-- Posted Sunday, 28 December 2008 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Saturday, December 27, 2008
“Phenomenally accurate forecasts
Jim Willy is one of the few commentators on the economic scene who deserves our serious attention. In his latest report, he trashes the crackpot notion that we’re in a mere recession, or that a recovery will occur in 2009. The economic paradigm is shifting tectonically, he says, and few things will be the same once we emerge from the current crisis. He also has this to say: “The year 2009 by year-end should be marred by very big inflation outbursts in price structures, enough to silence the wrong-footed deflation theory guys.”
Since I consider myself a deflation-theory guy, though certainly not a wrong-footed one, I will have something to say about this in Rick’ Picks commentary due out later this weekend. Let me mention that I have been shouting deflationist warnings from the rooftops since the early 1990s. I first wrote on the topic for Barron’s in the early 1990s, focusing on the key role of money velocity, and returned to it often in the column I freelanced to the Sunday San Francisco Examiner during the years of the dot-com boom.
A Lunatic Alone
For most of the 1990s, as far as I am aware, I was the only person writing in mainstream publications about deflation. It felt as though I had that piece of the lunatic fringe all to myself. Economist Ashby Bladen used the word “deflation” a couple of times in the column he wrote for Forbes, and an agricultural forecaster named Bill Helming wrote about the threat of deflation as it pertained to the farm economy. But it wasn’t until a few years after the collapse of the Thai baht in 1997 that others began to address a global, deflationary threat. The word “deflation” itself did not appear in a New York Times headline until a couple of years ago. Since then, the threat of ruinous debt deflation has come to be taken very seriously, mainly because it has already caused perhaps $70 trillion worth of assets to vanish from the financial system, but also because $8.5 trillion worth of bailout stimulus by the U.S. has failed so far to inflate much of anything.
Jim Willy calls the asset implosion a “liquidation” rather than a deflation, but I think he’s just splitting hairs. Even so, my differences with him are neither large nor difficult to reconcile, and his most important prediction – that the government is going to shift its bailout efforts toward individual homeowners and away from the greedy, unregenerate scumbags who control the banking system – is one that cannot be ignored by deflationists. I will discuss this prospect in greater detail in my commentary for Monday, but in the meantime you should familiarize yourself with Jim Willy’s very provocative thesis by clicking here.
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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. Trading in futures and options contract can be extremely risky, and it is possible to lose your shirt before you even realize what has hit you. For that reason, you should consult with your broker as to your suitability to such trading before you attempt it. 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 issues 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 express written permission has been granted to the contrary. All Contents © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Sunday, 28 December 2008 | Digg This Article | Source: GoldSeek.com
