Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20
Silver's Massive Undervaluation Relative to Gold Makes It Irresistible - 14th May 20
Bitcoin Halving Passes with no Fanfare, but Smart Money is Accumulating - 14th May 20
Will Job Market from Hell Support Gold? - 14th May 20
The Tragedy Of Missed Covid-19 Opportunities - 14th May 20
Worst Jobs Report In US Economic History - And The Stock Market Continues To Rally - 14th May 20
NASDAQ Sets Up A Massive Head and Shoulders Pattern - 14th May 20
Perceiving Coronavirus as a Disruptive Technology - 13th May 20
Why Financial Trouble Brews on the "Home" Front - 13th May 20
Stock Market ‘Sentiment Event’ Rally Grinds On - 13th May 20
The Fed Now Owns All Markets - 13th May 20
Fruit Trees Gardening to Beat Coronavirus Blues - , Apple, Cherry, Kiwi, Pears, Plums, Grapes, Bananas May 2020 - 13th May 20
Gold Investors Shouldn’t Be Losing Focus - 12th May 20
S&P 500 Bulls Again At Resistance – Now What - 12th May 20
US Fourth Turning Accelerating Towards Debt Climax - 12th May 20
Gold in the year of the Coronavirus Pandemic - 12th May 20
Hi Ho Silver : Away! - 11th May 20
The Great Stock Market Disconnect - 11th May 20
The Big Move In Silver May Be Right Now - 11th May 20
Finding Winners in the Wreckage of the Coronavirus Economic Downturn - 11th May 20
Brave New Corona World – A heated Debate between Steven Pinker and Aldous Huxley - 11th May 20
Coronavirus Catastrophe Stock Market Implications - 10th May 20
US Stock Prices are Ignoring the Economic Meltdown, Wait for it… - 10th May 20
Forecasting Crude Oil: This Method Has Been the Undefeated Champion Since 1998 - 10th May 20
Coronapocalypse and Gold - How High Is Too High for the Yellow Metal? - 10th May 20
The Illusion of Owning Gold - 10th May 20 - Nick_Barisheff
The Financial Crisis Will Continue To Lurk Even If the Lockdown Gets Eased - 10th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Inflationary Understatement

Economics / Inflation Sep 21, 2010 - 10:45 AM GMT

By: Richard_Daughty

Economics

Best Financial Markets Analysis ArticleThe Market Oracle newsletter jumps into the inflation-deflation debate, and says, "Debt deleveraging deflation completely ignores the fact that we are NOT living in the 1930's, but in a globalised world economy that is seeing the convergence of real GDPs where the developing world is eating up the [world's] resources at a faster pace then the west is cutting back on consumption."


Something in my Puny Mogambo Brain (PMB) went, "Ding!" when I instantly recognized this as a classic case of the age-old supply/demand dynamic where price equilibrates demand with supply, in this case the increasing demand from the "developing world" is swamping demand from the "developed" world, meaning an increased demand, but with no mention of the physical supply of resources, which are hard to increase and are, in the short run at least, absolutely fixed.

So any increase in demand means pressure towards an increase in price.

As one would expect from the infallible demand/supply dynamic, when demand is going up when supply is not likewise going up, the market clears at higher prices, and Mr. Oracle seems to be in complete agreement with me on this, and says that increasing demand is "driving inflation higher whilst at the same time the west is engaged in competitive currency devaluations in an attempt to generate nominal GDP growth," which is where I paused, as I fully expected him to accurately finish the sentence with "which is going to destroy the buying power of every one of those stupid currencies, including the dollar, which the Federal Reserve has destroyed with their insane neo-Keynesian econometric stupidities and outright frauds to create suicidal amounts of money, meaning suicidal amounts of inflation will destroy the people!"

Alas, he did not summarize it that way. Instead, the Market Oracle wins this week's Mogambo Egon Spengler Prize (MESP), a coveted award named after the character played by Harold Ramis in the movie Ghostbusters who, when asked by the stupid little EPA investigator why the power to the containment grid should not be turned off, did not say, "Because it would release such unimaginable horrors that it would destroy us all in an unstoppable catastrophic disaster where the survivors would envy the dead, and would be unpaid slaves, cruelly treated with no salary, benefits or OSHA protections of any kind, toiling endlessly to please to a hideous demon that lives on the psychic energy of inflicting everlasting pain and suffering until the world is destroyed and every last one of us is dead after being painfully rendered asunder, tearing off your arms and legs, one after another, limb after limb!"

Instead, in a moment that will live forever as the Mogambo Egon Spengler Prize (MESP), Egon Spengler replied, deadpan, emotionless, looking right into the face of the EPA jerk, "Because it would be bad," which is, if you have seen Ghostbusters, probably the most gigantic understatement in the history of the world.

Likewise, Mr. Oracle wins the coveted "Egon Prize" by ending his sentence with "which has highly inflationary implications"!!

And with that kind of inflationary horror waiting to befall us, now revealed as chillingly foretold in a Hollywood movie, you know that I am going to advise you to put down that slice of cold pizza that you are eating before one of the kids can get at it, and buy, buy, buy gold, silver and oil stocks, which are guaranteed to go up in price when the government is so bizarrely insane, like now, that it deficit-spends enormous amounts of new money - equal to a tenth of GDP! And more! - which is a massive amount of new money created by the loathsome Federal Reserve just for the purpose, all of which increases the money supply and makes prices go up, and up, and up, and which is the absolute Worst Thing That Can Happen (WTCH)!

Before you run screaming into the night, yelling, "We're freaking doomed!" be calmed by remembering that by just buying gold, silver and oil, everything for you will be OK for you, and out of sheer amazement and gratitude, you, too, will whistle approvingly and say, "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 © 2010 Daily Reckoning

© 2010 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