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Aep Lays Into Bernanke Big Style

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Bernanke is panicking and he's going to print, but if he goes down that road it has always ended in disaster no one ever prints just enough.

Ludwig von Mises describes the endgame brought on by reckless expansion of credit: "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."

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So is it time for you guys to apologise to Cnago yet? And Injin too for calling his printy printy statements crazy? Both of them have been vindicated.

We're in mid '08 right now. $600 oil just around the corner, 5% base rates, inflationary scaremongering blah blah.

7,323 wasn't a concrete ceiling.

There has been no hyperinflation.

100% guaranteed.

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The comments after the article are worth a read.

I have just spent a thoroughly enjoyable 20 minutes going through them.

There were a few names I recognise from here, and it was all good rough'n'tumble stuff.

But not many people contradicting AEP, with any conviction or sound argument. (bearing in mind his up-front apology for being wrong in the past)

However, they're worth a read, just for thought-provoking entertainment's sake.

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It is really nice to see someone in his position beginning to understand what is at stake.

However the following quote shows that he hasn't given himself the time to think things over:

But deliberately creating inflation “consistent” with the Fed’s mandate – implicitly to erode debt – is another matter. Nor can this be justified at this particular juncture. M3 has been leveling out. M2 has begun to rise briskly. The velocity of money has picked up. The M1 monetary mulitplier has jumped.

Deliberately creating inflation without the general populace noticing has been a matter of policy since at least WWII. To the academics in charge of monetary institutions it meant that business would be facilitated (investing borrowed funds require a much lower return for success in an inflationary environment) and for politicians in charge it meant they could spend money on pet projects and 'buy votes' without ever having to pay the money back.

This has been going on for 65 years and after 3 generations of people noticing and informing their siblings, nearly _everyone_ today is playing the borrow and speculate game: to enrich themselves and protect their savings from systematic currency debasement. The cat's out of the bag, it is game over as the deception only works if the majority fail to see it.

What we are seeing now is the conclusion of this process and funnily enough, his statement 'Nor can this be justified at this particular juncture' is wrong IMO. Now is perhaps the only time in the last 65 years that the option can be reasonably considered.

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Don't listen to him Ben, PRINT, PRINT, PRINT!!! Let's bust 1300 right open, YEAH BABY :)

I preferred how things were in early June when spot gold was at £858 an ounce and $1,220 in US dollars rather than today's £818 and $1,294.

The pound appears to be steaming towards its long term average of 1.70 versus the dollar so to get back to June's high would require a $1,458 close.

Amongst others, those holding euros and Aussie dollars have suffered a much worse shoeing during the same timeframe.

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There was another AEP article where I thought he really nailed it. Talked about the problems with the Yuan - Dollar exchange rate being at a level where the US couldnt compete. I thought that he was right with what he said there. And now he has done a 180 degree turn.

Somehow the US trade deficit with Japan, China, Brazil and Germany, has to balance. These countries are all trying to avoid it by fixing the exchange rate. I thought that the whole rationale behind QE2 was to pump money into the US economy, allowing it to move to these countries, who can then either spend it back in the US, which they wont, or keep it in their central banks.

But to acquire the dollars to put into their central bank, they need to buy them, and that means that they have to print money in exchange for the dollars.

And that means they will create domestic inflation. If they create enough inflation for long enough, instead of the exchange rate balancing out price differentials between the two countries, it will be price level adjustments that will do the job.

The market will always find a way of balancing things out. And the US needs it if it is to avoid being destroyed by the ongoing currency war.

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There is doom coming but not in the way everyone expects.

The traditional method of inflating away debt/devaluation will fail.

In the end the US is going to have to use much more direct and radical means.

Restructuring/reset will be required in the US.

China is clinging to the US economy for dear life.

It is only when this is broken that the US can begin to recover.

This means that tariffs/sanctions will have to be engaged.

This will force China to crash.

These actions are completely independent of the Fed, and are in the hands of the Congress.

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  • 419 Brexit, House prices and Summer 2020

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