I don’t know what else to say at this point, other than that everyone had better be ready for massive inflation..
For the record, I do not ascribe to the simplistic views of “either/or” when it comes to the great inflation vs. deflation debate. When I am asked about which outcome I favor, I say “yes.”
What I mean by this somewhat flippant comment is that I can easily envision some assets declining in price (worthless CDOs anyone? McMansions?) even as I see other things rising dramatically in price.
I’ve alluded to this before, and now the evidence for a liquidity flood is presented below:
Exhibit A – Stocks
First up, the run in stocks has been both magnificent and global. Here’s a typical article from today (9/22/09), crowing about how stocks are poised for even more gains:
U.S. Stocks Gain, Extending Global Rally, as Dollar Slips
Sept. 22 (Bloomberg) — U.S. stocks rose, sending benchmark indexes to almost one-year highs, on signs the world economy is improving and analyst upgrades of companies from Macy’s Inc. to Hewlett-Packard Co. The dollar fell to a one-year low against the euro, helping drive oil, gold and copper prices higher.
“The stock rally will keep going and any correction will be muted,” said James Dunigan, the chief investment officer at PNC Financial Services Group Inc.’s wealth-management unit, which oversees $100 billion in Philadelphia. “The appetite for riskier assets will continue to increase. There’s a lot of cash on the sidelines, corporate America has been very diligent on expenses and economic activity is improving globally.”
In truth, stocks have (for the most part) been running faster elsewhere on the globe than in the US, as evidenced by this comparison chart showing the S&P 500, the German DAX, the Japanese Nikkei 225, the FTSE 100, and the Brazil Bovespa:
If you can detect a serious difference in the wiggle of those lines, then you have better eyes than I do. I take such ‘synchrony’ as a sign that global liquidity has been loosed upon the world. This is not a Federal Reserve thing – it’s a global thing.
by former_user