Deflation... Sort Of - Stagflation, Yes
Bloggers and columnists have different takes on whether the economy is in an in-flationary or de-flationary cycle. In most parts of the country, real estate is in a deflationary cycle.
US stock markets (the Dow, S&P 500 and Nasdaq indices) are going sideways to slightly lower. Incomes of Americans seem to be stagnant.
But the prices of food, energy and just about everything else are going through the roof. In Idaho Springs, Colorado last Saturday, I bought my first gallon of 87 octane gasoline for $4.00/gallon ($3.999 to be exact). Wasn't happy or proud of that to say the least. Especially after losing $100 at poker in a Blackhawk casino earlier that day.
I know the government says that inflation is still low or "manageable" (depending on which parallel universe you live in where you don't eat or drive your car), but Gary Dorsch confirms the fact that inflation levels are vastly understated by Uncle Sam.
This adds up to the economic condition known as stag-inflation (or stagflation), which was last seen in the US in the late 1970s. Fortunately, we had a Fed Chairman with the cajones to put the kibosh on inflation through higher interest rates.
Unfortunately, today we have "Helicopter Commander" Ben Bernanke instead of Paul Volcker as Chairman of the Fed. And Ben Bernanke is darn sure no inflation hawk. For all the talk from Hank Paulson about a supposed "strong dollar policy" (yeah, right), what the Fed is doing is a totally different story. More of the same stuff that got us into this mess - low interest rates and an increased money supply - is being done to hold off the inevitable recession (at least in the short term).
What should you do to prepare for the upcoming economic mess? Invest in tangible (non real-estate) assets, such as physical gold and silver. For more complete recommendations, read Chapters 8-10 of Peter Schiff's book, Crashproof. It's well-thought out, and clearly explains where and why you should invest in certain asset classes to protect yourself against stagflation.
US stock markets (the Dow, S&P 500 and Nasdaq indices) are going sideways to slightly lower. Incomes of Americans seem to be stagnant.
But the prices of food, energy and just about everything else are going through the roof. In Idaho Springs, Colorado last Saturday, I bought my first gallon of 87 octane gasoline for $4.00/gallon ($3.999 to be exact). Wasn't happy or proud of that to say the least. Especially after losing $100 at poker in a Blackhawk casino earlier that day.
I know the government says that inflation is still low or "manageable" (depending on which parallel universe you live in where you don't eat or drive your car), but Gary Dorsch confirms the fact that inflation levels are vastly understated by Uncle Sam.
This adds up to the economic condition known as stag-inflation (or stagflation), which was last seen in the US in the late 1970s. Fortunately, we had a Fed Chairman with the cajones to put the kibosh on inflation through higher interest rates.
Unfortunately, today we have "Helicopter Commander" Ben Bernanke instead of Paul Volcker as Chairman of the Fed. And Ben Bernanke is darn sure no inflation hawk. For all the talk from Hank Paulson about a supposed "strong dollar policy" (yeah, right), what the Fed is doing is a totally different story. More of the same stuff that got us into this mess - low interest rates and an increased money supply - is being done to hold off the inevitable recession (at least in the short term).
What should you do to prepare for the upcoming economic mess? Invest in tangible (non real-estate) assets, such as physical gold and silver. For more complete recommendations, read Chapters 8-10 of Peter Schiff's book, Crashproof. It's well-thought out, and clearly explains where and why you should invest in certain asset classes to protect yourself against stagflation.
Labels: Ben Bernanke, inflation, Paul Volcker, Peter Schiff
posted by Brian Ochsner | 4:35 PM
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