tag:blogger.com,1999:blog-502356674750161309.post7005625588532128757..comments2008-12-27T22:18:18.788-08:00Eric deCarbonnelhttp://www.blogger.com/profile/08023745289801416061noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-502356674750161309.post-32321884654757598392008-12-27T22:18:00.000-08:002008-12-27T22:18:00.000-08:00Nice comment. I do have two points you should keep in mind.<BR/><BR/><B>"Mild hyperinflation" is impossible</B><BR/><BR/>If gold goes to 3-4000, it would suggest 3-400% inflations. Would you own treasuries in a nation experiencing that time of inflation? I wouldn't. Foreigners and domestic investors will sell off their holdings of US debt and flee the dollar, accelerating the currencies depreciation.<BR/><BR/>Basically the point I am trying to emphasize is that "mild hyperinflation" (3-400%) is impossible. Gold prices above 1000 will make investors nervous. Gold prices above 2000 will start a dollar panic, and all hell will break lose. So when gold does reach 3-4000, it will not stay there more than a week or two.<BR/><BR/><B>Intense hyperinflation will eventually drive up the value of all real assets</B><BR/><BR/>When the US starts experiencing Weimar republic level hyperinflation, with gold going to 1,000,000 and higher, the value of all real assets will rise. By real assets, I mean real estate, commodities, and even intellectual property. This will translate into much higher prices for a number of stocks, such as miners, oil producers, and software companies like Microsoft. So even if there is the possibility of the Dow falling to 3-4000, it is very dangerous to short the market right now.Eric deCarbonnelhttp://www.blogger.com/profile/08023745289801416061noreply@blogger.comtag:blogger.com,1999:blog-502356674750161309.post-18524284305045616782008-12-27T21:08:00.000-08:002008-12-27T21:08:00.000-08:00Well there you have it. The next shoe to drop will be States and Municipalities with commercial real estate staggering in as well. <BR/><BR/>So many fires to put out that 700B is just a 10 percent down payment. Cities, states, real estate developers, Big 3, more banks, probably the regionals this time, and most of all the unemployed.<BR/><BR/>You just got your glymps of hyperinflation. The catalyst will be all the money they throw out to desperate people who don't have jobs, who are angry and need bread and circus's. You want to see money velocity pick up? Put it in the average lame brain american consumers hands. <BR/><BR/>The deflationist have it right as far as ASSETS go. The Dow will go down, property will go down. Staples and commodities are going to go up AND emmerging markets are going to bounce back quicker than the G7 because they dont have the credit bubble to deal with. Decoupling is going to happen after they figure this thing out and re-establish a new trading block with unimpaired countries. I talked to a business man with coffee shops in Kenya. He said they barely felt any difference in business and he was suprised by the contrast with this country which seemed to be having a severe slow down, he attributed it to newspapers "doom and gloom", but I stated the point about more responsible lending practices and tighter credit controls which lit a light bulb.<BR/><BR/>"Hot money" sitting in bank vaults are going to bid up commodities again, this time with all that TARP cash as fuel.<BR/><BR/>I still see 15-20percent unemployment, Dow 3-4000 and gold at 3-4000. Gas will be about 12 bucks a gallon and price inflation will be at 15-20 percent and excelerating. It's going to be a difficult time. I heard one analyst say that by 2012 we'll be more worried about putting food on the table than buying christmas presents.Anonymousnoreply@blogger.com