TPS Posted October 18, 2010 Share Posted October 18, 2010 Editorial in the FT today: FT.com Beware of bubbles. Tulips, the dotcom boom and pre-credit crunch real estate have a lot in common; they are assets that were in vogue, became overbought and eventually fell to earth. And now it’s gold And a letter in response to the creation of ETC's for commodities, which essentially expresses my view on the role of speculators and speculation: Commodity speculation Link to comment Share on other sites More sharing options...
Peace Posted October 18, 2010 Share Posted October 18, 2010 Incoming! Link to comment Share on other sites More sharing options...
TPS Posted October 18, 2010 Author Share Posted October 18, 2010 Incoming! Magox...errr...Schiff responds.. Schiff, It's not a bubble Link to comment Share on other sites More sharing options...
Booster4324 Posted October 18, 2010 Share Posted October 18, 2010 Magox...errr...Schiff responds.. Schiff, It's not a bubble Schiff not only recommends buying the psychical metal, his portfolio is heavily weighted with gold mining stocks. Hey, if he has a bunch of gold, I am inclined to trust him... Link to comment Share on other sites More sharing options...
Peace Posted October 18, 2010 Share Posted October 18, 2010 Magox...errr...Schiff responds.. Schiff, It's not a bubble Schiff not only recommends buying the psychical metal, his portfolio is heavily weighted with gold mining stocks. The gold is all in his mind, just like my 40 billion. Link to comment Share on other sites More sharing options...
/dev/null Posted October 18, 2010 Share Posted October 18, 2010 Murphy's Golden Rule: He who has the gold makes the rules Link to comment Share on other sites More sharing options...
Peace Posted October 20, 2010 Share Posted October 20, 2010 Looking at the investment landscape, gold still looks pretty solid. A helluva lot better than anything in dollars. Link to comment Share on other sites More sharing options...
BillsFanNC Posted October 20, 2010 Share Posted October 20, 2010 A great read here Link to comment Share on other sites More sharing options...
Magox Posted October 20, 2010 Share Posted October 20, 2010 (edited) A great read here I follow Edward Chancellor, he wrote a great piece recently regarding Sovereign Debt and its risks and how they are formed called Reflections on the Sovereign Debt Crisis partially based on a study done by Reinhard and Rogoff, two very intelligent men. It's not a long read, appoximately 10 pages, very fascinating and informative if you are into these sort of things. Edited October 20, 2010 by Magox Link to comment Share on other sites More sharing options...
Clip Smith Posted October 20, 2010 Share Posted October 20, 2010 A great read here Or This... Link to comment Share on other sites More sharing options...
Magox Posted October 20, 2010 Share Posted October 20, 2010 Or This... This is a must read!! "Judefetzen" the Germans called it, which was there conspiracy theory they had that the Jews were trying to take down Germany through hyperinflation . Another good book to read is "Dying of Money: Lessons of the Great German and American Inflations". The crucial passage comes in Chapter 17 entitled "Velocity". Each big inflation -- whether the early 1920s in Germany, or the Korean and Vietnam wars in the US -- starts with a passive expansion of the quantity money. This sits inert for a surprisingly long time. Asset prices may go up, but latent price inflation is disguised. The effect is much like lighter fuel on a camp fire before the match is struck. Swiss endure safe-haven agony from euro flight People’s willingness to hold money can change suddenly for a "psychological and spontaneous reason" , causing a spike in the velocity of money. It can occur at lightning speed, over a few weeks. The shift invariably catches economists by surprise. They wait too long to drain the excess money. "Velocity took an almost right-angle turn upward in the summer of 1922," said Mr O Parsson. Reichsbank officials were baffled. They could not fathom why the German people had started to behave differently almost two years after the bank had already boosted the money supply. He contends that public patience snapped abruptly once people lost trust and began to "smell a government rat". Which is a concept that I have spoken about at length, in which some of us here are unable to grasp. Link to comment Share on other sites More sharing options...
Clip Smith Posted October 20, 2010 Share Posted October 20, 2010 This is a must read!! "Judefetzen" the Germans called it, which was there conspiracy theory they had that the Jews were trying to take down Germany through hyperinflation . Another good book to read is "Dying of Money: Lessons of the Great German and American Inflations". Which is a concept that I have spoken about at length, in which some of us here are unable to grasp. That quote looks a little familiar. They were caught off guard as the public snapped 2 years after a major monetary influx because they did not trust the government. I think what you see in gold is a short term top in a rational market. In a true bubble, like tech stocks in 1999 where mom and pop were going all in Fidelity growth Funds in their 401K, or in the real estate market 5 years ago where mom and pop were mortgaging multiple homes in hopes of flipping them, EVERYONE flocks to the hot area. I think educated investors are at least aware of precious metals at this time and may understand some of the basics about their role, but the only people I know who consider them important right now are eastern Europeans who have lived through similar periods of discord in their homeland, or those who have more money than I would know what to do with. When gold starts to move up in $50-100 intervals in a matter of days, or even hours, then the bubble watch is on. Even then it is tough to know just where a fair value will find itself. The fact that almost every major player in the world is looking to devalue their own leads me to believe they can fight each other all they want, but weakness will show up against gold and other hard goods. If at the Thanksgiving table, everyone is asking how many gold eagles you own, or how many shares of SLV are in your account, then we have a bubble forming. I can't see that right now. Maybe next year at this time. Link to comment Share on other sites More sharing options...
TPS Posted October 21, 2010 Author Share Posted October 21, 2010 (Velocity) Which is a concept that I have spoken about at length, in which some of us here are unable to grasp. Good thing you said "some of us here," because it's clear you really don't understand the concept. You tell "us" that it will change and bring inflation. Explain it then. And not in vague terms, but explicity how it will change and cause inflation. Link to comment Share on other sites More sharing options...
Magox Posted October 21, 2010 Share Posted October 21, 2010 Good thing you said "some of us here," because it's clear you really don't understand the concept. You tell "us" that it will change and bring inflation. Explain it then. And not in vague terms, but explicity how it will change and cause inflation. I already have numbskull, a bazillion times.... Link to comment Share on other sites More sharing options...
TPS Posted October 21, 2010 Author Share Posted October 21, 2010 I already have numbskull, a bazillion times.... If you really understood it, then you'd understand that when I say banks holding reserves on account at the FED, or money won't be created until banks start lending, or inflation won't kick in until the loans and spending lead to higher growth and lower unemployment, that's all related to velocity. So spare "us" the condescension. Link to comment Share on other sites More sharing options...
Magox Posted October 21, 2010 Share Posted October 21, 2010 If you really understood it, then you'd understand that when I say banks holding reserves on account at the FED, or money won't be created until banks start lending, or inflation won't kick in until the loans and spending lead to higher growth and lower unemployment, that's all related to velocity. So spare "us" the condescension. When I said "us" I meant you. And once again, you miss the mark. Although I do agree, that in inflation traditionally is closely linked to money lending, where your conventional line of thinking fails is that you dismiss the impact of the dollar and it's relation to inflation. The other area in which you are unable to grasp, which I've pointed out to you on a few occasions is that you look at everything from an isolated POV. You don't factor in global growth and it's impact on inflation. You also don't factor in that FED's QE policies, which filter funds into EM economies. We will see sluggish growth here in the U.S for quite some time, but we will see higher oil, food and commodity prices for two main reasons, one the value of the dollar and two growth from the EM markets, which of course has an inflationary impact. Once the U.S gets onto firmer footing and we start employing 250,000 workers a month on a consistent basis, bank lending will begin to free up and that's when the velocity of funds will come into play leading to much higher inflation than what we are seeing today. Link to comment Share on other sites More sharing options...
TPS Posted October 21, 2010 Author Share Posted October 21, 2010 When I said "us" I meant you. And once again, you miss the mark. Although I do agree, that in inflation traditionally is closely linked to money lending, where your conventional line of thinking fails is that you dismiss the impact of the dollar and it's relation to inflation. The other area in which you are unable to grasp, which I've pointed out to you on a few occasions is that you look at everything from an isolated POV. You don't factor in global growth and it's impact on inflation. You also don't factor in that FED's QE policies, which filter funds into EM economies. We will see sluggish growth here in the U.S for quite some time, but we will see higher oil, food and commodity prices for two main reasons, one the value of the dollar and two growth from the EM markets, which of course has an inflationary impact. Once the U.S gets onto firmer footing and we start employing 250,000 workers a month on a consistent basis, bank lending will begin to free up and that's when the velocity of funds will come into play leading to much higher inflation than what we are seeing today. Gee, really, you meant me? I never guessed. Maybe you don't read very carefully. You take my disagreement on what we think is driving commodity prices to mean I don't realize there is growth in emerging markets. NO. I simply think at the current time most of the price movements are being driven by speculation (which I think is the greatest. YOu think it's current global demand. We'll see. Your view is that this will lead to a supply-side inflation like the oil price hikes of the 1970s. Maybe. Again, we'll see... I understand how QE has impacted the $ carry trade and funds flowing to EMs. I understand how investors have tied commodity investments to movements in the $. I understand how the falling $ raises import prices. You seem to have a problem dealing with anyone who disagrees with you, as if there is only one possible outcome. The beauty of economics is that the future is uncertain, so we try to make our best guesses as to what that outcome will be. Most of our disagreements have been about inflation and how it occurs. OUr initial disagreements were about the possibility of high inflation, as you state above. I disagree that we will see "higher inflation," rather I beleive that we will again see a return to "inflation normal," the target the FED would like to maintain at 2%. Although, I have said it wouldn't surprise me if the FED let it rise a bit higher (3-4% range). However, the FED will not let it get out of control. So if by higher, you mean > 4%, then we disagree here too. Link to comment Share on other sites More sharing options...
Magox Posted October 27, 2010 Share Posted October 27, 2010 5-Year TIPS Sold At Negative Yield For First Time Link to comment Share on other sites More sharing options...
Clip Smith Posted October 27, 2010 Share Posted October 27, 2010 5-Year TIPS Sold At Negative Yield For First Time Your boy Bill Gross calling the treasury worse than a Ponzi Scheme today. Link to comment Share on other sites More sharing options...
Peace Posted October 27, 2010 Share Posted October 27, 2010 Your boy Bill Gross calling the treasury worse than a Ponzi Scheme today. It's hard to sometimes separate an honest criticism of the treasury from a sales pitch. It's certainly in Gross's interest to call it a Ponzi scheme. At the same time, he is not far off from wrong. Link to comment Share on other sites More sharing options...
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