Inflation

Can Bernanke Contain Inflation?

Ben Bernanke has stated publicly that he can contain inflation in 15 minutes by raising interest rates. He thinks he can go the route of Volcker, but I have serious doubts over whether Bernanke can get away with raising interest rates under the present circumstances. The number one constraint on Bernanke’s ability to contain inflation is the U.S. government bond market. I consistently say that what you should fear is…

Questioning the 1,000 Dow, Debt Deflation Thesis

As expected, right when everyone is leaning bearish, the markets rally. After all, when the New York Times runs a feature story on Robert Prechter and his  1,000 Dow doomsday scenario, you know that overall sentiment has turned overly bearish, at least in the short term. The interesting thing about Prechter is that he predicts a collapse in confidence, debt defaults, and an eventual flight to quality. About these points we are…

Misconceptions, Misrepresentations, and Illusions About Our Economy

I know I am in the minority in my opinion that big economic shockwaves are coming, which is fine by me, since there is some serious lack of understanding out there of how the economy and markets work. Need proof? How many people saw the “Great Recession” (read: Depression) coming, even though it was preceded by the most obvious bubble in history? Exactly, not many.  In time like these, you need to think…

Is Gold Really An Inflation Hedge?

If you ask the average person what purpose gold serves as an investment, they will most likely respond that it is a hedge against inflation. Since inflation is relatively stable, they will argue that gold is not a good investment in the current environment. It follows that any rise in gold should be closely correlated with rises in the CPI. Negative CPI prints, or deflation, should be met with falling…

A Year-End Look at Gold, Stocks, and Bonds

With 2010 just around the corner, it’s a good time to take a step back and analyze the major asset classes while attempting to divine where we are headed in the future. Stocks I am starting to get the sense that the rise in stocks is more than just a classic bear market rally and is now starting to instead signal potential inflation. I wouldn’t be surprised by new nominal…