Inflation compounds on itself like a bad story. The opening is bad, the plot points are lackluster, it drivels along, and then at the end the whole story is in shambles. This is exactly how inflation will read on the pages of history.
The Federal Reserve was a bad idea. It was ill conceived to believe that a private cartel of bankers could every have the States best interest at hand. It was ill conceived to think that having a domestic fiat note would work and it was moronic to use fiat as an international standard that replaced money. This because not only would inflation wreck havoc on the cost of assets but because there would be a turning point when fiat goes up in smoke.
It could be that the point is looming near, or maybe it will be a year before fiat goes up in smoke. Either way, having a standard backed by nothing other than the promise to pay means there will be an end, and like a bad movie, people will want their money back.
Wednesday, November 28, 2012
Wednesday, November 14, 2012
The Great Wash
FInance has been a clusterfuck for a long time now. Every year an investment that was a great idea is suddenly the worst and vice versa. We had the dotcom bubble, then everyone decided to flip houses, and huge sums of money were lost. Now Americans are scared to make any investment. They are scared of inflation but don't want to buy stocks because of yearly budget crisis. They are scared of taxes and so after dividend paying stocks being the go to investment of the last year they are being sold but municipal bonds are in a bubble so don't buy those. Bonds are in a bubble so don't buy those either. Dollars aren't earning any interest at the bank so don't put your money there. Basically there is nothing for people to invest in anymore.
At least that is what the MSM would have you believe. The pundits and media have scared people because the system was created out of lies and sold to the highest bidders and the cat has been let out of the bag. But the one thing that is a good investment falls on deaf ears because of conditioning rhetoric.
Precious metals are discussed frequently on this blog so I will assume the reader understands the benefits. Instead I will use the rhetoric the MSM does. They don't pay interest, they just sit there and aren't productive, and they are volatile. Of course these are only some of the reasons to buy. Buy at an affordable price or make monthly purchases, there is no counter party risk, and what is interest other than a syphoning of funds.
The Central Bank policies and MSM have destroyed investments in a great wash of the last several decades and now Americans run around scared as cats losing their wealth behind every bush. The great wash will continue and soon the cats will either be broke or finally stop listening to the bells and whistles and make a good investment into real money.
At least that is what the MSM would have you believe. The pundits and media have scared people because the system was created out of lies and sold to the highest bidders and the cat has been let out of the bag. But the one thing that is a good investment falls on deaf ears because of conditioning rhetoric.
Precious metals are discussed frequently on this blog so I will assume the reader understands the benefits. Instead I will use the rhetoric the MSM does. They don't pay interest, they just sit there and aren't productive, and they are volatile. Of course these are only some of the reasons to buy. Buy at an affordable price or make monthly purchases, there is no counter party risk, and what is interest other than a syphoning of funds.
The Central Bank policies and MSM have destroyed investments in a great wash of the last several decades and now Americans run around scared as cats losing their wealth behind every bush. The great wash will continue and soon the cats will either be broke or finally stop listening to the bells and whistles and make a good investment into real money.
Wednesday, October 24, 2012
The Looming Shortages
One of the only things I have walked away from the study of economics with is the law of supply and demand. It may not be as cut and dry as the books teach, but the over all theory works to find an equalibrium concerning price.
This summer we have seen some very important goods fall prey to shortages of supply. The first was corn and other food staples. Because of this many farmers slaughtered their animals because feed was high priced. So soon we will see shortages of meat.
Another supply concern is that of precious metals. Platinum miners went on strike in South Africa and were followed by gold and silver miners. This will create a supply crunch down the road.
As for precious metals, investment demand has been quelled by paper products. This will not help industrial demand. If there is ever industrial shortages the price will rise. This is one reason rising investment demand may help create price appreciation - it could squeeze industrial demand.
Food products are not so easily created. People can eat less meat if the price rises too high, but since everyone eats the inflation will be obvious to the status quo. Precious metals can rise and not everyone cares. Many people think gold is a barbarious relic; they don't understand that it is being used to shore up Central Bank balance sheets across the world. They don't understand that in every cell phone there is fifty cents worth of silver. They don't understand there is platinum in every catalytic converter. They don't understand that gold is in every computer's mother board.
With rising costs due to monetary policy, with rising costs due to peak resources, a major supply crunch will throw a wrench into the system. I expect the above two examples (meat and metals) to do just that next year.
This summer we have seen some very important goods fall prey to shortages of supply. The first was corn and other food staples. Because of this many farmers slaughtered their animals because feed was high priced. So soon we will see shortages of meat.
Another supply concern is that of precious metals. Platinum miners went on strike in South Africa and were followed by gold and silver miners. This will create a supply crunch down the road.
As for precious metals, investment demand has been quelled by paper products. This will not help industrial demand. If there is ever industrial shortages the price will rise. This is one reason rising investment demand may help create price appreciation - it could squeeze industrial demand.
Food products are not so easily created. People can eat less meat if the price rises too high, but since everyone eats the inflation will be obvious to the status quo. Precious metals can rise and not everyone cares. Many people think gold is a barbarious relic; they don't understand that it is being used to shore up Central Bank balance sheets across the world. They don't understand that in every cell phone there is fifty cents worth of silver. They don't understand there is platinum in every catalytic converter. They don't understand that gold is in every computer's mother board.
With rising costs due to monetary policy, with rising costs due to peak resources, a major supply crunch will throw a wrench into the system. I expect the above two examples (meat and metals) to do just that next year.
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