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The Return of "Inflation"

jhaddock (February 26, 2009)

(Just Not the Kind We Expected)

Also In Today’s Letter…

Chuck Butler Image

By Chuck Butler I’m afraid it’s not quite a Thunderin’ Thursday for me. I’m out of the office today -spending the day getting some tests done at the Siteman Cancer Center. Hopefully I’ll have good news for you when I’m back tomorrow.

But in the meantime, I wanted to share something briefly with you…

Earlier this month, one of your fellow FX University readers sent me a really interesting question that I’d like to answer here in the issue. The astute reader (and a financial professional in his own rite) wrote me to ask…

Image“I have been saying since February 2008 that we would be in a mess until the third quarter of 2010. I have revised my forecast to the fourth quarter of 2010 to possibly summer 2011. Things are progressively getting worse with the botched government intervention and the lack of the Bankers providing any real solutions to the derivatives situation. What do you really think?”

My goodness, he hit a nerve here didn’t he? But since he asked, I’ll give you all dear readers a few of my thoughts on this…

What Caused This Recession
(Read: Depression) In the First Place

First of all, some of this is build up of not allowing the recession of 2001 to clean out the excesses of the previous boom.

Recall the Fed/Greenspan, lowered interest rates to 1%, increased money supply, and told people to “spend.” At the time, I told people that by not allowing the recession to do its job, the next recession would be even worse. And so it is (it just took a few years to happen)! Image

When all of this came to the forefront in July 2007, I said then that we were getting what we deserved, because of years of greed. This is what happens when you have an economy that’s really a mirage based on irresponsible, asset-inflating monetary policy.

The financial products that created so much wealth are now destroying it. As everyone now knows, these products were built upon existing ones, and so on. U.S. prosperity, one could argue, is predicated on several layers of over-inflated assets!

But, now we have the “meddlers” trying to stimulus this and stimulus that in an attempt to bring us out of what I feel is actually a depression. They will, in the end, just spend money, and not make things better in my opinion.

And in the meantime, they will pass legislature after legislature telling us how “it’s needed” that will be chock-full-o socialism. Get ready for it…

I Almost Fell Out of My Chair When I Heard This…

Okay, I think we could all use a laugh after that. An acquaintance sent this to me earlier this week and I laughed so hard that I had to share it with you…

“Your income taxes are normally due on April 15th unless that date falls on a Saturday or Sunday in which case they are due on Monday the 16th or 17th.

The good news is that I have learned of a recent change, and for the next four years, they will not be due until you are nominated to cabinet position.

Please check with your tax adviser to confirm.”

Haha!

That’s all for today…Well, my big news for the week is that I’ve been invited to speak in sunny Bermuda this spring! The Sovereign Society has asked me to share my thoughts at their Total Wealth Symposium this April 26-29. I’ve been to Total Wealth Symposiums in the past and seriously, talk about a glut of talent…

They have financial geniuses from all corners of the globe at these events – asset managers from Panama to Hong Kong, investment guys from Switzerland to New York, currency whizzes from Florida to Denmark…and then some. Naturally, I’ll be on hand to give all my top currency recommendations for 2009, and tell all attendees how to diversify into the best foreign currencies at these super-cheap bombed-out levels.

Okay, time to tie a bow on this and get out of here. Wish me luck at my appointment. I’ll be back here tomorrow with my usual commentary on the markets. Till then…

Have a Thunderin’ Thursday!

Chuck

EDITOR’S NOTE: The Sovereign Society’s Total Wealth Symposium has sold out every year for the past three years. So if you’re interested, we urge you to reserve your spot now, while we still have seats available.

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