Yeah...I tend to agree. I think that's what Jimmy Rogers was thinking when he did his commodity fund thingy. Principally, I hate the thought of TIPS. But at some point in your life it becomes more important to maintain wealth rather than create it.
The Sovereign Society Offshore A-Letter Friday, May 29, 2009 Ding! Dong! The Recession is Over! Long Live the Recession Mattâs Two Cents on Some of the Hottest BS and Lies In the Mainstream Media and the Historical Record Dear A-Letter Reader, This ainât a recession. And by no stretch of the imagination is it anywhere near over. Iâm sorryâ¦but itâs Friday, and Iâm sick of another week of âGreen Shootsâ rubbish. Even some of my fellow contrarians are now jumping into the frayâ¦with two of my fellow newsletter writers giving conflicting reasons for the end of the ârecessionâ⦠Oohâ¦consumer confidence has bottomed! (Laughable, that one. Just wait and see.) Oohâ¦Unemployment claims have started to turn downward! Please. First of all â as we said yesterday â thereâs simply no reason to trust the BLS statistics. You want the long explanation, youâll have to buy me lunch or hit the A-Letter archive. We donât have the time for it here. Secondâ¦thereâs absolutely no reason to trust the BLS statistics. Yeah, itâs the same as the first reason, but itâs that important. So why all the BS from almost all members of the media? Afraid of being labeled fearmongers? Maybe. Itâs also damage control; at least in part. With such a fragile global economyâ¦and such dim prospects for any kind of recoveryâ¦nobody wants to rock the boat. But Iâm also convinced that itâs a problem of perspective⦠As Iâve said in previous A-Letters; not one of these yahoos was around for the Great Depression. A pity Sir John and Dr. Kurt didnât make it to see this one. As such, these yahoos have only ever known inflation â one kind of economic regime. Theyâve built their names, their lives, their fortunes, and their reputations in the biggest, most âidiot-proofâ global economic regime ever contrived. Simply put; they donât know deflation. Thatâs kinda like coaching a football team and not knowing about defense. Their whole lives, theyâve only coached offense⦠And now itâs coming apart. Câest la vie my narrow-minded friends. All good rackets must come to an end. But I canât blame them entirely. Most were educated by a historical record thatâs less historically accurate than Plan 9 from Outer Space (donât even Google itâ¦itâs the worst movie ever made.) So letâs crack our knuckles and bust this one wide open⦠The Hoover-Obama Connection History isnât written by the winners. The winners are too busy enjoying the spoils. Historyâs written by the dim-witted meek guy that was standing behind the winner. And historically speaking, that guyâs an idiot. Historyâs also massaged over the course ofâ¦wellâ¦historyâ¦to the point where it often becomes more fairy tale than gritty crime drama. For example; much hullaballoo was made about the similarities between Obama and FDR. Thatâs an important thing â history says â because FDRâs radical âdo-somethingâ policies and the âNew Dealâ helped us claw our way out of the Great Depression. Hoover â on the other hand â was a freaking monster according to history. He didnât do anything about the Depression, he let it run its courseâ¦and by the end of his term, people were destitute, picking through garbage dumps to find their next meal. Right. And Iâm king of the moon-people. The reality â one that Dan Mitchell points out here in detail â is that Hoover absolutely mastered the âdo somethingâ mantra that FDR would take over. Sure, a ton of banks failed, but Hoover made sure that his administration still had its hand in the potâ¦mucking up the order of things. And when the âNew Dealâ came about, there wasnât really anything new about it. It was almost as if they took Hooverâs plans to Emerilâs TV showâ¦and with a Bam! hereâ¦and a Bam! thereâ¦they âkicked it up a notch.â In many ways, the New Deal was the same deal Hoover had been pitching for years. Funny thing is; the bulk of history books donât really cover this. Dig up Murray Rothbardâs âAmericaâs Great Depressionâ and youâll find out about the AALLâ¦a special program Hoover set up to keep wage deflation from taking hold. He also encouraged unionization and other measures that would impede the necessary progress of deflation through means of wage deflation⦠Donât be intimidated by the big words; wage deflation just means falling wages overall. It kinda makes sense when your unemployment rateâs trudging up to 20% and everything else is falling in value (in other words; its part and parcel of healthy deflation). But itâs the third rail for knee-jerk, âdo somethingâ politicians. Getting paid less?! Thatâs unfathomable! No selfish idiot would ever want that. Even if it meant keeping the unemployment rate under control (which â in the little-known discipline of economics â it does) â¦Hmmâ¦Sound familiar to anyone you know? Let me explain⦠Remember Ford motors? That fine American company that doesnât need any free taxpayer money? Bless those guysâ hearts! At least we know there are still a few good capitalists out there. How do we know that? Because last year, their executives played some hardball with the UAW (something youâd never see Obama or Hoover do.) And they forced the UAW down to competitive wages. Instead of costing Ford almost $75 an hour â like GM and Chrysler â those dim-witted, car-assembling high school grads would only cost about $55â¦as much as the Japanese pay in their US plants. You see that? Itâs wage deflation. They took it head on, and theyâll be better for it. Theyâll be more efficient, more competitive, and more likely to truly survive the pain of the coming years. Meanwhile, whatâs Obama doing with the other car companies? You guessed it; anything but bringing the wages down. He threw billions of dollars â dollars that belong to me, you, our children and grandchildren â at both companies, rather than let something as politically terrifying as wage deflation take place. The Reality: Is the Recession Over? Thatâs just the tip of the iceberg, folks. I could go on for hoursâ¦daysâ¦weeks even, about all the lies and BS in the historical record, and how they distort the political, social, and economic âlessonsâ weâve learned from history. But that one point really stuck out like a sore thumb to me. The reality is that the worst New Deal programs were horrid atrocities; one of which was responsible for slaughtering thousands of heads of livestock, torching hundreds of acres of farmland, and starving thousands upon thousands of Americans (AAA). And the most âsuccessfulâ of New Deal programs? Social Securityâ¦the SEC, the FDICâ¦Fannie and Freddieâ¦yeahâ¦sparkling successes those things were. In reality, the New Dealâs most successful programs only served to create long-term distortions that led us to where we are today. As our Chairman â New York Times bestselling author John Pugsley â can personally attest; the real ârecoveryâ didnât come until after WWII. He remembers the strict rationing; the difficulty of life during the warâ¦and the fact that life wasnât suddenly rosy after FDR âfixed the banking system.â So hereâs todayâs reality â one that all the wealthy financial âexpertsâ in the world canât seem to publicly grasp â the Great Depression was no accident. It wasnât unexpected. It was the result of years of inflationary monetary policyâ¦during which people started mistaking bank credit for real wealth. And today, weâre facing the exact same macro-issue. We may have more fail-safesâ¦more backstops in place todayâ¦but our overall debt levels are worse than they were in the 1930âs, and our situation doesnât look much better. In reality, the distortions of aging New Deal policies and Federal Reserve practices have created a deflationary recessionâ¦the likes of which hasnât been seen at least since the Great Depression. Am I an entropist? A fearmonger? Do I just want to see it all burn down? Hell no. Unlike all these mainstream yahoos, I actually understand deflation. Deflation â and even recessions â are the economyâs way of telling us that weâre screwing up. That we need to re-think how weâre doing things, rearrange our capitalâ¦maybe put it to better use. Think its any more complicated than that? Well, youâd be wrong. Feel free to plug through the historical record. Iâd start with Microsoft, Apple, HP, GE, Compaq and many of the other largest, most powerful companies on the planet. Each of those companies was started in the midst of recession â or worse â during some form of Depression. In other words; the future is here. Itâs at our doorstep. And the longer we cling to the past â the same way Cramer clings to his popularity and Hank Paulson clings to his fortune â the more it will end up hurting. Thatâs the lesson of history. Will fortunes be lost in the coming years? Absolutely. Some riches-to-rags stories? Likely tons of âem. But for every dream thatâs destroyed, for every ounce of capital thatâs freed up in bankruptcy â thereâs a more powerful dreamâ¦one belonging to the futureâ¦waiting in the wingsâ¦just itching for its turn. Thatâs it for today folks. I needed to get that off my chest. No Editorâs Corner today. Instead, Iâll ask you to look to the future. Whatâs your place in it? Donât worryâ¦you have one. You just have to look hard enoughâ¦to embrace new things. Once the old guard stands down and gets out of the way, the future will have begun. And anyone not on the bus gets left at the station. Keep your guns handy and your teeth gnashed. The ârecessionâ is not yet over. Not by a longshot. And thereâs a good-money chance that itâs never going to go âback to normal.â Yours in Personal Sovereignty, MATTHEW COLLINS, A-Letter Editor
You can' apply this as a general rule. Sometimes commodities work great, sometimes they don't. They didn't work well during the 80s and 90s. CPI price index doubled from 1980 to 2000.
that is why in the past south american countries with high rates of inflation had strong currencies. with your kind of reasoning you are of the school that prosperity can be brought about by depreciating the $UScurrency through inflation. a job is waiting for you in washington d.c. with helicopter bernanke. how about saying rising prices instead of using an euphemism like price instability.
Because last year, their executives played some hardball with the UAW (something youâd never see Obama or Hoover do.) And they forced the UAW down to competitive wages. Instead of costing Ford almost $75 an hour â like GM and Chrysler â those dim-witted, car-assembling high school grads would only cost about $55â¦as much as the Japanese pay in their US plants. $55 dollars an hour for something a Monkey could do?!
This article clarified the issue of inflation in my mind and confirmed my feeling that buying physical commodities such as gold and oil is the best way to preserve and increase wealth at this point in history. http://www.investorsdailyedge.com/inflation-is-not-coming-it-has-arrived.html
Yeah, I'm there with you but I own them too. I think it is an understanding that you know it is a relative loser of an investment, but its not likely to be a big loser & therefore somewhat of a back-up in your overall asset allocation (cash, Treasuries, TIPS, commods) Since it seems that outright theft is the order of the day.
The best inflation hedge/"investment" for a longterm investor who doesn't want to trade himself that I can think of is a basket of 5-6 managed futures funds that trade all the most liquid currency/commodity/bond contracts. That will give you a very good chance of benefiting from market volatility and de-/inflation/economic uncertainty over the coming years. No need to guess right on whether the theme for the next 10 years is inflation or deflation or a mix of both. If commodities explode/bonds implode you likely do well with managed futures funds, if they both do the opposite you will likely also do very well. Simply getting long commodities and thinking that shields you from rising consumer prices without any downside risk is very naive.