muses of the moment

March 28, 2010

The new bubble

groovygirl found a very good article explaining the reason the US is not experiencing huge inflation….yet.

Click here.

A few points:

  • The government is very aware that banks are using the cheap money to buy Treasuries and not lending. They are OK with this because no one else wants to buy the debt. Rates will continue to be low to keep this going as long as possible. (January 2011 is the next estimated time that Congress will have to vote for a higher debt ceiling.)
  • US treasuries are a bubble, stay out or only have as much in as you can lose. Do not buy anything longer than a year. (groovygirl is out.)
  • The bubble will pop quickly.
  • Money will rush into non-debt investments (commodities and related investments).
  • The dollar will devalue and then default (or revalue).
  • There will be no money to lend (as it all went into the US Treasury bubble). No credit, no economic expansion, continued and worsening unemployment. No lending means no mortgages, no improvement in the housing market.
  • Inflation in prices will rise dramatically and quickly.

Where to hide? Click here. (What is being described in Britain and Europe will also effect the US.)

The first 20 years of the new century will be known as the bubble years. You are in it right now. Understand it for what it is and make investment choices accordingly.

Governments and Banks are reacting. Please be proactive in your future investments and avoid the bubbles. They may be very pretty, but they have a tendency to pop at the least expected moment.

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