In the last five months, according to the Federal Reserve Board, the money supply in the United States has increased by 271 percent. It has almost tripled.
Have car sales tripled? Home purchases? Consumer spending? Corporate investment? Not only have they not tripled, they have all declined more sharply than they have since at least the recession of 1981-82, and perhaps since the Great Depression.
So where is the money? If it isn’t being spent, where is it?
It is being parked, squirreled away. Consumers are using it to pay down their credit card balances, pay off their mortgages, reduce their student loans, make the payments on the car sitting in their driveway — not the one in the dealer’s lot. Businesspeople are buying T-bills, investing the money and saving it. They aren’t spending, either.
But one day this recession — despite Obama’s best efforts
— will end and things will begin to look up again. Then we can
expect all of this money to come out of its parking space and get
back on the highway of commerce. All at once. The inevitable result
will be double-digit hyperinflation.
More
(ARTICLE CONTINUES BELOW)
Comments:
Step 1. If you haven't done so already, buy inflation hedges. Back
in the 1970s, it was often cumbersome and inconvenient. Investors
scrambled to buy gold bullion bars. Or they hoarded bags of silver
coins.
Step 2. Also consider energy-related investments. Oil, natural gas
and alternative energy sources are in the vanguard of this round of
inflation, with no end in sight. Stocks and ETFs tied to their rise
are bound to continue to benefit.
Step 3. Diversify out of the U.S. dollar by buying the strongest foreign currencies. Although the dollar could enjoy a nice rally in the near term, the long-term outlook remains negative. Even if the Fed pauses its recent rate-cutting ... even in the Fed actually raises rates ... as long as real interest rates in the U.S. remain below zero, it's unlikely to provide lasting support for the dollar.
