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Deflation and Inflation

I’ve had it with this talk of hyperinflation and deflation.

Here is the deal, once and for all.

There is a group in society endlessly looking to start bubbles with costless cash.  They are the banks.  They move from nation to nation, from fad to fad.  Wherever they set up shop – that’s where inflation appears.  They are like a roaming band of locusts.

First dot.com.  Then housing.  Then bonds.  Now commodities.

Whatever they “target” gets hit with an initial blast of inflationary radiation.  Some radiation just glows for a few hours and dies (dot.com).  Some radiation lights a fire all of its own (housing).  And some simmer and simmer (gold).

The point is that ‘hyperinflation’ can occur in the midst of credit deflation.

Suckers who bought houses are experiencing deflation.

But the money supply keeps growing.  Where does it go?  Where the bankers see opportunities to corner markets, into base money (gold and silver), into food, into essentials.  Because they are the substances that are ‘non-negotiable’.  They are the things that, if you hit them, will go up and stay up.

Who has the guts in this environment to borrow debt-money, to see opportunities to grow?  Governments and bankers!  So new money, marginal money, price makers move into govt pork and defence and commodities.

When the fundamentals line up, you get people cashing goods with cheapening cash, and bang – you get price rises.

People need to look at (1) who’s replenishing money with what (2) demand and supply fundamentals (3) the marginal buyer and the marginal seller.

Look at what the bankers will do next week and buy that today.  That’s how you guarantee to be in the hyperinflationary sweet spot.  This talk of money supply aggregates is rubbish and useless from an investement perspective.  You should always focus on the marginal buyer and the marginal seller because they set the price.

Suckers are taken down.  The rich get richer.  Big deal.

The question is – who holds the money and what are they going to do with it?

That’s all you need to worry about.

Hyperinflation comes later.

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