About right now, I imagine 90% of our subscribers and most of the analysts in my building think I'm nuts. Truthfully... I feel a little bit like Chicken Little. I've been saying the risk of hyperinflation is a more serious threat to our wealth (and way of life) than a massive deflation. Meanwhile, just about every month it looks more and more like Europe's banking crisis will cause another round of serious deflation in the world's asset prices. I'm starting to look pretty foolish... I thought economic growth would be stronger than expected, not weaker. I thought job growth would be stronger than expected, not weaker. I thought yields on long-term Treasury bonds would move higher, not … [Read more...]
Global Inflation and Double-Dip Recession Prospects
By Martin Hutchinson, Contributing Editor, Money Morning Last week's stock-market meltdown was a worldwide affair, and was touched off by trader fears of a global "double-dip" recession. However, the truth is that the odds of a recessionary reprise are high in just a few countries - primarily those that have experienced excessive fiscal and monetary "stimulus," or that have real inflation problems. The rest of the world is recovering just fine. … [Read more...]
20 Questions with Robert Prechter: Signs Point to Deflation
June 30, 2010 Signs point to Deflation By Elliott Wave International The following article is an excerpt from Elliott Wave International’s free report, 20 Questions With Deflationist Robert Prechter. It has been adapted from Prechter’s June 19 appearance on Jim Puplava’s Financial Sense Newshour. Jim Puplava: Bob, I want to pick up from last September. Since then we've had several quarters of positive economic growth. Asset classes rose substantially, CPI turned positive, gold has hit a new record, oil is close to $80 a barrel. I guess a lot of our listeners would like to know, have these events altered your views on deflation? … [Read more...]
Gold – The Optimal Investment for Inflation and Deflation
History shows that gold is an excellent performer in both inflationary and deflationary economic scenarios. Author: Ronald Stoeferle Posted: Thursday , 24 Jun 2010 VIENNA (Erste Bank) - The central question of whether the next few years will be dominated by inflation or deflation still remains unanswered. In periods of inflation, tangible assets are the preferred asset class, whereas in times of deflation, cash is king. Gold is liquid, divisible, indestructible, and can be easily transported. It has a worldwide market and there is no default risk associated with it, which means it is cash of the highest quality. Therefore gold is the optimal investment both in deflation and … [Read more...]
The Primary Precondition of Deflation
By Robert Prechter, CMT Elliott Wave International The following was adapted from Bob Prechter’s 2002 New York Times and Amazon best seller, Conquer the Crash – You Can Survive and Prosper in a Deflationary Depression. Deflation requires a precondition: a major societal buildup in the extension of credit (and its flip side, the assumption of debt). Austrian economists Ludwig von Mises and Friedrich Hayek warned of the consequences of credit expansion, as have a handful of other economists, who today are mostly ignored. Bank credit and Elliott wave expert Hamilton Bolton, in a 1957 letter, summarized his observations this way: In reading a history of major depressions in the U.S. … [Read more...]
Which is Better: High or Low Inflation?
It would seem intuitively obvious that low inflation is good for consumers, because costs are not rising faster than their paychecks. The problem with high inflation is that even with "cost of living" increases there is a time lag between when the cost of goods increases and when you get your raise. But recently commentators have been saying that "Low inflation introduces uncertainty". This is nonsense. During the high inflation "Eighties" I remember commentators saying "High Inflation introduces uncertainty". This is not quite true either. The truth is that steady inflation, whatever its level, if it can be relied upon to remain steady, does not introduce uncertainty. Changing … [Read more...]
Deflation or Inflation – Which is it?
By Tim McMahon, Editor It seems the debate on whether we will be facing inflation or deflation is heating up. This week I received emails from two different subscribers insisting that I was wrong. Well that is always a possibility but we will see... The first letter I received was from Jeff L. it said, "Your current "Annual Inflation" chart, graph, and commentary are very helpful. Thanks very much. The data would appear to contradict a recent article on your own site predicting a long period of deflation." My response was, "Personally, I think we are in for inflation. Robert Prechter (who is much smarter than I am) believes it will be deflation. At this point we are on a “knife … [Read more...]
Gold… the Timeless Inflation Hedge
In the article Is Gold really a good Inflation Hedge? I said, Gold is actually a "crisis hedge." But here Jeff Clark tells us how gold can also be a store of wealth and a long term inflation hedge.~Tim McMahon, editor What Do You Have in Common with King Nebuchadnezzar? By Jeff Clark, Editor, Casey’s Gold & Resource Report “There’s no reason to invest in gold,” said the finance editor of a major newspaper interviewing me. “If gold goes up because of inflation, then so does everything else, so why buy it? It’s not really a good investment.” She was serious. Yes, she is a finance writer. And yes, it’s a newspaper you’ve heard of. I was so dumbfounded that I must have sounded … [Read more...]
Healthcare Is Killing America
by Bud Conrad, Editor, The Casey Report Healthcare is the biggest segment of our economy. In the debate over who should pay for what or, increasingly, for whom, most people don't stop to understand just how large a portion of our society's money is dedicated to healthcare. For some perspective, as a share of GDP, the U.S. spends about twice that of other advanced nations. This is an important reason why the U.S. is increasingly uncompetitive in global manufacturing. It is, for instance, the most important factor (besides poor management) that General Motors and Chrysler are going bankrupt. Going forward, the situation is guaranteed to get worse. The Obama administration is committed … [Read more...]
Inflation is Not Coming…It Has Arrived!
By Jon Herring Don’t be deluded into thinking that inflation “might be coming” in the future and that once you see the signs you can protect yourself. Inflation is already here. And if you wait too long to take precautions, this silent thief will most certainly steal your wealth and savings. You must act NOW if you wish to protect what you have worked so hard for. Take the right actions today, and you can not only insure your wealth against erosion by inflation… you can generate life-changing profits as well. First, it is important to have a proper understanding of inflation. Most people believe that the definition of inflation is rising prices. This is not true. The definition of … [Read more...]
