Saturday, October 1, 2011

Inflationary or deflationary depression

Last week, we witness one of the most spectacular hammering of commodities especially precious metal. Silver felt an unprecedented 25% in 3 days. Bernanke has pulled off a remarkable deflationary feat in commodities while he is printing monies. Right now, investors are shocked and coerced by FED, channeling their monies into bonds, away from commodity. These events nudge me to further re-evaluate FED.

I advise against writing off FED too quickly. The fall of USA in my opinion, must be preceded by a secession of its peripheries. For example, one of staunchest ally, Thailand seems to be increasingly drifting apart. Recently Thailand started accumulating gold in larger amount, and has started to quit the capitalist game by trying to improve the living standard of its farmer by hiking rice price.

US dollar as world reserve currency will enable US to theoretically print tremendous amount of monies without having serious inflation, as the addition of monetary base compared to the world demand for reserves is small.

US dollar till date, is still being backed by China, the largest and most industrious nation. Chances of its collapse right now seems remote. Snowball will start rolling when China is on fire. By then, when China decides to keep the surplus to placate her own citizen instead of shipping to USA, inflationary events will quickly unfold.

Hyperinflation in Germany 1923. When it comes,
you will have just 3 month to prepare.


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Veritas said...

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