Comments on: How To Get Ready For Double-Digit Inflation

By: Financial Samurai

Financial Samurai — Fri, 30 Oct 2009 05:19:03 +0000

If there’s really going to be double digit inflation which I really REALLY doubt, then it’s all about buying assets and mortgaging yourself to the hilt!

By: MoneyEnergy

MoneyEnergy — Thu, 08 Oct 2009 05:43:51 +0000

@DividendGI – I can’t remember now why I didn’t also include a section in here on gold – maybe because I’ve already written so much about it – but yes, obviously, gold is another way to store the value of your money and protect it.

Also, heard a new phrase recently to describe the phenomenon of “exporting inflation” – it’s called “competitive debasement” of fiat currencies. Nations want to protect their exports to the US (if they are a major trading partner), so they weaken their own currencies to “keep up” with the weakened dollar.

By: Dividend Growth Investor

Dividend Growth Investor — Tue, 14 Jul 2009 12:58:39 +0000

I agree that if you expect double inflation to show up over the next few years, the best strategy would be to get a fixed rate loan and buy real estate or dividend stocks.

I don’t believe that we are going to see any high inflation however. Maybe the typical 3%-4% on average over the next decade. When everyone is telling me that we are going to experience an inflationary environment, I keep thinking that the herd must be wrong again.. Anyway, my dividend stocks would do great in a higher inflationary or a normal environment. My fixed allocation would do ok in a deflationary environment.

Has anyone considered purchasing gold? I haven’t but I like the idea of collecting and playing with gold coins..;-)

By: MLR

MLR — Tue, 14 Jul 2009 03:38:15 +0000

Gotcha, I assumed you hadn’t read it because you said “It’s the same monetary policy for deflation as for inflation” when I had already addressed that it wasn’t applicable to deflation at this point

I don’t think SS has stopped releasing M3 data, it seems the graph is updated as of 7/13.

I think the article is fine if its a general “What to do if there is inflation”… I just think it is silly to dismiss the idea that deflation is the real concern right now. That’s all!

By: MoneyEnergy

MoneyEnergy — Tue, 14 Jul 2009 03:21:50 +0000

@MLR – yes, of course I read your whole comment:) And I understand what it means for growth to decrease as opposed to absolute supply:) However one interprets the data, when inflation does become more noticeable the concern is what to do – that’s what I was trying to address in the article. I’ve published on ShadowStats here before. They’ve stopped releasing M3 figures, so we can only go by the announcements we get about what the Fed is doing.

By: MLR

MLR — Tue, 14 Jul 2009 02:49:46 +0000

You didn’t finish reading my comment: “There is monetary policy that can deal with inflation. Right now, they can’t do as much if deflation hits… the rates are already as low as they’re gonna go.”

As I said, they can’t use monetary policy to combat deflation right now… the rates can’t go much lower.

I didn’t say monetary supply has decreased, but I did say that the growth has decreased (meaning it’s still growing but not as fast).

Look at Shadow Stats calculations of M3… in 2006 to 2008 M3 was blowing up (almost getting to 18% annualized growth!). In early 2008 M3 started to take a fall, getting to an approximate 6% growth. In the years before they stopped releasing official M3 numbers (2003-2006), M3 was hovering around 6%.

M3 is finally stabilizing around a sustainable number for the time being, and I’m sure they will react accordingly if things change.

But yeah… inflation is fear mongering at this time.

By: MoneyEnergy

MoneyEnergy — Tue, 14 Jul 2009 02:40:28 +0000

It’s the same monetary policy for deflation as for inflation: manipulating the interest rates and controlling the money supply. Just in two different directions. What data are you using to show the money supply has decreased?

By: MLR

MLR — Tue, 14 Jul 2009 02:22:32 +0000

No, since Early 2008… right before they started printing more money. (Their actions make a little more sense when you look at all of the data)

So the fear truly is deflation. There is monetary policy that can deal with inflation. Right now, they can’t do as much if deflation hits… the rates are already as low as they’re gonna go.

By: MoneyEnergy

MoneyEnergy — Tue, 14 Jul 2009 00:42:00 +0000

@MLR: “In fact, money supply growth has slowed.” …. yeah but over what time period? The last month? That wouldn’t be meaningful compared to the amounts put into the system over the last 8 months or so.

By: MLR

MLR — Mon, 13 Jul 2009 23:32:09 +0000

Printing more money doesn’t mean money supply is growing at a fast pace.

In fact, money supply growth has slowed.