muses of the moment

January 14, 2011

Martin Armstrong’s Latest Letter dated January 5, 2011

Filed under: Economic Confidence Model Cycle, Martin Armstrong — Tags: — totallygroovygirlfriday @ 11:01 pm

Click here for Martin Armstrong’s latest letter entitled, Are You Ready to Rumble?, dated January 5, 2011 (15 pages).

He charts gold and all major currencies on last few pages.

Relax, Ben has inflation under control

Filed under: Gold and Silver Investing, Inflation, Precious metals, The Federal Reserve — totallygroovygirlfriday @ 1:39 am

Click here for a scary chart. It looks like inflation to me. My first clue was the price line rising at a 45 degree angle. At least it’s not a hockey stick…yet.

Side musing: now that Volker has left the O team, there is no one to reign in inflation or even bring up the discussion. Too bad. The governments’ policies are very clear, print money to sustain current economic numbers and prevent any systemic collapse. The unfortunate thing is that Ben can not use Volker’s 1970’s tactic to reign in inflation in the future because of the huge amount of debt already in the system. This is not the 1970’s global economy and debt load, we have 40 years worth of more debt creation. Rising interest rates would implode the US economic system within 12 months from US Treasuries, mortgage resets, business lending, credit availability, higher prices, everything. I suspect that Volker has pointed this out and it was not received well. Since you can not control the government’s policies, protect your savings and prepare for rising inflation and then, hyperinflation.

The CCI index (chart is #15 in link below) doesn’t look much better. It is right at 2008 all time highs and we see no correction in the future. Food is up, up, up! To make matters exponential, the derivative traders (which are still not regulated in any way) have left the mortgage and banking markets for the commodity markets.

If people were pissed when the derivative traders imploded the equity in their homes and retirement funds, they sure are not going to be happy when they can’t afford to eat because of those financial instruments of mass destruction. This will not end well.

Expect higher inflation in prices for anything that is produced out of a raw material for the foreseeable future.

There is a difference between asset inflation, what Ben is going for and price inflation, which slows down economic growth when there is no asset inflation to go with it. The money he is printing seems to be going into price inflation, not asset inflation. Why? Since the debt systemic crisis is not fixed, this new money is seeking out real assets that don’t have debt tied to them, such as raw materials, precious metals, food, and other commodities.

These commodity and precious metal prices have broken free of the tick by tick devaluation of the dollar and are rising on their own despite the lower or higher purchasing power of the dollar.

These charts from Rosenberg, via zerohedge.com, explain exactly what I am talking about. These charts show the systemic global debt implosion and the effects of the governments’ “solutions”. There is absolutely nothing positive in these charts, unless you own physical precious metals and commodities ­čÖé

Click here.

  • Debt is still imploding/defaulting world-wide.
  • Prices for real things are increasing.
  • Economies are contracting and unemployment is rising.

There is no solution.

Hunker down and protect your purchasing power. That’s all you can do now.

Blog at WordPress.com.