Tuesday, October 5, 2010

The Coming Inflation Tsunami?

Fed operators, Evans, Dudley, Sack and Bernanke, have all recently called for Fed easing on a grand scale.

These guys appear very serious about inflating. If this actually occurs, we will be in for the mother of all inflations. David Tepper will be right, buy everything (except bonds).

As indicated in his speech yesterday, Bernanke is very concerned about the financial structure of the economy at the federal, state and local levels. He may be trying to avoid the crisis by flooding the country with dollars, so that governments at all three levels will be able to pay off the debt with cheap dollars.


  1. Inflation (printing money) largely works if the public is unaware of the printing, and/or unaware of the consequences.

    Above is NOT the case today, & on the contrary, most know the ultimate outcome: deflation/depression, & thus more likely to take actions appropriate to the last chapter, not the early chapter, that Helicopter Ben desires.

  2. "buy everything (except bonds)"

    Yes, that's the one pervasive fallacy. The announcement of QE 1 was THE high in bonds for months. Inflation expectations will not suddenly not matter. No matter how much free money is given away, not everyone will simply front run the Fed, putting a bid on bonds. There are giant holders that are essentially "stuck long" and will become sellers at the margin on any strength, resulting in net decreases in price over time.

  3. The QE2 is getting ready to set sail.

    Thank you uncle Ben for making me at least nominally wealthy by doubling the dollar value of my gold investments. Let me tell you why I think you and your group of heretics are a joke. Back in early 2007 I had the fortune of listening to a guy from the Austrian School named Peter Schiff. I Hated him at first for being so negative, but for what ever reason I researched who he was and more importantly where he got his economic understanding from. What I read made sense to me and so in Aug 2007 I liquidated most of my stocks and started buying gold. In 2008 when the crash actually happened just as predicted by the Peter, I bought more gold and gold mining stocks, even though gold was crashing and the MSM were pointing out that Peter was wrong on gold. Well guess what, Peter was right--again! Maybe if you want to know what will happen next, you should read the EPJ, LRC and Mises websites.

    I sure hope that those of you that beleive in the Austrian School are using that knowledge to protect your wealth and maybe even make a little money to boot. Oh, and just to be clear I am also making money trading commodities, shorting equities in the financial sector, and am building quite a nice short against the long bond.