Investing in precious metals 101

revisiting which comes first: hyperinflation or deflation

Login or register to post comments Last Post 9511 reads   39 posts
Viewing 9 posts - 31 through 39 (of 39 total)
  • Thu, Feb 11, 2010 - 02:03pm

    #31
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1612

    count placeholder

    Who Will Fund Government Borrowing: This is who.

 

I’ve harped on this before.  As has been pointed out by Albert Edwards, corporate and personal borrowing are decreasing (read: collapsing) at rates high enough to fund the ever-increasing government deficits.  I know this cannot last forever, but for now, it puts a huge dent into the hyperinflationists arguments.  As long as there is capital just sitting there, it will go into US Treasury bonds simply because there is no other place for it to go.  In a related story, here we see there are $1.2 trillion just sitting in corporate coffers of SP 500 companies.  Gee, you think they’re going to put that in Greek bonds? Chinese ETFs?  PMs?  Ha!  I doubt Mr. S&P500 VP of Finance is going to risk his career or attempt to explain to his board any investment of otherwise cap-ex funds into anything other than US Treasuries. 

http://www.bloomberg.com/apps/news?pid=20601087&sid=aE6W8c9z9Bms&pos=6

 

  • Thu, Feb 11, 2010 - 02:47pm

    #32
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1612

    count placeholder

    Re: revisiting which comes first: hyperinflation or …

Zimbabwe: A Fresh Start

“Clearly Mugabe was responsible for the hyperinflation. The causes were those always present in these events. A weak economy, large government budget deficits, inability to borrow funds combined with the political decision not to cut Government spending. Governments are reluctant to lay off government employees, especially those related to the armed forces. The latter might invite a military coup. The only source of funding left is the creation of new money.”

http://www.kitco.com/ind/Field/nov112009.html

Sound familiar?

“I’m not trying to single you out Davos, but your the only “inflationist” in this conversation.”(sic)

BTW Jeff, I’m with Davos on inflation

  • Thu, Feb 11, 2010 - 03:06pm

    #33
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1612

    count placeholder

    Re: revisiting which comes first: hyperinflation or …

[quote=gregroberts]

“I’m not trying to single you out Davos, but your the only “inflationist” in this conversation.”(sic)

BTW Jeff, I’m with Davos on inflation

[/quote]

I realize that nearly everyone here is in the Inflationist Party, which is why “I am discounting the obvious and betting on the unexpected”. When I wrote that, Davos was the only representative of the Inflationist Party in the conversation.

  • Thu, Feb 11, 2010 - 03:13pm

    #34
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1612

    count placeholder

    Re: Who Will Fund Government Borrowing: This is who.

[quote=Farmer Brown]

 

I’ve harped on this before.  As has been pointed out by Albert Edwards, corporate and personal borrowing are decreasing (read: collapsing) at rates high enough to fund the ever-increasing government deficits.  I know this cannot last forever, but for now, it puts a huge dent into the hyperinflationists arguments.  As long as there is capital just sitting there, it will go into US Treasury bonds simply because there is no other place for it to go.  In a related story, here we see there are $1.2 trillion just sitting in corporate coffers of SP 500 companies.  Gee, you think they’re going to put that in Greek bonds? Chinese ETFs?  PMs?  Ha!  I doubt Mr. S&P500 VP of Finance is going to risk his career or attempt to explain to his board any investment of otherwise cap-ex funds into anything other than US Treasuries. 

http://www.bloomberg.com/apps/news?pid=20601087&sid=aE6W8c9z9Bms&pos=6

 

[/quote]FarmerBrown: You raise an excellent point my friend. Having said that I think we are going to see failures in the munies as municipalities tank. As those get down rated – despite what Turbo Timmy says – I think we are going to see problems in the big bond market. I may be wrong, but I really don’t think Gross et al are wrong. Take care 

  • Thu, Feb 11, 2010 - 03:48pm

    #35
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1612

    count placeholder

    Re: revisiting which comes first: hyperinflation or …

Faber’s Bold Prediction: Both The US And Europe Will Default On Their Debt

Tyler Durden's picture

Submitted by Tyler Durden on 02/10/2010 17:52 -0500

Picking up where he left off in his prior Bloomberg interview earlier this week, the author of the “Gloom, Boom and Doom Report” continues his bashing of the governments of all developed and overleveraged nations, which he claims will sooner or later default on their obligations. This could be the most scathing critique of the fiat-money system to date, which is the primary cause for the facility with which governments have accumulated untenable debt loads.

“In the developed world we have huge debt to GDP, in terms of government debt to GDP and unfunded liabilities that will come due, and these unfunded liabilities are so huge that eventually these governments will all have to print money before they default.”

Sure enough, CNBC, and especially Dennis Kneale, was not too happy with his assessment.

From another article

But today, dear reader, we would propose that the West, and the entire globe, is living through a fiat money collapse. Economies all over the world have been inflated to their fullest and people can buy no more useless gadgets and work at no more superfluous jobs. Too many useful endeavors have been marginalized and phony ones have been elevated. An implosion is taking place. The world is reverting to a kind of mathematical practicality. In America, car companies have shrunk because there are too many cars, and houses are not being built because there are too many houses. Banks are not doing deals because too many deals have been done. All that is working overtime are the printing presses. While the greenback is exceptionally at risk we would argue that the same thing is occurring, to a greater or lesser degree, in Europe, in Japan, and even in China – despite all the happy talk about the Chinese miracle. Here’s a famous investor on the subject of China:

Contrarian Investor Sees Economic Crash in China … James S. Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose stories were too good to be true. Now Mr. Chanos, a wealthy hedge fund investor, is working to bust the myth of the biggest conglomerate of all: China Inc. As most of the world bets on China to help lift the global economy out of recession, Mr. Chanos is warning that China’s hyper-stimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like “Dubai times 1,000 — or worse,” he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent. “Bubbles are best identified by credit excesses, not valuation excesses,” he said in a recent appearance on CNBC. “And there’s no bigger credit excess than in China.” (- New York Times)

http://www.thedailybell.com/800/Depression-2010-Western-Fiat-Money-Finished.html

  • Thu, Feb 11, 2010 - 04:38pm

    #36
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1612

    count placeholder

    Re: revisiting which comes first: hyperinflation or …

401K’s will fund it.  http://www.bloomberg.com/apps/news?pid=20601087&sid=aSn2_iDKbl1g&pos=4

 

  • Thu, Feb 11, 2010 - 04:47pm

    #37
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1612

    count placeholder

    Re: revisiting which comes first: hyperinflation or …

[quote=isjrb029]

401K’s will fund it.  http://www.bloomberg.com/apps/news?pid=20601087&sid=aSn2_iDKbl1g&pos=4

 

[/quote]DeepCaster pegged it a 5t source. But even so we now have Greece (I think our CB will have it’s hands in that bailout) and we have a 25 trillion dollar backstop for over the counter derivatives.

Nothing is going to fund this.

  • Thu, Feb 11, 2010 - 06:35pm

    #38
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1612

    count placeholder

    Re: revisiting which comes first: hyperinflation or …

Failed 30-Year Auction Closes Rough Week; Treasurys Fall

http://www.cnbc.com/id/35348388

  • Fri, Feb 12, 2010 - 08:57pm

    #39
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1612

    count placeholder

    Re: revisiting which comes first: hyperinflation or …

Since I’m not smart enough to figure out the inflation / deflation future, I have placed bets in both worlds.  Then again, maybe the extreme outcomes will not play out and something in between will.  That being said, Johnny Oxygen has brought up an isue that may well be more important than the I / D issue:

“I think maybe I see the coming problems in a broader spectrum that others may. I don’t see the coming crisis as just a monetary one. I think it will be an everything crisis: oil, food, war, power struggles, and the like. In that environment I see it very much as a dog eat dog proposition. I know many peple have invested in mining but what happens when an area that isn’t that stable to begin with (I’m thinking Africa) suddenly hold an extremely rare and sought after commodity like gold silver or copper? Don’t you think that will create regime change? And violent ones at that. How can you depend on your stock being honored or even acknowledged?

I think this holds true for other commodities and stocks that you can’t physically control. I don’t know much about Brazil but I can’t see it being immune from social unrest and over throw. This type of thinking always brings me back to the safety of hold physical PM’s.”

Nate

Viewing 9 posts - 31 through 39 (of 39 total)

Login or Register to post comments