[BigTex]

I have learned to be agnostic about the future and acknowledge my beliefs about the future have absolutely nothing to do with what will actually happen.

This mental balancing act allows me to develop detailed theories about what I THINK will happen without becoming dogmatic when events begin to play out differently than I anticipated.

Oddly enough, this approach has the net effect of providing a bit more flexibility when thinking about both the present and the future, and it has caused my predictions to be more accurate than they might have been had I taken them more seriously.

Maybe it's sort of like walking on a plank six inches off the ground rather than 600 feet off the ground. I hear it's harder 600 feet off the ground than six inches, though the size of the board is the same.

One thing that i think also helps clear up one's thinking about the future is to practice making a convincing case for more than one outcome. For example, for someone who is interested in the deflation/inflation story, I think it is helpful to be able to make a good case for each scenario. If a person can't make a reasonable argument for opposite outcomes, it suggests that they may not understand all of the dynamics that will determine which scenario (if either) actually arrives.

Often, the best investment hedging strategies are right in front of you if you have a good grasp of the range of investment outcomes that are foreseeable. What often messes people up is getting too attached to their preferred scenario (and only listening to people who validate that set of beliefs) and putting all of their chips on one narrow set of future conditions.

[DantesPeak]

Keep in mind that deflation will not - repeat not - prevent bond yields from climbing if it occurs at the same time government and possibly corporate borrowing is increasing rapidly.

The situation where bond rates went very low in Japan would not be comparable here in the US, because there they had more than enough private investment to buy bonds. Right now, new Treasury bond issuance is well in excess of actual or even potential US savings - or even worldwide savings. Essentially at this point in time the budget deficit is being financed because it hasn't yet finished sucking prior available savings from elsewhere - but it will.

So if I thought there was deflation coming, I would only buy very short term Treasuries.

[BigTex]

$this->bbcode_second_pass_quote('DantesPeak', 'K')eep in mind that deflation will not - repeat not - prevent bond yields from climbing if it occurs at the same time government and possibly corporate borrowing is increasing rapidly.

The situation where bond rates went very low in Japan would not be comparable here in the US, because there they had more than enough private investment to buy bonds. Right now, new Treasury bond issuance is well in excess of actual or even potential US savings - or even worldwide savings. Essentially at this point in time the budget deficit is being financed because it hasn't yet finished sucking prior available savings from elsewhere - but it will.

So if I thought there was deflation coming, I would only buy very short term Treasuries.

[sparky]

.

BigTex

This is good !

"I have learned to be agnostic about the future and acknowledge my beliefs about the future have absolutely nothing to do with what will actually happen."

Your thinking about a dead economy being non inflationary is spot on ,



.

[Gerben]

$this->bbcode_second_pass_quote('BigTex', 'A')sk yourself how money could be devalued if everyone is broke?

[BigTex]

$this->bbcode_second_pass_quote('Gerben', 'W')hen in debt there is always someone who you owe the money to. Just imagine what will happen when people want to cash it. The dollar will be devaluated. Perhaps not now, but within a few years. Although this week should already make some people nervous.

[sparky]

.

A possible indicator would be a relative " rise " in raw materials and energy inputs

the two final quarters to xmass should give some idea of what is going on .
so far the picture is rather contradictory and confused ,
I'm not sure anyone has a clear idea of where all the bodies are buried yet .

Only one thing is for sure , all public finances through the OCDE are in need of fresh money
and quite a few of the listed companies too .
the old Euro benchmark of less than 60% debt to gross national product is gone by the board ,
the new acceptable line seems to be around 100% nowadays .





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[BigTex]

$this->bbcode_second_pass_quote('sparky', 'A') possible indicator would be a relative " rise " in raw materials and energy inputs

[Outcast_Searcher]

The confusing "war" being played out now between the inflationists (buying metals, oil, global stocks and avoiding the dollar) and the deflationists (buying long term treasuries with both hands, apparently) is an example of why it is VERY hard to outperform the markets long term.

It reminds me of comedian Lewis Black's commentary on the economy in one of his routines (paraphrased): "NO ONE understands the economy. The economy goes up! The economy goes down! The economy goes up! The economy goes down! ..." I think he has at least as much insight here as most economists, BTW.

[Gerben]

$this->bbcode_second_pass_quote('BigTex', '')$this->bbcode_second_pass_quote('sparky', 'A') possible indicator would be a relative " rise " in raw materials and energy inputs

[sparky]

.

We can assume that raw inputs and energy is a constant cost ,
the only variables left are taxes level and wages ,

the only demand destruction around might be Joe Blow wallet
if employment stay weak , deflation is a fair bet .

.

[copious.abundance]

Posted on November 14, 2008:
$this->bbcode_second_pass_quote('patience', 'T')he whole financial Ponzi scheme is unravelling much faster than many predicted. I'm betting on mid-2009 being a watershed of failures around the world, as outlined by GEAB recently.

edit: Wonder where Oilfinder went?

[Gerben]

$this->bbcode_second_pass_quote('OilFinder2', 'B')TW, if anyone's interested, nice read here:
>>> 30-Year Bond Sends Encouraging Signal <<<

[DantesPeak]

$this->bbcode_second_pass_quote('', 'I')'m sure it has never occured to you to you that the FED is behind the scenes buying all of these treasuries themselves even though it has been shown and proven by numerous writers.

[Revi]

The price of silver and gold jumped last week. That has to mean something is going on. Monetizing the debt has got to show up somewhere. Is inflation happening again?

[DantesPeak]

$this->bbcode_second_pass_quote('Revi', 'T')he price of silver and gold jumped last week. That has to mean something is going on. Monetizing the debt has got to show up somewhere. Is inflation happening again?

[copious.abundance]

>>> LINK <<<
$this->bbcode_second_pass_quote('', '[')b]China Can’t Buy Enough Bonds as Dollar No Deterrent
By Cordell Eddings and Lukanyo Mnyanda

Sept. 21 (Bloomberg) -- International investors are increasing purchases of Treasuries on a bet U.S. inflation will remain subdued, even as the dollar falls to the lowest levels of the year and the budget deficit tops $1 trillion.

[...]

Foreign governments have little choice than to buy Treasuries because they hold so many dollars. The U.S. dollar accounts for 65 percent for world currency reserves, up from 62.8 percent in mid-2008, according to the International Monetary Fund in Washington.

[...]

Yields on U.S. inflation-protected debt show there’s little concern about consumer prices eroding the value of bonds’ fixed payments. The difference in rates on 10-year notes and Treasury Inflation Protected Securities, or TIPS, which reflects the outlook among traders for consumer prices, is 1.82 percentage points. While up from 0.04 points in November, the level is below the average of 2.19 points over the past five years.

The U.S. has the lowest so-called breakeven rates of any major sovereign debt market except Japan. The difference between three-year maturities is 0.71 point, below the average of 2.21 points this decade.

[...]

[Revi]

So everything is fine again?

[Maddog78]

It certainly makes a mockery of a lot of recent doomer predictions regarding Foreigners dumping their $US holdings.

Not only are they not dumping, like many predicted, they are in fact buying more.

[DantesPeak]

$this->bbcode_second_pass_quote('Maddog78', 'I')t certainly makes a mockery of a lot of recent doomer predictions regarding Foreigners dumping their $US holdings.

Not only are they not dumping, like many predicted, they are in fact buying more.