Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Technical Analyst: Gold Price Weakness Should Be Short Term - 24th May 19
Silver Price Looking Weaker than Gold - 24th May 19
Nigel Farage's Brexit Party EU Elections Seats Results Forecast - 24th May 19
Powerful Signal from Gold GDX - 24th May 19
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Decoding the Truth About Inflation

Economics / Inflation Feb 11, 2011 - 03:49 AM GMT

By: Richard_Daughty

Economics

Proving once again that investing in fixed-yield bonds when the foul, filthy Federal Reserve is creating so much money (so that their governments can deficit-spend it!) is a stupid, stupid, stupid idea because inflation will result, Agora Financial's 5-Minute Forecast newsletter reports that "Already since October, the rate on the 10-year has jumped from 2.4% to 3.6% - a 50% increase." Yikes!


So how much value does a bond paying 2.4% lose when yield rates climb to 3.6%? I don't know, nor do I care, since I currently have less than zero interest in bonds, which is a kind of hostile antipathy towards them, not unlike that time I took the beautiful Brenda out, and when I later tried to kiss her goodnight, she said, "If your lips even come close to me one more time, I am going to claw your eyes out!"

I changed my mind about Brenda, and, of course, I will eventually change my mind about bonds, too. This will be when interest rates are so high but inflation seems to be peaking, which means that I will get out of gold (which will theoretically be at its high price) and into bonds (which will be, theoretically, at their low prices).

But that ain't now! Indeed, the torrent of new money continues, as The Daily Bell newsletter reports, "Central banks have pumped something like US$20 to US$50 TRILLION into the world's economy to try to reinflate economies that collapsed in 2008."

The keen eyes and sharpened economic senses of Junior Mogambo Rangers (JMRs) everywhere surely detected the use of all-caps to spell "trillion," and which JMRs rightly suspect contains a secret code of some kind, perhaps relaying an important secret message to a shadowy group of insiders who have the code key, or a Secret Code Thingamabob (SCT) of some kind, such as a Mogambo Secret Decoder Ring (MSDR).

Of course, there is the obvious interpretation that the $50 trillion dollars is a Hell Of A Lot Of Money (HOALOM), being just short of equaling the GDP of the Entire Freaking World (EFW)!

Perhaps if we had a Mogambo Secret Decoder Ring (MSDR) to solve the mystery!

Alas, the idea for the stupid rings never really worked, it cost WAAAY too much, it was made of really cheap materials (I think some of it was radioactive), with cheap labor, it was a Big Pain In The Butt (BPITB) to encode secret messages, and then I forgot how, but which wasn't the point, anyway: the Mogambo Secret Decoder Ring (MSDR) was just another attempt to make a lot of money in a hurry so that I could have a lot of money to buy gold, silver and oil because the Federal Reserve was creating so much money!

Since I had no decoder ring, or code key, or any idea what I am talking about, I decided to just shut up, whereupon The Bell continued, "As this currency begins, finally, to circulate, price inflation must result, unless such money is quickly removed."

And since money is obviously NOT being removed, it is no surprise that price inflation is already here, as attested to by Bloomberg reporting that "World food prices rose to a record in January on higher dairy, sugar and cereal costs and probably will remain elevated. An index of 55 food commodities climbed 3.4% from December to 231 points, the seventh straight increase."

The biggest gainers were dairy prices, which were rising at 6.2%.

And The Economist magazine reports that inflation in the "food" category made prices rise by a staggering 44% in the last year, and "non-food agriculturals" rising by a whopping 100.6%! More than doubling! In One Freaking Year (OFY)!

Tyler Durden at zerohedge.com reports, "Corn spot up 7.76%, wheat up 5.63%, Rice up 10.08%, Hogs up 10.16%, Sugar up 5.64%, Orange Juice up 3.33%, and cotton... up 17.08%. That's in one month!" Mr. Durden's use of an exclamation point proves that he is concerned about inflation, and how fast prices are rising, too!

What does this all mean to me? It means I was abso-freaking-lutely right to be buying gold, silver and oil, because monetary inflation means price inflation, and that means gold, silver and oil go up in price! Whee! This investing stuff is easy!

Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron’s, The Daily Reckoning, and other fine publications.

Copyright © 2011 Daily Reckoning

© 2011 Copyright The Daily Reckoning - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules