This is what is bothering me.
Is the Fed printing new money or just replacing some of the wealth destroyed by a collapsing housing sector and all that is associated with it?
I do not know, quite frankly. My sense, however, is that net net, they are replacing the incredible wealth destruction that has taken place in the past 18 month. If so, their action is not terribly inflationary as most people think.
Just watch the price of commodities, gold, and crude oil. They are sinking. The time to worry about inflation is when they start rising.
More, much more when you read older posts and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
2 comments:
Do you agree with this analysis of hussmanfunds.com? I believe you have recommended reading his columns.
Where do I think the market is headed? I have no forecast, but I'll share my impressions. It's possible that the lows we observed in November were the lowest point that we will observe during this downturn, but I would not invest on that basis. It's possible that market action will improve further, and that we will recruit enough evidence to warrant removing a significant portion of our hedges, but at present, we don't have that evidence. My impression is that regardless of near-term prospects, we will observe a tone of “revulsion” at some point next year, which we should certainly allow for especially during the first half of 2009. At that point, we should not rule out a low that would compete with the November lows and perhaps break them, but we should also expect that the market will be more selective at that point, so there will be many stocks that hold above the lows that have already been set.
I have my indicators and follow what they are telling me.
Hussman is a very astute observer of the markets.
Best.
George
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