Robert Prechter Says ‘Cash Is King’

[Confounded]

Less than a week ago there were quite a few threads questioning where all the deflationist had gone, it was clearly inflation all the way to infinity.

Well a 1000 point plunge in the DOW followed by another plunge yesterday only saved by direct intervention has exposed the folly of this market and how the reflation illusion (also achieved by direct intervention in the markets see Obama the sage telling people to buy stocks right at the bottom last march) could burst with a big bang.

Now I am not saying we have embarked on our journey to DOW 400 predicted below, I do think we have entered a period where the inflationists may go quiet for a bit, lets hope the central banks retain control and we have another bout of reflation once this deleveraging phase is done.

It is worth watching the video here

http://www.thepanicnews.com/2010/04/28/robert-prechter-says-cash-is-king-fast-money-doesnt-believe-him-but-the-smart-money-better/

Robert Prechter says ‘Cash is King’. Fast Money doesn’t believe him… but the smart money better.

By Al Coryell

Host/Moderator

A couple of weeks ago Robert Prechter of Elliott Wave International was invited on to CNBCs “Fast Money” show to talk about his prediction of an imminent collapse of the global stock markets. You can watch the video of that interview below. The show hosts were rude, talked over him, insulted and ridiculed him and all but called him an idiot for telling them that the market was about to make a major top and would be collapsing summarily by May. It is evident from watching him that he was indeed insulted at the way he was treated, but I can also tell you this… he left the show perfectly happy with the way the panel behaved.

Why, you ask, would anyone be happy to be treated that way? Simply answer… confirmation. You see, at the tops of major trends everybody is convinced the party won’t end. The excitement that carried everyone to the crest of the wave is so intoxicating that rational judgment is impossible for the vast majority, and they subsequently can’t help but believe that things are so good right now nothing can go wrong – the perfect example of Alan Greenspans “irrational exuberance”. While I’m sure Prechter would have appreciated a little more decorum from the panel, no doubt he was not disappointed with his reception and went away even more assured of his contrarian position.

Prechter made a major point worth noting… he said “Cash is King” in a deflationary environment. He was trying to warn Mom and Pop investors that they want to be in cash or safe cash equivalents while this next collapse is taking place. If there is not enough room in your mattress for all of your money, then Prechter advises short term treasuries as your best bet. Any bank can order them for you. Another alternative is mutual funds or money market funds comprised of short term treasuries only. Just Google “US treasury only funds” to find companies that have them. Prechter went as far as to suggest to listeners that they should cash out of their IRAs, mutual funds and 401k plans and go to cash even if they have to pay the penalties involved in doing so. The vast majority of those accounts will be worthless by the time the bottom of the stock market collapse is reached. Although Prechter never answered Najarian’s question of a downside price target (for reasons I fully understand), I will tell you it is below 400 on the Dow. Prechter’s Elliott Wave analysis predicts the coming crash will be that severe and that devastating.

I did find the moronic and obnoxious behavior of panelist Steve Grasso somewhat amusing. He evidenced his obvious ignorance of Austrian School economics when he tried to make the assertion that anyone going to cash would have their portfolio eaten up by inflation. Apparently, he has no concept of what deflation is about and no understanding of the effects of a deflationary depression. In his defense, most people don’t. Almost no one alive today has experienced deflation and few have taken the time to research the history. Consequently no one will be ready for the financial devastation ahead, except hopefully you.

When credit bubbles burst, economies collapse. I will repeat the sage words of Ludwig von Mises again for those who may not have heard them yet:

“There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.”

Our Keynesian government and monetary policy makers (the Fed) are still trying to “stimulate” the economy (credit expansion), the exact wrong thing to do if you understand Austrian School economics. By their actions, they have chosen von Mises’ latter alternative which will inevitably lead to total systemic catastrophe. If you do not yet have an understanding of von Mises words, or understand what deflation is and how it works, then read my four part series of articles entitled “Deflation vs. Inflation – Which one is controlling the fate of America?… “. In it I explain about both inflation and deflation and make the case for my belief that Robert Prechter and fellow Austrians are correct when they assert that inflation is currently impossible and predict that we are, right now, on the edge of a deflationary cliff.

Had the participants on the Fast Money show all agreed with Prechter’s contrarian admonitions, I can assure you he would have gone home that night and gotten very little sleep. As it turned out, however, I can also assure you, based on their collectively dismissive behaviors, Robert went home and slept like a baby.

[Toto deVeer]

Prechter's the man.

He's been right since the early 2000's, but things didn't go his way because no one could have predicted the sheer fraud and blatant crime coupled with ultra-extreme FED policy. His underlying thesis is about to be fully validated. I got caught in the same trap after the dotcom bubble collapsed.

The last decade has witnessed a level of fraud that has not been seen since the 1720's, at every level of the financial system, world-wide. No one could have predicted that.

[interestrateripoff]

Time will tell.

How this one is going to play out is anyone's guess.

Manipulation is alive and well, the only certainty is won't be pretty.

[Confounded]

Prechter's the man.

He's been right since the early 2000's, but things didn't go his way because no one could have predicted the sheer fraud and blatant crime coupled with ultra-extreme FED policy. His underlying thesis is about to be fully validated. I got caught in the same trap after the dotcom bubble collapsed.

The last decade has witnessed a level of fraud that has not been seen since the 1720's, at every level of the financial system, world-wide. No one could have predicted that.

I totally agree and a lot of people deride Pretcher for being a perma bear and calling the top too early and too often but interestingly he called the bottom last march spot on. I think this links into your comment where it is very hard to call a top when there is so much corruption and manipulation at every level of the financial system.

[The Masked Tulip]

But if it is deflation then they can keep IRs at ZERO for years meaning that loads of people who have mortgages will be happy as larry...

[interestrateripoff]

But if it is deflation then they can keep IRs at ZERO for years meaning that loads of people who have mortgages will be happy as larry...

Really? Surely this means falling wages which won't help those with mortgages?

[Georgia O'Keeffe]

Less than a week ago there were quite a few threads questioning where all the deflationist had gone, it was clearly inflation all the way to infinity.

Well a 1000 point plunge in the DOW followed by another plunge yesterday only saved by direct intervention has exposed the folly of this market and how the reflation illusion (also achieved by direct intervention in the markets see Obama the sage telling people to buy stocks right at the bottom last march) could burst with a big bang.

Now I am not saying we have embarked on our journey to DOW 400 predicted below, I do think we have entered a period where the inflationists may go quiet for a bit, lets hope the central banks retain control and we have another bout of reflation once this deleveraging phase is done.

It is worth watching the video here

http://www.thepanicnews.com/2010/04/28/robert-prechter-says-cash-is-king-fast-money-doesnt-believe-him-but-the-smart-money-better/

Robert Prechter says ‘Cash is King’. Fast Money doesn’t believe him… but the smart money better.

By Al Coryell

Host/Moderator

A couple of weeks ago Robert Prechter of Elliott Wave International was invited on to CNBCs “Fast Money” show to talk about his prediction of an imminent collapse of the global stock markets. You can watch the video of that interview below. The show hosts were rude, talked over him, insulted and ridiculed him and all but called him an idiot for telling them that the market was about to make a major top and would be collapsing summarily by May. It is evident from watching him that he was indeed insulted at the way he was treated, but I can also tell you this… he left the show perfectly happy with the way the panel behaved.

Why, you ask, would anyone be happy to be treated that way? Simply answer… confirmation. You see, at the tops of major trends everybody is convinced the party won’t end. The excitement that carried everyone to the crest of the wave is so intoxicating that rational judgment is impossible for the vast majority, and they subsequently can’t help but believe that things are so good right now nothing can go wrong – the perfect example of Alan Greenspans “irrational exuberance”. While I’m sure Prechter would have appreciated a little more decorum from the panel, no doubt he was not disappointed with his reception and went away even more assured of his contrarian position.

Prechter made a major point worth noting… he said “Cash is King” in a deflationary environment. He was trying to warn Mom and Pop investors that they want to be in cash or safe cash equivalents while this next collapse is taking place. If there is not enough room in your mattress for all of your money, then Prechter advises short term treasuries as your best bet. Any bank can order them for you. Another alternative is mutual funds or money market funds comprised of short term treasuries only. Just Google “US treasury only funds” to find companies that have them. Prechter went as far as to suggest to listeners that they should cash out of their IRAs, mutual funds and 401k plans and go to cash even if they have to pay the penalties involved in doing so. The vast majority of those accounts will be worthless by the time the bottom of the stock market collapse is reached. Although Prechter never answered Najarian’s question of a downside price target (for reasons I fully understand), I will tell you it is below 400 on the Dow. Prechter’s Elliott Wave analysis predicts the coming crash will be that severe and that devastating.

I did find the moronic and obnoxious behavior of panelist Steve Grasso somewhat amusing. He evidenced his obvious ignorance of Austrian School economics when he tried to make the assertion that anyone going to cash would have their portfolio eaten up by inflation. Apparently, he has no concept of what deflation is about and no understanding of the effects of a deflationary depression. In his defense, most people don’t. Almost no one alive today has experienced deflation and few have taken the time to research the history. Consequently no one will be ready for the financial devastation ahead, except hopefully you.

When credit bubbles burst, economies collapse. I will repeat the sage words of Ludwig von Mises again for those who may not have heard them yet:

“There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.”

Our Keynesian government and monetary policy makers (the Fed) are still trying to “stimulate” the economy (credit expansion), the exact wrong thing to do if you understand Austrian School economics. By their actions, they have chosen von Mises’ latter alternative which will inevitably lead to total systemic catastrophe. If you do not yet have an understanding of von Mises words, or understand what deflation is and how it works, then read my four part series of articles entitled “Deflation vs. Inflation – Which one is controlling the fate of America?… “. In it I explain about both inflation and deflation and make the case for my belief that Robert Prechter and fellow Austrians are correct when they assert that inflation is currently impossible and predict that we are, right now, on the edge of a deflationary cliff.

Had the participants on the Fast Money show all agreed with Prechter’s contrarian admonitions, I can assure you he would have gone home that night and gotten very little sleep. As it turned out, however, I can also assure you, based on their collectively dismissive behaviors, Robert went home and slept like a baby.

whilst prechter might be right or wrong ultimately he really shouldnt give programmes or people like that the time of day, when you have these slick white collar TV muppets deriding him on the basis that er forward earning are good its laughable, he is way above these fools. Like i say he may be right or wrong but when you understand the pain staking attention to detail he puts into his research be it waves, economics, socionomics or any other technical minutiae he should really tell programmes like that fck off when they want an interview

[Georgia O'Keeffe]

But if it is deflation then they can keep IRs at ZERO for years meaning that loads of people who have mortgages will be happy as larry...

not if they lose their jobs which is what deflation is all about, insolvency, the interest rate is neither here nor there, if its deflation that ultimately happens it will have to be so much default that it will put at least another 3-5 million out of work

Edited May 8, 2010 by Tamara De Lempicka

[Toto deVeer]

Problem now is that the entire G20 ponzinomics strategy has been pushed to the outer limits of reality.

Within the last month, protests/riots in France, Germany, Russia, Greece, Iceland across the USA, Turkey, Hong Kong, South Korea (too many to keep track of). And this is just for starters.

A coup in Kyrgyzstan, bordering Afghanistan. Pakistan falling apart. Mexico is a failed state, with Mexicans streaming into America.

The Pentagon/US military beginning to exert pressure in US politics. Watch this space.

No way that the lid can be shut. Things can only get worse from here.

The fun's just beginning, and it's going global...

[DabHand]

Ok l appreciate the idea of deflation where you treat shrinking credit as fungible money supply that is disappearing. oh and you have to also caveat that the government debt/credit bubble doesnt go to the man in the street so its not really inflation. (not something l agree with because it displaces money that should be taken out of circulation to meet that need, and thus is preventing deflationary forces by allowing money to be in mmore places than it should be = inflation).

So ok, lets say leveraged assets and stocks n shit go down, again this isnt deflation. Tell me, as a stirling saver how do l enjoy this deflationary effect when the govt is quite happy to see my currency eat shit and lose value against just about everything. I dont count deflation as "well its cheaper if its made here and your competition is other mug stirling holders" because a. We don't make feckin anything. b. If we did someone with a much stronger currency will come along and outbid me. Unless of course stuff being entirely unavailable in this country at any reasonable price is some new form of deflation l havent heard of.

Would be quite glad of a convincing reply cos so far this whole theroetical deflation thing is just making me furious. :angry:

[scepticus]

" Robert Prechter Says ‘Cash Is King’ "

that's what he always says. so, what's new?

[scepticus]

not if they lose their jobs which is what deflation is all about, insolvency, the interest rate is neither here nor there, if its deflation that ultimately happens it will have to be so much default that it will put at least another 3-5 million out of work

what you meant to say is that its the REAL interest rate that matters.

[Confounded]

Ok l appreciate the idea of deflation where you treat shrinking credit as fungible money supply that is disappearing. oh and you have to also caveat that the government debt/credit bubble doesnt go to the man in the street so its not really inflation. (not something l agree with because it displaces money that should be taken out of circulation to meet that need, and thus is preventing deflationary forces by allowing money to be in mmore places than it should be = inflation).

So ok, lets say leveraged assets and stocks n shit go down, again this isnt deflation. Tell me, as a stirling saver how do l enjoy this deflationary effect when the govt is quite happy to see my currency eat shit and lose value against just about everything. I dont count deflation as "well its cheaper if its made here and your competition is other mug stirling holders" because a. We don't make feckin anything. b. If we did someone with a much stronger currency will come along and outbid me. Unless of course stuff being entirely unavailable in this country at any reasonable price is some new form of deflation l havent heard of.

Would be quite glad of a convincing reply cos so far this whole theroetical deflation thing is just making me furious. :angry:

I don't think you will get a convincing reply from anyone because there are too many variables. We will get crushing deflation but the key question is will this come before or after hyperinflation.

It all boils down to this

“There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.”

and the fact that we have reached debt saturation, the point where further debt will not create real GDP growth.

[Toto deVeer]

Ok l appreciate the idea of deflation where you treat shrinking credit as fungible money supply that is disappearing. oh and you have to also caveat that the government debt/credit bubble doesnt go to the man in the street so its not really inflation. (not something l agree with because it displaces money that should be taken out of circulation to meet that need, and thus is preventing deflationary forces by allowing money to be in mmore places than it should be = inflation).

So ok, lets say leveraged assets and stocks n shit go down, again this isnt deflation. Tell me, as a stirling saver how do l enjoy this deflationary effect when the govt is quite happy to see my currency eat shit and lose value against just about everything. I dont count deflation as "well its cheaper if its made here and your competition is other mug stirling holders" because a. We don't make feckin anything. b. If we did someone with a much stronger currency will come along and outbid me. Unless of course stuff being entirely unavailable in this country at any reasonable price is some new form of deflation l havent heard of.

Would be quite glad of a convincing reply cos so far this whole theroetical deflation thing is just making me furious. :angry:

Really depends upon how deflation is defined. To me, deflation is just that money (currency) starts to get really scarce; very hard to come by.

When Sterling falls (and it will) this will cause an increase in interest rates, just like Greece.

This rise in interest rates is when deflation will really kick in. The value of just about everything will fall, and salaries will not increase, and may also fall. The UK may risk default.

This is when Prechter's 'cash is king' statement will really become reality...

[Guest_ringledman_*]

Do you all live in the USA?

It is no wonder the US as a net importer and with the dollar so strong as the world's reserve currency is facing deflation.

The last time I looked most of us live in the UK where we are/have-

Importing nation

Very weak currency

Negative interest rates

Quantative Easing (will return!)

Importer of energy

No government!

The US can very well have deflation. I dont see it here at present, quite the opposite.

Should the pound bounce heavily upwards v the dollar and euro then perhaps we will face deflation. At the moment no way.

I subscribe to the Marc Faber view that the West will run negative interest rates for the next decade. He also says that the 'effect' of inflation could become far greater than the 70s as then they faced much higher interest rates (i.e. net effect between inflation and interest rates will be much higher this next decade than in the 70s).

Edited May 8, 2010 by ringledman

[matroskin]

Problem now is that the entire G20 ponzinomics strategy has been pushed to the outer limits of reality.

Within the last month, protests/riots in France, Germany, Russia

Russian protesters were demanding either a/ Article 31 of Constitution to become direct law (few hundreds of dissidents in Moscow) or b/ second-richest Russian governor to go (Mr Boost, Kaliningrad). Nothing to do with money printing.

A coup in Kyrgyzstan, bordering Afghanistan.

Kyrgyzstan does not have a common border with Afghanistan. Check with Google maps. The direct cause for the coup was govt troops firing at protesters and killing 200. Again, nothing to do with money printing.

[Confounded]

Do you all live in the USA?

It is no wonder the US as a net importer and with the dollar so strong as the world's reserve currency is facing deflation.

The last time I looked most of us live in the UK where we are/have-

Importing nation

Very weak currency

Negative interest rates

Quantative Easing (will return!)

Importer of energy

No government!

The US can very well have deflation. I dont see it here at present, quite the opposite.

Should the pound bounce heavily upwards v the dollar and euro then perhaps we will face deflation. At the moment no way.

I subscribe to the Marc Faber view that the West will run negative interest rates for the next decade. He also says that the 'effect' of inflation could become far greater than the 70s as then they faced much higher interest rates (i.e. net effect between inflation and interest rates will be much higher this next decade than in the 70s).

Virtually all of the points you raised above can be prescribed to the US?

[plummet expert]

Prechter is interesting. His thesis on deflation may be right and I am sure he is right about a forthcoming collapse, which he has been touting for months. But you'll find many respected economists who firmly believe the crisis will play out as hyperinflation and depression or stagflation, due to the simply vast injection of printed money supply in the USA and other places including the UK. When you find that the money supply has increased by 4 fold in two years but inflation is still at bay, you have to wonder how that happened. The forces holding it back are only just beneath the surface and the dam will break. In the UK the real inflation measure - the RPI is at 4.4% as of April and rising when they said it would fall. The talking heads said house prices would rise, but April shows the fall has begun. In fact the Land Registry shows it was happening from Feb really. The supply of 'for sale' homes has shot up dramatically. It is many times the previous number and monthly adding at the rate of 3 x the number being sold, so inventory and rising interest rates, cuts and unemployment, confidence and a return to recession by next year which will make sure. HPC fans will at last see the real correction, but with a lot of pain to come. BTL will shrink dramatically in a fire sale over the next 2-3 years. By 2016 we will see rising prices again. Homes will be 2.5 x income for the first time since 1995.

Whichever way it plays out, be it depression or inflation or a combination, your wealth will not easily survive or thrive sitting in treasuries except for a very short time indeed. In Greece, they have been sold off at 60% face value recently. So I don't favour this course. Hard assets, such as Gold, Silver and Platinum will do best. Agriculture is also currently woefully undervalued.

GOLD may already be showing signs of 'detachment' from the stockmarkets. Most often it has risen and fallen in tandem, but lately there have been good rises when the market tripped. EG Gold went up $34 in a day when the Dow fell. It has fiddled with a correctiona couple of months ago, but its bottom is the old top of about $1000.

Peter Schiff is another one to watch. He fortells the price of gold being equal to the Dow when the collapse comes. Something like $3-5000 per ounce. Silver will do considerably better. Get and hold the physical stuff or use the company GoldMoney.com who are kosher.

[Toto deVeer]

Russian protesters were demanding either a/ Article 31 of Constitution to become direct law (few hundreds of dissidents in Moscow) or b/ second-richest Russian governor to go (Mr Boost, Kaliningrad). Nothing to do with money printing.

Kyrgyzstan does not have a common border with Afghanistan. Check with Google maps. The direct cause for the coup was govt troops firing at protesters and killing 200. Again, nothing to do with money printing.

Some of these protests are economic, some related to immigration, some related to other factors.

Never said it was related to money printing. The issue is general political upheaval. Underlying this is the economic situation. Times are starting to get hard; and for some, real hard.

Kyrgyzstan is crucial to Afghanistan, because the US base there replaces the US base that was lost in Uzbekistan. Now the likelyhood is that the base in Kyrgyzstan will be lost too. This is vital for military operations in Afghanistan. OK, doesn't directly border Afghanistan, but it's pretty damned close.

[Toto deVeer]

Do you all live in the USA?

It is no wonder the US as a net importer and with the dollar so strong as the world's reserve currency is facing deflation.

The last time I looked most of us live in the UK where we are/have-

Importing nation

Very weak currency

Negative interest rates

Quantative Easing (will return!)

Importer of energy

No government!

The US can very well have deflation. I dont see it here at present, quite the opposite.

Should the pound bounce heavily upwards v the dollar and euro then perhaps we will face deflation. At the moment no way.

I subscribe to the Marc Faber view that the West will run negative interest rates for the next decade. He also says that the 'effect' of inflation could become far greater than the 70s as then they faced much higher interest rates (i.e. net effect between inflation and interest rates will be much higher this next decade than in the 70s).

I like Faber. But where he's been very accurate on the markets, he's been premature on the currencies. Especially the dollar - same as Schiff.

At some point interest rates will have to rise in order to defend Sterling. This is inevitable. I just don't think that anyone is looking at this risk. Rates cannot stay at 350 year lows indefinitely. Just can't happen.

Rising interest rates will kick off deflation in the UK, no matter what is happening elsewhere.

[Edit]: Just to say, I'm expecting a Euro around $.85, and Sterling around $1.00, before this is over, provided that the US does not have a total political implosion before then (which is a possibility).

Edited May 8, 2010 by Toto deVeer

[betterToDo]

So ok, lets say leveraged assets and stocks n shit go down, again this isnt deflation. Tell me, as a stirling saver how do l enjoy this deflationary effect when the govt is quite happy to see my currency eat shit and lose value against just about everything.

Your first sentence seems to cover a large proportion of assets and "stocks n shit", and you point out that that shit is going down.

Your second sentence says your currency is losing value against just about everything.

I'd say these two things aren't simultaneously true by definition. The value of currencies rise and fall all the time, it just depends what you're measuring against. Today my sterling is worth a bigger chunk of pretty much any equity on the LSE compared to a few weeks ago. Its worth less gold. Its probably worth about the same amount or less of a UK house (but for how much longer? ooo! Interesting question, someone should setup a website about it )

[domo]

When I joined here a Prechter thread was an open invitation to the inflation trolls, since 2007 people have become open to the concept of deflation, which is part of the change to deflationary psychology. IOUs are not money and any IOU can collapse to zero, since 99% of the monetary supply is IOUs (arguably 100%) then deflation has almost unlimited potential.

[stonethecrows]

Your first sentence seems to cover a large proportion of assets and "stocks n shit", and you point out that that shit is going down.

Your second sentence says your currency is losing value against just about everything.

I'd say these two things aren't simultaneously true by definition. The value of currencies rise and fall all the time, it just depends what you're measuring against. Today my sterling is worth a bigger chunk of pretty much any equity on the LSE compared to a few weeks ago. Its worth less gold. Its probably worth about the same amount or less of a UK house (but for how much longer? ooo! Interesting question, someone should setup a website about it )

Correctomundo.

The point is that asset values are collapsing and will continue to do so until there is no and I do mean NO asset class on the planet that will not feel some repurcussive effect of this. The temporary drop in sterling merely serves to create the 'smoke and mirrors' effect which will only mask what is really happening for a short time.

The QE efforts have served only to slow the collapse they have not reversed it in the wildest dreams of the central bankers and politicos.

Be under no illusion-in this scenario it is a question of who loses the least not who makes any real gains so you had better be REALLY worried if you bet everything on black thinking you need to protect yourself against inflation. Touch cloth time for this particular group of people is VERY close at hand...

Edited May 9, 2010 by stonethecrows

[stonethecrows]

Prechter is interesting. His thesis on deflation may be right and I am sure he is right about a forthcoming collapse, which he has been touting for months. But you'll find many respected economists who firmly believe the crisis will play out as hyperinflation and depression or stagflation, due to the simply vast injection of printed money supply in the USA and other places including the UK.

Please feel free to name these 'respected economists' and I will try really hard not to laugh too much

When you find that the money supply has increased by 4 fold in two years but inflation is still at bay, you have to wonder how that happened. The forces holding it back are only just beneath the surface and the dam will break. In the UK the real inflation measure - the RPI is at 4.4% as of April and rising when they said it would fall.

Oh dear god, no disrespect but where did you get this bowlarks from?

the REAL problem

See that chart? I suggest you study it a while and it's predecessors. Then when you have fully taken on board the general idea try to exercise your brain a little thinking on this-all that QE and 'increased money supply' you talk of has done what? Kept M4 BARELY in postive territory is what and I assure you that was luck more than judgement and a whole lot of jawboning in the interim. To achieve anything remotely approaching REAL inflation and I don't mean all this pissy bullshite about relative currency fluctuations-inflation that is not!!!-we are talking a great many 'powers of' the amount that has been pumped in up until now. So many 'powers of' in fact that the currency in question would survive the process for maybe a few nanoseconds if you were lucky.

I said on this forum a few years ago when the same shower of witless wonders were trying to pitch the case for hyperinflation that risk is going to get repriced in a very big way at some point before this is done and dusted and the effects will be profound and last for maybe a generation or more. As you are now seeing in glorious technicolor in the PIIGS bond markets as just one of the many examples this has shown up in the last 3 years, inflation is not the only trigger for rate rises-ohh, you didn't believe me? OOOPS . The result? If its not as plain as the nose on your face by now, all I can say is shoulda gone to Specsavers mate. A little hint: it's not inflation and it's not even stagflation and it begins with a dirty great D.

Edited May 9, 2010 by stonethecrows

[okaycuckoo]

Inflation v Deflation has been the debate for the past three years - at least since I started paying attention.

I simply have not experienced price rises. My credit card statements for monthly expenses over that period have remained steady. (BTW - self employed)