Due to the
overwhelming number of emails I received in response to my earlier article
detailing the behemoth that is the derivative market.
question I’m receiving is: does deflation pose a REAL risk today?
is absolutely. Remember, the entire
financial system is broken in the US. Until we take our medicine and deal with
the hundreds of trillions of bad debts sitting on the banks’ balance sheets,
there is ALWAYS the risk of another 2008-type event.
Reserve has attempted to paper over these issues by offering Wall Street an
endless stream of Dollars. But this hasn’t addressed the underlying issues in
any way. The banks are still insolvent and the derivatives market is still the
primary concern for anyone who works in finance whether they know it or not.
deflation is and always will be a potential threat that can erupt at any time.
However, should deflation even take
hold of the markets again, the Fed and other central banks’ responses will
GUARANTEE that it is short-lived and that inflation, then hyper-inflation takes
over in a short period of time.
Bernanke has NEVER admitted that he was wrong about anything. The guy literally
believes he’s an economic genius who can save the world (thanks Time magazine
for buffering his ego). He is 100% positive that his policies are the right
policies. So if deflation reared its head again, he would do the same things he’s
already done (print money, engage in more QE, etc) only on an even larger, more
destroy the US Dollar and insure that we experienced either severe inflation
similar to that of the ‘70s or hyper-inflation similar to Weimar. Bernanke’s
nearly pushed into the former already and deflation hasn’t been seen in the
financial markets in over two years.
better believe he’d go all out if deflation poked its head up again. Imagine if
a grizzly bear got up and tried to attack you after you already brought it down
with repeated gunfire. What would you do? You’d blow its head off and then walk
up to the body and shoot it until you ran out of bullets to make sure the thing
didn’t get up again.
do the same thing to deflation. He’d throw so much money at it that he’d not
only kill it dead, but he’d also kill the US Dollar and send us straight into
Zimbabwe-land without even a moment’s pause.
deflation is a threat. And it will
always be. But we might very well not see it again thanks to Bernanke’s
actions. And if it does show up
again, its presence would be very short-lived.
I call it The Financial Crisis “Round Two” Survival
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protection, which investments to own and how to take out Catastrophe Insurance
on the stock market (this “insurance” paid out triple digit gains in the Autumn
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PPS. We ALSO
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have all already SOARED as a result of the Fed’s monetary policy.