Friday, Jun 13, 2008
How much will any savings be worth next year?
Telegraph: Emerging markets face inflation meltdown
"The inflation genie is out of the bottle: easy money is the culprit," said Joachim Fels, chief economist at Morgan Stanley.
"Weighted global interest rates are 4.3pc, while global inflation is above 5pc. The real policy rate in the world is negative," he said
Posted by cornishman @ 02:35 PM (1209 views) Add Comment
11 Comments
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1. cornishman said...
Interesting that easterners are buying dollars:
"The currencies of Korea, Thailand, the Phillipines, and Malaysia have come under pressure this week as investors scramble for dollars in moves that echo the East Asia crisis in 1997-1998. Several countries have had to intervene to slow the currency slide."
The dollar - a safe haven?
If so, what will that do for the pound?
2. d'oh said...
cornishman - Is an interesting question. Which monopoly money should you hold at any given point in time.
3. planning4acrash said...
Money isn't the culprit, money doesn't have a mind of its own, it is created by people, for people! The only problem with our money, is that it is only created for the uber rich.
- Morgan Stanley are one of the responsible parties, firstly for printing money, and secondly for forcing governments to let them print money. Money should be controlled by government for the people.
- We are the greatest culprits, by not educating ourselves about and fighting for libertarian values, about sound money. Only the general public, starting from grass roots level, can fight this system.
Ron Paul's brand new, post presidential race Campaign For Liberty website. - Lets hope that David Davis can take a slice of Ron's cake, so that we can all eat it and breathe the free air of liberty! But we need to contact David and not expect him to find the answers alone. Contact him, and tell him what you want, because, a campaign for liberty, should be a campaign for what you, the people want.
4. cornishman said...
I can't see how the US, with its unfunded baby boomer pension comittments, war costs, tumbling housing market etc etc can be seen as a safe haven.
Look at this - total borrowings from the FED
how is that lot going to be paid back?
5. mark wadsworth said...
Cash sterling savings will be worth a bit less - plus interest minus tax minus inflation. So what? Better to lose a couple of % on your savings than lose 'double figures' on property!!
6. stillthinking said...
Really? I think all of this is incredibly deflationary.
"Richard Cookson, a strategist at HSBC, advises clients to slash their holdings in these regions."
Ummm.... Doesn't this mean changing ownership of something tangible to holding cash ? Ownership of food, or oil, which gets used up, is no kind of ownership at all. All the objects in the world that can be owned, like companies or real estate, are going down in price.
Ergo, the amount of money that can be spent by those who owned this stuff is going down, money available to spend is going down.
Things that can be owned in the full sense of the world, with a full future of being bought and sold in the future, are going down in price because people prefer to hold MONEY.
7. jack c said...
"Where to put the money? We think corporate debt is stunningly cheap compared with equities. Seven-year to ten-year 'BBB' [rated] corporate bonds in the US haven't been this cheap since the Autumn of 2002," he said -
If investors move into Corp Bonds now and interest rates subsequently rise (which seems more and more likely) their capital value will fall. As for the respective ratings by the agencies two words spring to mind (1) Northern (2) Rock
8. Blindleadtheblind said...
Got Gold??
9. drewster said...
@stillthinking,
We can expect to have "biflation". This is where assets (including property) deflate while prices of consumables (food, oil, etc.) inflate. Wages are likely to stagnate too. Everybody gets poorer all round.
@jackc, You're quite right. The bond market is set for carnage as interest rates and corporate defaults rise, and as the dollar continues to tumble.
10. landofconfusion said...
> 8. drewster said...
>
> We can expect to have "biflation".
I've been wondering whether we were going to experience inflation (due to increased money supply) or deflation (due to contraction of the economy). I never realized that you can have both.
http://en.wikipedia.org/wiki/Biflation
11. Malct said...
cornishman
the answer to yesterday's question is 'probably - it doesn't work'
I've had no notification though