Posted on 11/05/2009 7:31:49 PM PST by JustTheTruth
{snip ...] "Since interest rates are zero, you can borrow dollars at no cost at all and use them around the globe," says Jeffrey Kleintop, chief market strategist of LPL Financial, a privately held brokerage firm based in Boston. "For example," explains Kleintop, you can borrow dollars at zero, and invest in Brazilian bonds yielding 5.2%. As the real (Brazil's currency) has risen 26% against the dollar so far in 2009, such a carry trade would have earned 31%, or double the loss of value in the dollar.
Gold and oil, especially, have an inverse relationship to the dollar, underscores Frank Holmes, CEO and chief investment officer of U.S. Global Investors ( GROW - news - people ), a mutual fund empire headquartered in San Antonio, Texas, that focuses on hard assets. "When gold is up, the dollar tends to be down, and vice versa," says Holmes. "Looking at weekly data going back 20 years, this relationship occurs nearly 70% of the time."
(Excerpt) Read more at forbes.com ...
Meanwhile big international financial interests/players can scam this game legally while taking advantage of the government-sponsored efforts to re-inflate the nation's financial bubble through artificially low interest rates. It is an "insider's game," and the big players are playing to win - and are doing so at the expense of savers, small investors, and other "rubes" who work for a living and pay taxes in America.
Thank you (not!), Obama, Reid, Pelosi and all of the RINO's who have enabled and who sustain this fraudulent charade!!!
Yippee!! We’re RICH!!!/s;)
Maybe banks can borrow for 0% but we cant.
More than that, the CPI is a highly manipulated tool of the government to suit its agenda at any given time. The CPI is a huge, deliberately manufactured lie.
Lies
Damn lies
Statistics (especially government statistics)
Half the articles I read say fear inflation. The other half say fear deflation. Flip a coin, dude....flip a coin.
Yeah, I’m sure anyone trying to sell a house right now is thrilled about the incredible profit they are making with the appreciated asset value.
Honestly, I think we are headed for a unique economic situation of a combination of both deflation and inflation.
The dollar will inflate when the velocity picks up. This will reduce its buying power as it depreciates.
Income will deflate. Assets will deflate.
But the cost of the necessities will inflate.
We’re going to get burned on both ends, just as the central bankers want it.
You are unintentionally making my point (that people are missing what's happening to the value of their money, savings, assets) ...
The dollar has lost more than 15% of its value in the last six months - and yet - since the CPI has hardly changed, people do not realize that their dollar-denominated assets have lost incredible value in such a short period of time, and will continue to lose value in the future under Obamanomics.
The fact that we are not seeing local, dollar prices rise misses the fact that - in a global economy - the dollar has truly already lost more than 15% in six months relative to other currencies. Prices will eventually show it - but perhaps not for a while since the world's production capacity is not fully utilized... Devaluation of the dollar IS inflation - even though it takes time to be apparent. Oil producers and product producers (China) are moving toward replacing the dollar as the currency of international trade... once that happens (and the dollar is no longer "the" primary currency for Central Bank reserves around the world), the dollar's fall will accelerate and local price inflation will be very evident.
It’s amazing the dollar is holding as well as it is. With zero percent borrowing from the fed the banks are free to do as they please. If they can only make one percent on any investment well then just borrow more. This free money for “banks” is just another phase of bailouts. The cure for the bubble crash is more bubbles. Everything invested in with this free money will naturally show inflation; oil, stocks, gold etc. Keep your eye on the ball, just a rumor of raising rated will be very deflationary, O.M.G. no more free money! Think about this. The money is free and the dollar still almost holds its ground.Look out below!
Which is why they all converted to banks before the bailouts came. Goldman, GMAC, Morgan Stanley, et. al.
Now I’m depressed.
You’re confusing deflation with disinflation, as the media does constantly. We have deflation counteracting hyperinflation, resulting in stagnation. Were it not for inflationary policies by the federal reserve and our budget deficit, we would be seeing disinflation, which would spur economic growth by making doig business cheaper, or at least greatly boosting buying power. Disinflation is good; it prevailed throughout the Industrial Revolution. Think about it: as manufacturing and service provision became easier, costs declined. Deflation is when buying power, not price, decreases. That’s what is bad.
Interesting. A money supply needs to grow (interest rates down) or shrink (interest rates up) to reflect the need for liquidity in the market at any given time. What we have are two distinct markets: the 'put food on the table' market, and the 'speculative' market.
When it comes to speculation, the government has to be out of it completely. Otherwise, bubbles will be created- followed by the subsequent pop that devastates local economies.
There are brand new homes in California that'll never be lived in. Had the funds used to speculate on homes been private and private only, certain brakes on investment behavior would have been mandatory and the effects of any bubble would have been minimized.
Speculators provide a necessary function in an economy and act to bring prices closer to market value on many commodities. They accept risks in pursuit of profit- sometimes winning, sometimes losing.
What we need to do is ensure no government funding for any sort of speculation takes place in our economy. Market economies are flawless in distributing resources most efficiently. Governments just get in the way, mess things up, and, cause some to demand 'more' government interference when things go wrong. Go figure.
Specifically, Im referring to an article by Nouriel Roubini in Forbes titled “Get Ready For ‘Stag-Deflation’”. He argues that asset prices (stocks, gold, oil, etc) are inflating now, but are creating a bubble and will trigger massive deflation when they inevitably bust.
My dilemma is that. I’m an engineer, not an economist. Logically, it makes sense to me that the Fed policies will cause massive inflation. Yet, its hard to dismiss these other articles either. At this point, all these scenarios have a ring of truth to them. So what to do? Buy stocks or gold? Hoard cash? Might as well decide by flipping a coin.
You’ve captured my reasoning on it. A few more thoughts...
This scenario is part of the plan of the original “globalists” dating back to the mid 19th century, which is, to destroy the middle class that American-style governance and the free-market capitalism created. They want a two-tier societal structure with the ruling elite at the top and everyone else (the serfs) terrified to try to change the system lest their food supply be cut off or the elite decide to liquidate large sectors of the population.
If you watch the moves of CONgress, you’ll see that not only are they controlled by our central bank (the Federal Reserve) who intentionally creates the liquid-cash system that you mentioned (that is, they intentionally create the boom-bust cycle because, since they create it, they profit during both the boom phase and the bust phase while all others are predominantly only fortunate enough to profit on one side of the cycle), but they are also actively supporting it.
When they talk about the need for increased regulation, it is always to the advantage of the mega-firms (Goldman-Sachs, JPM, etc.) and to the disadvantage to the rest of us who are just trying to hold on to some of our earnings.
The fact that the GSE mortgage entities have NOT stopped the subprime mortgage scam but have only switched from Foney and Frauddie to FHA is pretty good evidence that the goal is to continue to keep artificially inflated the housing bubble and, while doing that, for the government to continue to purchase residential real estate with taxpayer dollars. Another huge flag was the floating of the idea that people currently in homes who could not afford their mortgage maybe offered the ability to rent their home from the US government. Truly frightening.
Beck made a good point the other day and one I’d only lightly considered. He posited that one of the reasons for all this might be that, when the world drops the US dollar as the reserve currency and adopts a New World Order currency managed by a global, central bank, only those nations will be able to play the game who have some sort of assets or credit. We have no credit and can borrow no more. We have no manufacturing to offer as an asset. All that we have that we can use as collateral for a loan on the global currency will be real estate and our natural resources, perhaps an ancillary reason that we are not drilling our own oil, mining as much coal as we could, etc.
It isn’t actually holding its own.
Other nations, like India and China, are intentionally keeping their currencies down so that their exports are more affordable. This artificially props up our dollar but it does so in such a way that it actually harms you and me by driving up th cost of crude and everything that that cost touches.
And those nations are not “propping up” our dollar for our benefit. It is also to protect the investments they have in the US dollar until they can switch those investments to something of greater value (like India’s purchase of 200 tonnes of gold recently). This does not help us. It pushes us further up the mountain so that when they finally push us over the edge, we have farther to fall.
I think the answer is that it would have been wise to invest in solid stocks last April but that it is wise to dump them now. All indicators point to the markets being heavily manipulated, which means they have been artificially propped up to sucker investors in. That also means that, as in the past, the bubble will burst so that the mega-investors (Goldamn-Sachs, JMP, etc.) steal their money legally.
I’m no financial adviser, but I recommend precious metals (gold, silver, lead), food supply, water supply, medical supplies, and a bug-out destination, if possible.
Here’s an article on “renting from the government.”
http://www.freerepublic.com/focus/f-news/2379852/posts
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