From my view, there is a currently a deflationary bias in the economy not apparent to many consumers. I draw my opinion from my observations of bond, equities, metals and commodity markets. Am I wrong? It's certainly possible as I am not a expert economist but I don't think so.
I believe we'll only see a temporary suspension of overt QE replaced by covert QE through the reverse repo market or some other mechanisms before overt QE begins anew.
I was particularly surprised to read recent comments by Greenspan at the Council of Foreign Relations. Does he feel he can be more truthful now that he is no longer at the helm of the Fed? He stated "bond buying fell short of it's goal", "that bond buying is dead in the water", that efforts to boost it via bond buying "has not worked", it's effect on "boosting asset prices has been a great success", "he doesn't believe it is possible to end the Feds easy money policy in a trouble free manner" or that "now is a good time to put money in gold given it's value as a currency outside the policies conducted by governments." I am certainly interested in watching how sovereigns and the investment community react to his "advice" from a physical supply/demand metric as opposed to the managed paper price.
Ultimately, I don't think the Fed will be able to maintain it's goal of 2% inflation without manipulation of government economic indicators and more Management Of Economic Perspectives (MOPE).
I think the global economy is in shambles. Honest fundamentals, in large part no longer matter and global economies will only grow worse from here. There may be small pockets of exception but they will be a rarity and contain much counterparty risk.
I am beginning to agree with those that think the paper price of gold/silver may reach zero in the future. A false reflection of the physical metals intrinsic value as a currency, commodity and insurance. Only after this happens will their real value begin to be reflected. In the meantime, I plan to continue DCA at current and future lower prices until demand outstrips supply.
Interesting times as we watch how it all unwinds. Never before seen economic history in the making if you ask me.
Don't worry. Be happy.
I'm certain that's what many Romans and Germans of the Weimar Republic believed too. Just to name a few. It's always a slow burn till you get to the end of the fuse. "Never happens"? That would exclude most of history.
Thump...am I misunderstanding You? It appears to me you'd like to see inflation..? Because of your 2 year time frame I assume for political reasons?
Huh...
Falling fuel prices are a result of falling crude prices. Crude won't go lower than $75-80/barrel. If it does, the impact on fracking and drilling would be severe. The last thing you want to happen to the strongest segment of the domestic economy. I suspect that $80-85/barrel could be the short term range for sweet crude and a little lower for WTI. All depends on global economic growth or lack thereof, war and geo-political events, IMO.
In all fairness, I can't put the blame solely on Oboli. I'll lump 41, Slick Willy, 43 and all their congresses into the mix as well. Oboli obviously compounded and accelerated the problem.
It will be interesting to see how the banks will burn off the 2.7 trillion in excess reserves. Then what? Massive tax hikes, bail-ins of depositor accounts?
I agree w/ you SA. The house of cards could be propped up longer than any of us imagine. Many economists of the Austrian persuasion tell me it is a mathematical certainty. I tend to believe them. Few seem willing to bet on the timing.
I also pray for the best and for those that won't see what is potentially coming. Buckle up, it may be a bumpy ride.
When your cost of food, fuel and basic goods increase faster than incomes, us un-educated call that inflation. But rest assured, despite higher costs all-around it isn't actually "inflation". Just ask a liberal.
Bluetick's Link
Deflation could be worse."
You got me confused now... should I worry about inflation OR deflation? Both???
Worry, worry, worry... woe is us... ;)
