There has been a LOT of chatter lately, warning of the impending DEFLATION. People like Rick Ackerman and Harry Dent are leading the bandwagon. It is very important to your financial well being that YOU get this one right. Your portfolio should be very different under a deflation or hyperinflation scenario. Unfortunately, you have to react to one or the other; you can’t just sit idly by on the sidelines. Each scenario will affect your portfolio. Should you be in the stock market? Should you be in dollars? Should you keep investing in precious metals? The inflation/deflation outcome will affect all of these areas.
So, it is critical that you pick the right outcome. Should you follow Dent’s recommendations – or those provided by the brilliant John Williams at Shadowstats? I am going with Williams. I will take my chances with his analysis and not look back.
If you don’t already subscribe to Shadowstats, you really should. In today’s newsletter, I have presented a few of his recent comments on the state of the economy, the dollar and where we are (soon) headed. Hint: hyperinflation, collapsing economy, plunging dollar and rising precious metals. Read his section today.
Your point is well taken, but with either blow offs PM’s will be a great way to transfer wealth to a new financial system. One miss interpretation a lot of financial savy people have is that in a Deflationary spiral Dollars will be a winner. That was true back in the 1930s great depression because dollars were backed by GOLD. Gold was the Money backing up the system whereas Dollars loose in either a Deflationary or Hyperinflationary. My best finacial guess, is if we do have a Deflationary crisis because of our current global Fiat Money system there would be numerous currency crisis brought on by the “Big Fiat Print”.
Of course throw in a few “Head Fakes” from our central planners e.g. Tapering, Belgium Way Point, Fear Trade, etc. just to make things a little interesting.
It’s hardly fair to reason that the deflationary argument doesn’t hold water by comparing Dent to Williams. How about Nicole Foss vs John Williams?
There is a fair argument that a short term deflationary episode is occuring. What happened when the Argentinian economy took a dive. People exchanged the peso as soon as they got to a US dollar supplier. The result, in a small way the Argentine crisis helped strengthen the dollar. The question is which currency will fold first. The weak ones or the world’s reserve currency.