. Look at the Fed's last flow of funds report and its monthly balance sheets for the past year. Those will tell you what the real fundamentals are regarding the money supply.
The first problem you're overlooking if you look at the Fed's balance sheet for the past year is that Bernanke quit printing in March 2009. Since then he has merely shifted the Fed's balance sheet around -- for example, recently he has been selling Treasuries (i.e., UN-printing money) then using that to buy Fannie/Freddie MBS's (mortgage-backed securities).
The second problem you're overlooking, a problem you can validate for yourself from the flow of funds data, is WHY Bernanke quit printing: the zero bounds problem. Check out Bernanke's speech to the New York Fed in March of last year for the details, but basically what Bernanke found was that every dollar he printed was just flowing around in a circle and ending right back at the Federal Reserve as deposits at member banks, rather than staying out in the economy and actually facilitating the flow of goods, which is what money is supposed to be used for (having money is a *lot* more efficient than barter). This is the exact same thing that happened during the Great Depression, for the exact same reason -- member banks are scared that they're going to get a bank run against them, and instead of lending the money, they're shipping it back to the Fed vaults to shore up their reserves, thereby basically shoving it under a (virtual) mattress and rendering it of $0 value insofar as ability to cause inflation (the inflation calculation basically boils down to MV, i.e., money mass times velocity, and when V, the velocity part, is zero, that gives you $0 inflation caused by that money).
In short, you're predicating your actions on false assumptions here. The data simply does not support the notion of hyperinflation anytime soon. Bernanke only printed $2 trillion after $6 trillion in effective money disappeared from the economy, and if you look at the flow of funds data, only $700 billion of that money has since flowed into the economy -- the rest is still in the Fed's vaults, except put there as banking reserves by banks.
In short, a) Bernanke would somehow have to print $5.3 trillion dollars within the next two months to get *any* inflation, and there's no way for him to do that -- there are insufficient assets for him to buy with freshly-printed money coming onto the market within the next two months for him to print money that fast, and b) Bernanke would somehow have to repeal the zero bounds problem, which is a problem we studied greatly during the Great Depression and during Japan's Lost Decade and in neither case did we ever find a solution that allowed simply printing money to cause inflation once you hit the zero bounds. Instead, it simply does one round trip through the economy and ends up right back in the central bank's vaults.
In conclusion, the flow of funds and Fed balance sheet data simply doesn't support hyperinflation anytime in the near future. We still have that $5.3 trillion dollar hole in the economy caused by the asset value collapse, and Japan printed four times as much money relative to the size of their economy after their asset value collapse in the 1990's -- and *still* ended up in deflation, because of the zero bounds problem.
- Badtux the Numbers Penguin
Ok I understand that but look at California on the brink of default. They're gonna need a bailout. Almost all the other states are going in the same direction.
Inflation is clearly hear in food and fuel costs...
People around the world are focusing on EU defaults when Cali has a GDP larger than the main EU states on the brink.
The California default event is actually going to be a *deflationary* event, because it basically means a collapse in government spending in California, resulting in more people out of work, less economic activity, more people stashing money under their mattresses (or into bank accounts at banks that are stashing money under the Fed's virtual mattress because they fear a bank run or FDIC takeover, same difference), less money actually circulating in the economy and doing what money is supposed to do.
So, if California gets a bailout, will that be an inflationary event? Well... no. The reason California needs a bailout is because people are putting money under (virtual) mattresses rather than spending it and creating income for California as sales taxes and income taxes -- remember, only money that is actually circulating can be "seen" by the economy, money under (virtual) mattresses might as well not exist as far as its contribution to economic activity is concerned. A bailout will be funded by selling U.S. Treasuries... which right now are a favorite security for people who would otherwise stash money under mattresses (thus the 0% interest rate on short-term Treasuries). In other words, California will be bailed out with money that would otherwise become mattress money, and thus be a neutral event inflation-wise.
Yes, things start getting *weird* at the zero bounds, things don't act the way you'd expect. That was a critical lesson we learned during the Great Depression -- a critical lesson that, alas, appears to have been forgotten by today's policy makers.
You mention asset inflation in the value of oil and its ripple effect in food prices (modern agriculture is basically a way of turning oil into food). That is a case of an excess of investment funds creating a short-term bubble in an asset price, and is no more a sign of overall inflation than the 20% rise in housing prices in 2005 was. The reason that Treasuries are at 0% is that investors see a shortage of worthwhile investment opportunities for their money given that consumption has collapsed and thus nobody needs to expand. One result of that collapse of worthwhile investment opportunities is that investors are driving up the prices of "solid investments" like oil or Treasuries as they look for places to park their money while waiting for better opportunities. This event is inflation-neutral insofar as the economy as a whole is concerned -- it's a shifting of a volume of money from one investment opportunity (business formation and expansion) to another investment opportunity (oil), not a change in the underlying fundamentals of money volume and overall inflation.
In short: The fundamentals do not support the notion that there is overall inflation in the economy or any chance of such, despite localized inflation in certain asset values.