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-- Posted Wednesday, 18 October 2006 | Digg This Article | Source: GoldSeek.com

Rick's Picks

Wednesday, October 18, 2006

For investors who'd rather be smart than lucky

The "core" producer price index rose an ostensibly whopping 0.6 percent in September, but only an economic nincompoop could be truly concerned about it. We prefer simply to re-add it to the list of red herrings currently distracting investors from reality. We should also note that it is one of the most abysmally stupid popular myths to have survived the late, great asset boom. With that boom now starting to dry up as quickly as dew on a rattler's tail, inflation is the last thing we should be worried about. Rather, it is the rough beast of deflation, slouching in the middle distance, that is properly our biggest economic concern. Our only economic concern, to put things in proper relief.

The U.S. and world economies have been running on credit, as we all know, and it would take only a hair's-breadth of slippage in the value of the underlying collateral to cause this flimsy, metaphysical edifice to implode. We are there now, as most property owners in the U.S. will already have surmised, and the dire epiphany of deflation can be no more than perhaps a year off, if that much.

The moment of realization will be less shocking if we come to it understanding that the "inflation" the pundits would have us worry about is by definition the puny kind that occurs at the consumer level, and it is a function of a global economy that produces at most $55 trillion worth of goods and services in a year. That may sound like a lot of money, but it is just small change in comparison to a financial economy that supports global play in speculative vehicles with a notional value well above $300 trillion. If you view that sum as the un-"actualized" potential of deflation, it is then, and only then, that you begin to understand how insignificant are the price increases we experience in our day-to-day lives. Forget about the rising CPI; the true dragon is deflation, and it is about to bear down on us with millennial force      

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in i ssues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers' initials will be used unless expre ss written permission has been granted to the contrary. All Contents © 2006, Rick Ackerman. All Rights Reserved. www.rickackerman.com  

-- Posted Wednesday, 18 October 2006 | Digg This Article | Source: GoldSeek.com

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