Friday, Apr 18, 2008
The Fed is printing money to clean up the housing bubble, which was fueled by the money it printed to clean up the Internet bubble. The only question is what kind of bubble the new money will inflate.
Baltimore Sun, USA: Bet on oil as the newest bubble
Hmm, somebody got the picture here, unusually rounded reporting from the press about the merry go round that is our unsustainable inflationary based monetary policies of the west, Where is Jesus, when you need him to chase away the money lenders!!
Posted by planning4acrash @ 08:13 PM (420 views) Add Comment
9 Comments
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1. waiting for the crash said...
Tulips
2. Boris said...
Why is it everything mainstream seems to get it wrong - without fail!
The Fed are NOT printing but they want you to think they are - Mish gives the low down correctly
http://globaleconomicanalysis.blogspot.com/2008/04/mzm-m3-show-flight-to-safety.html
3. lvmreader said...
Much of the Fed's liquidity, Hanke says, is going into Treasury bills and other ultra-safe debt. Not enough of what's left is being efficiently deployed in the oil industry.
How are US Treasuries safe?
4. planning4acrash said...
Treasuries are safe because they are underwritten by the government. Same way that Northern Rock is pretty safe now. But the yields of course will be rubbish and you are investing in a falling currency. Safe, but poor returns. Is that right?
5. lvmreader said...
If the Fed prints money and then people who buy the money then buy US Treasuries, do you not see a problem....
6. Duncan said...
I suggested earlier today that the next bubble will be food.
This links in with the oil argument given the push towards Bio-Fuels.
:- Duncan
7. planning4acrash said...
Could there be a problem if the Fed implodes? I learned today that two Fed's have collapsed before, is this one going that way?
8. drewster said...
p4ac... Ideally government bonds are safe but low-return. In fact they are so safe that US treasuries are generally considered the benchmark against which all other bonds are measured, the "spread" (ie. the number of points yield above US treasuries). However as lvmreader points out, that only works when the government behaves. If the government prints money like mad then those treasuries actually lose value compared to assets such as gold, oil, or even corporate shares.
The next bubble might be in energy. Already, news about energy is part of our everyday lives (just like housing news was). The papers are full of stories about people insulating their homes and fitting efficient boilers. Both traditional and alternative energies will boom, just as both old-timer AT&T and newcomer Amazon.com boomed in the late 1990s. The alternative sources will see a lot of small companies fail (like boo.com), but some will survive and prosper, During the gold rush it's the picks and shovels which make money. Companies like Cisco and Microsoft provided the picks and shoves for the dot-com boom; so for the energy boom I would bet on oil services companies like Schlumberger or Halliburton. (Note that I don't own shares in any such companies although I am considering buying some. I am not a professional analyst. Buyer beware.)
9. lvmreader said...
My point is that if I can notice the "boot-strapping" effect of printing your own money, giving it to people to then invest in more money you lend back to yourself, then others (Russians, Arabs, Chinese, Japanese, Africans, South Americans) can see it too.
It is like Citigroup selling loans to the people it lent the money to. How is that possible?