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Bernanke: "Yes, We Have No Inflation"

Thursday, February 3, 2011, 6:23 PM

In the recent article on the party in stocks, this was one of my concluding paragraphs:

The bottom line is that by the time the Fed becomes institutionally aware that inflation is raging across the globe - and I often wonder when they'll finally awake to the threat - it will be too late. Inflation will have the momentum, and it will take a vast overreaction on the part of the Fed to restrain it. They'll have to drain enormous amounts of liquidity and tolerate vastly higher interest rates to be able to do that, and I doubt they have the courage for such bold action. I think they will hesitate, equivocate, and ultimately be late.

Perhaps sensitive to the growing awareness of inflation across the world and the Fed's role in fostering it, Bernanke took the opportunity today, while at the National Press Club, to minimize any such concerns. This is really quite a disturbing mindset on display:

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Information Scouting Report: Vol 1 (2-2-11)

Wednesday, February 2, 2011, 6:45 PM

We received a lot of great feedback from the content survey, and one idea that popped back into our field of view was for me to provide additional commentary on the wide range of articles that I run across when I do my daily scouting.

Here are the most interesting articles I've run across the past few days and why they caught my eye:

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"Let Them Eat Cake"

Friday, January 28, 2011, 10:19 AM

There are great moments in history, critical turning points that seemingly hang upon a single phrase. In response to news that the peasants had no bread, Marie Antoinette allegedly said "Qu'ils mangent de la brioche." (A brioche is a luxury bread enriched with eggs and butter).

At the time of the French Revolution in the late 1700's, the staple food of the peasants was bread, which absorbed 50% of their income, in contrast to fuel, which consumed only 5%. The obliviousness and selfishness of the ruling class sparked the violence that led to its downfall.

Fast forward to today, where food and fuel consume up to 50% of the income of people in developing nations, such as Tunisia and Egypt, as well as China and India. In an increasing number of these places, violence is breaking out, as the modern-day peasants grow increasingly restive at the burden of merely trying to stay fed.

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Inflation Is So Much Worse Than We're Told (Full Report)

Tuesday, January 25, 2011, 11:02 AM

Inflation Is So Much Worse Than We're Told

Tuesday, January 25, 2011

Executive Summary

  • Why inflation is several percent higher than claimed
  • The criticality of correctly weighting the CPI & how the current methodology is flawed
    • Case study using healthcare, one of the largest victims of underweighting in today's CPI
  • Why the Fed (erroneously) sees deflation and is making dangerously-flawed policy decisions as a result
  • The 8-steps that will signal our progression into an inflation-induced financial crisis in the US
  • Recommendations for preserving the purchasing power of your assets 
Full Report (for enrolled members only)

Provides a much deeper dive into the CPI, its flawed methodology, the likely implications of understating inflation, and strategies for individual investors than available in the public-only article. If you are a looking to protect the purchasing power of your current wealth, it's important to understand the stealth tax your assets currently exposed to from the erroneously-low reported inflation rate.


The Week Ahead: More Inflation on the Way

Monday, January 24, 2011, 2:36 PM

I am putting the final touches on a new report today which reveals just how badly inflation is undercounted in the US. The bottom line is that with the rest of the world already reeling from and reacting to accelerating inflation, the game is much closer to an inflationary dénouement for the US than one might suspect by following the Fuzzy Number generator otherwise known as the Bureau of Labor Statistics (BLS).

The week ahead in the markets is simple enough to divine: more asset inflation, dead ahead.

That's the plan, and here's the thin-air money printing for the week that will provide the fuel for that plan:

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Interview with Jim Rogers: Why Inflation is Raging Worldwide And He's Shorting US Treasury Bonds

Saturday, January 22, 2011, 1:14 PM

"I see more inflation and more currency turmoil as we go forward. There are huge debt imbalances in the world. U.S. is the largest debtor nation in the world and all the assets are in Asia. The largest creditors in the world are China, Korea, Japan, Taiwan, Hong Kong, Singapore – this is where the assets are and the debts are in the West. Those imbalances have to be resolved. They frequently lead to more currency turmoil. We’ll see more inflation, we’ll see more governments fall. We just saw Tunisia fall – more are coming because the world is going to continue to have these problems, and especially inflation that is going to cause more social unrest."

So said investing legend Jim Rogers when he spoke recently with about the inflationary pressures rising dramatically around the globe, despite some governments' best efforts to downplay them. Jim shares his "outside in" perspective on US monetary and fiscal policy, and how international players find themselves forced to react. He sees a lot of fundamental imbalances that need to be corrected for, as well as shortages of almost everything developing. In his words, "It's going to be a real mess before it's over."

We're making this important interview available first to our enrolled members.

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Missing the Big Picture - Economists Risk Everything

Thursday, January 20, 2011, 6:04 PM

In a different time we could happily go about our lives, ignoring economists as largely irrelevant to our daily lives. That is no longer the case.

In helping to shape central bank policies, economists are performing one of the largest social and monetary experiments in all of history, and its outcome, good or bad, will shape all of our lives enormously over the coming years. In fact, this experiment is already well underway and yielding results. Perhaps not the desired results, but results nonetheless.

The biggest problem with most, but not all, economists is that their theories are founded on incorrect assumptions.

This biggest of them all is assuming that the economy has some sort of an 'equilibrium point,' a magic place where just the right number of monetary actions and policies will create high jobs, price stability, and economic growth.

Unfortunately, this is just completely the wrong way to look at things.

Niall Ferguson recently pointed this out and made a critically important point:

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Interview with Bill Fleckenstein (Part 2): Outlook for 2011

Tuesday, January 18, 2011, 10:07 PM

The second part of Chris' interview with Bill Fleckenstein is reserved below for you, our enrolled members.

If you've not yet listened to Part 1, click here to do so.

Part 2 of this interview delves into Bill's vision on where the Fed's money printing is leading: notably, to a currency and/or bond market crisis. 

He and Chris discuss the timing of how quickly such an event could play out, what advance signals to look for, and where investors can position themselves in advance. » Read more


Interview with Marc Faber (Part 2): Prognosis for 2011

Sunday, January 16, 2011, 6:53 PM

The second part of Chris' interview with Marc Faber is reserved below for you, our enrolled members.

If you've not yet listened to Part 1, click here to do so.

Part 2 of the interview takes a critical look at longstanding and widely-held assumptions that are dangerous to maintain in today's reality. America is due for a rude awakening as it increasingly realizes the rest of the world is less dependent upon it (and less respectful of it) than it thinks. Or that there's not enough global energy supply to keep historic growth trajectories continuing ad infinitum.

Marc discusses his vision for the most likely way in which the current economic situation will play out, plus his specific outlook for 2011 - including the investments he believes are best-suited to the future he sees. » Read more


How This Will All End

Wednesday, January 12, 2011, 10:52 PM

How This Will All End

Wednesday, January 12, 2011

Executive Summary

  • The inevitable market correction will be triggered by a forcing event, and which one is most likely
  • The US has too much debt
  • State bailouts signaled by Fed's denials?
  • "Not enough oil to repay the debt"
  • Why the cost of debt service will drown us, even if interest rates remain low
  • Bond market will lead the way
  • The key signs to watch for that will signal the endgame is playing out
  • Recommended investment classes for preserving wealth 

Part I

If you have not yet read Part I of this report, please click here to read it first.

Part II - How This Will All End

In Part I of this report, I laid out my reasoning for why the game has managed to continue on as long as it has. Where a massive financial dislocation should have happened by now, in practice the impacts have been relatively minor compared to what many people had expected to happen. 

But we cannot escape the fact that entirely too many debts and liabilities exist to pay off in current dollars. Either those debts will have to be defaulted upon, or they will have to be inflated away.

Even more important than the question of which one it will be is the question of when. That's what we will explore here.