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Deflation Revisited
We were not surprised to see the Ten Year Treasury Notes double their yield cost to the Treasury Taxpayers last year.
We will not be surprised to see a serious bulge in 5 to 7 year T Notes and others, maybe even an inverted yield curve, typically the sign of an overheated economy coming to an end.
So many Corporate Wall Street commentators like Kudlow may be so accustomed to three generations of Fed and Treasury inflation that they may be missing the Jubilee forest for the daily trees, thinking a steeper yield curve is a bullish wild child wonderful thing.
As Arch Crawford, Robert Farrell, Bob Prechter, Dave Rosenberg or Gary Shilling might say, we are not in a continuing inflationary or even disinflationary secular environment.
BB may have it right.
Rising interest rates today are not due to inflation, but rising credit default risk from deflation. Look no further than Britain, China, Greece or Russia for a preview of coming interest rates.
If Uncle Sam can’t pay his bills, who will want his paper?
The day of reckoning appears to be upon US, with Rick Ackerman correctly noting American corporate and government spending has peaked across the board.
Today’s GDP and Profits are achieved by seasonal inventory adjustments and amputations. We can only remove so many limbs and workers before the host dies.
Yes inflationistas, the continuous 1980 nominal CPI is approaching 10% again, but in terms of gold, it is falling, hello, wake up, get out and off the train track while we can.
Debt of course leverages gains on the way up and amplifies losses on the way down.
Saving America by saving for an ice rainy day and waiting to buy at multi-generational price lows before the Great Debt Inflation may be the key to conquering deflation and depression to prosper.
We face the end of debt fiat usury money as we know it, long live Keynes.
