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EmailTuesday, October 13, 2009
Executive Summary:
- A large investment theme and strategy is discussed.
- A hyper-concentration of income gains towards the top over the past thirty years is shaping our story.
- A rapid and large shift in investment preferences could entirely reshape the investment landscape with startling speed.
- Those early to the game win; those late will find themselves stuck in a wealth trap.
This week’s report was supposed to be an extension of last week’s, but I need to take a little detour here. I received quite a few responses to The Sound of One Hand Clapping, and it occurred to me that there is a very important bit of thinking that needs to accompany that article.
In this report, I will tell you exactly why I am convinced that the next round of destabilizing price adjustments – adjustments that will completely reshape the value of your income and assets – will not follow any prior historical model. Fortunately, with a bit of analysis, I think we can predict what sorts of changes will happen well in advance and get ourselves properly positioned.
Here is a representative question, asked by enrolled member Eric, who raises an important point:
I agree with your analysis in one hand clapping. Can you address how inflation will take hold if the new money is only in banks' hands? I can see the banks piling into various assets creating bubbles, but I don't see where the common man is going to get access to this extra created money unless it is sent directly from the government in the form of stimulus checks. Otherwise, I cannot see runaway inflation occurring. Thanks, Eric
Great question. How can inflation occur if people can't afford to pay for things? Given that both earning and borrowing money seem to be depressed avenues for most people, where will the new buying pressure come from that will stoke inflation?
This is a good question, and it leads me to another insight that I've been nursing for a while. I realize I may not have shared it yet, at least not directly, and that certainly needs fixing.
Your faithful information scout,
Chris Martenson
Copyright 2009, Chris Martenson. All rights reserved.
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Comments
Excellent report Dr. M.
I haven't read anything that so closely comports with my own view from out here at the end of the food chain. It reconfirms the reasons I became a member of this site over a year ago.
Thanks,
Doug
Great report Chris. One question, did you mean to say 0.1% instead of .01% in figure 3?
Thanks for such consistently fantastic work. I am anxious to hear a summary of the ASPO conference.
Hi Chris, I enjoyed your writing as usual. Have you researched the Tiffin Dilemma (Robert Tiffin, 1960)? He went before the U.S. Congress to present his theory on the Breton Woods agreement. His argument was that the US had to run deficits to supply the world with dollars to keep liquidity...
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Wow. I am stunned. You have clarified the phenonemon I have been seeking for months. This explains the disconnect and I really like the idea of "sloshing". I have my work cut out for me for the day! Off to work then . . . EGP
Outstanding job here, Chris.
One comment. I'm glad you talk about how prices can rise without some kind of inflation occurring. It seems that so many people are stuck in the trap of traditional economic thinking. So not only can prices rise in an environment of shrinking monetary bases but also in times of less demand...
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Chris excellent report that sums up my feelings exactly. I need some input on a decision I'm struggling with. I have been looking at purchasing a small ranch in either MT or SD. I have an impending dread of living in the big city that I live in. We have a ranch 90 miles north of where we live that has plenty of water, fish, can be farmed, etc...
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Chris,
Thanks for the great analysis. You've been consistently right and ahead of the curve in your recommendations that tangible assets are better protectors of wealth than the paper games. Those of us who followed this advice are much better off today...
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Very unique analysis. Thanks.
Chris, you're on fire! Another insightful and original analysis. The top 1/100th percent continues to get richer while the rest of us get poorer - and almost nobody talks about it.
While watching where their money goes and following suit makes sense in terms of wealth preservation, I get an icky feeling about following that strategy...
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Great report, Chris.
Previously, my view of goods in terms of inflation were the things we need and consume (food, energy, etc.), the things we want (iPods, BMWs, Armani suits), and then of course all of the traditional investment classes. My previous view did not include the wealthy and I tended to assume that resource scarcity and the monetary supernova would appear mostly in items we need, then in investments broadly, and perhaps very little in the items we want, since most Americans would be spending (previously) surplus income on the items they need now...
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