Originally posted by Bryan Hancock:
Hope this helps...A great site to visit is Shadowstats too:
Shadowstats
You know, Bryan, it is apparent from this post that you have done quite a lot of reading on the subject, or at least know the source of a lot of info on the subject.
I am far from an economics expert, and am just working my way through this type of information as a layman, to see how it could affect me and what action I could take to minimise risks.
What interests me is that the shadowstats site you recommend is incredibly pro-hyperinflation, and yet you are not convinced.
As I said, I am no expert. But the things that have concerned me over the past few years are
1. the Baby boomers needing to cash in 401Ks at 6% from 2012... if so many people *must* cash in, given the current state of play, most of the western world at least seem to be going through a time of saving, not investing ... who will buy the stock? Will it result in a crash?
2. If you compare the value of the Dow to commodities over the past few years, even though the Dow is hitting *highs* in USD, it is steadily declining in value against oil/wheat/gold/silver ... which would indicate that both the dollar and the Dow are overvalued, and using one to evaluate the other is a bit misleading.
3. No one wants the US to engage in quantitative easing, because it devalues the USD against the other currencies, and with the American market being pretty much the largest in the world for most things, we don't want to be hindered by things like a USD that is losing value. A currency war is inevitable if the US is too obvious about devaluing the dollar.
4. The US Fed has increased the money in the system by more than 200% over the last few years, and the amount of debt available, it has fallen to a low never seen before since the before the great depression.
5. The first QE of $2T seemed to not have enough strength, unemployment continues to rise; is a further $600B really going to make a difference?
6. 1 in 4 kids in the USA are already benefitting from food stamps
7. How on earth with the US government come good on Medicare/Social Security for the baby boomers? I have heard (not checked) that they are looking at $76T needed to be covering that.
And most basically of all ... if the Fed is loaning the Dollar to the US government at 6%, and the Fed prints the dollars, how on earth is that sort of system sustainable? If you don't have the capacity to generate your own currency, how can you repay interest on it?
Personally, I *am* getting into precious metals as my strategy. I *am* reluctant to hold things in credit. I *am* taking a very close look at leveraged positions to see how sustainable they might be in a hyperinflationary period.
I don't purport to really understand it all ... I am trying and learning ... but I really do have grave concerns about a good many issues around hyperinflation.
