Boy, could we agree any more? Sell US stocks, get out of dollars, and get ready for inflation. Great write-up on how GM is facing the exact same problems as the US in total, ended by this summary:
(Wonk extra credit for someone who can tell us about the little button I pictured... )
Investors, therefore, should factor in an increasing propensity for higher inflation in future years as debt principal is eroded much like the shaved edges of a Roman coin. Higher taxes, as well, are just around the corner. Finally, currency devaluation effected through a low Fed Funds policy vs. competitor nations and/or global policy coordination should apply the coup de grace for foreign holders of U.S. liabilities.
Chinese, Japanese, OPEC, and other substantive holders of U.S. Treasuries will have two ways to lose in future years: they will watch U.S. inflation erode their principal and on top of that the real dollar value of their global purchasing power will decline as the dollar sinks. Actually, the same applies to U.S. citizens although the decline in global purchasing power can be masked by domestic asset appreciation in the short-term (houses, stocks).
Higher inflation, higher personal and corporate taxes, and a lower dollar point U.S. and global investors away from U.S. assets and toward more competitive economies less burdened by health and pension liabilities – those personified by higher savings rates and investment as a percentage of GDP.
Need I say more than to sell U.S. assets and buy Asian ones denominated in their local currencies; or if necessary to hire a global asset manager with sufficient flexibility and proper foresight to thrive in an increasing difficult investment environment?
May 08, 2006
Wonk Alert: PIMCO's Bill Gross lays it out
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13 comments:
So where do I put my money? I have stock brokerage account. I'd like to by Swiss Franc denominated bonds. I don't even know if they are issued, hard to buy.
Gold, I'm not sure if that would do well in a deep recession, even if there were inflation. It's had a heck of a run.
Oil should come down in a deep US recession.
Democrats supporting Gerald Ford's "Whip Inflation Now" program. My favorite memory was of the automakers responding to Nixon's price freeze by rebadging thir models and thus qualifying them as new and not subject to past price restrictions.
"Whip Inflation Now" Still waiting for the Fed to get around to that one. My $ doesn't go as far as it did even in the heady days of '70s stagflation.
I remember the size of food portions shrinking dramatically during the wage/price freeze, and then filling your soft drink slam-full of ice, with little soda in it. I was a kid and that was about the limit of my exposure to the economy.
Nice of them to squeeze more profits out of the consumer, even when everyone was in the same price and wage-fixed environment.
Stock are at a six year high.......put money in stocks this year....every year and you will come out in the LONG run.
if you take into acocunt price of energy, medical, food, ccommodities, other expenses, inflation will be higher than 3%.
"Reality break:
Annual inflation is running about 3.5% right now."
uknow - if you truly believe that, then I have some land in florida to sell you
Inflation is running rampant. The government number is a lie.
But then again, you probably believe what fox news tell you to, eh?
Boy, some people just didn't get the "questioning gene" - they like to be told what to believe, then they believe it.
Inflation as calculated by the gubmint is a joke. The CPI is grossly underestimating the inflation rate.
As for dollars going further.. At least in the 70's peoples wages were somewhat keeping up with the inflation rate.
"Reality break:
Annual inflation is running about 3.5% right now.
Annual inflation in the 1970s exceeded 10%.
Remember that exaggeration only hurts your credibility."
Either I didn't make myself clear or you deliberately chose to misunderstand.
In the 1970s I could buy a gallon of gas for less than 50 cents, and a cheeseburger for 29 cents. A paperback book cost fifty cents.
It's quite safe to say that the fed has *not* 'whipped' inflation. They are the ones who create money in excess of GDP growth, and monetary inflation is what we are talking about.
Rising prices (particularly in commodities) are merely a reflection of the explosion of the money supply.
Speaking of credibility, where does yours come from anyway?
How credible is a cartoon anyway?
uknowwhoiyam
True story you are living in the twilight zone, one just has to walk into your local Home Improvment store and inflation will wack you up-side your head.
3.5% you must have read that on fox...its more like 10% and the cost of food & clothing forget it...so with those stripped out of the formula..sure life is great for those who dont have to eat.or dress. sheesh!
I was informed by a Dr. R at the Bureau of Labor Statistics (CPI producers) that the CPI is a consumer price index and not a cost of living index. I'm not at all sure what this is supposed to mean but it is the semi-official response to the obvious - that the CPI greatly understates inflation as experienced by the average worker bee.
I have an index that should be tracked : The ATG index = Alcohol, Tobacco and Gasoline. That's what counts :-)
I could care less about a paperback book. Who has time to read a whole book when you work 60 hours a week, and Barnes & Noble will let you skim their copy for free?
I have been following a site now for almost 2 years and I have found it to be both reliable and profitable. They post daily and their stock trades have been beating
the indexes easily.
Take a look at Wallstreetwinnersonline.com
RickJ
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