Food for thought. Who is the evil party in this whole crisis story? Is it the people who want Europe to declare insolvency and restructure? Or, is the people who wish to “extend and pretend” through artificially propping up failed governments and institutions, which in turn hurt the people through caused inflation and harsh austerity?
The knee-jerk opinion is to declare Bernanke an evil genius, one who is interested in slaughtering poor people via starvation. However, if Ben allows the financial system to collapse, how does that help Joe Shmoe, working at the bus depot making 45k per annum? Without intervention, deflation on a massive scale will hit, which will drive prices down. On the surface, this sounds fantastic. But what will happen to margins? Everything will be CRUSHED, including stocks.
Corporations will lay off workers and the reduction of cost of goods will become a moot point, since no one will be able to afford them anyway.
The big winners will be the people who saved for a rainy day. You know that $750k house you’ve been eying? You’ll be able to buy it at $550k with a 3.5% 30 year mortgage.
On the flip-side, if we continue the path of quantitative easing, commodities will rise and our shitty banks will still withhold capital, since they are effectively insolvent and useless. Couple that with fucktarded government OVER-regulation, the price of housing isn’t going anywhere but flat to down in the foreseeable future. Stocks will outperform and 8-10% unemployment will be “the new normal.”
My point: this is not an easy problem to deal with.
While talking shit on the internet, everyone seems to be an expert. It’s easy to second guess the actions of community organizers partaking in 4 wars and a great recession. But his job sucks dick, no? I do not envy anyone in power. However, I do wish to profit from their mistakes.
It is as clear as America’s collective cholesterol levels: policy makers are committed to an reflationary response. As much as you pine for Germany to walk away from the presses and invade Greece for sport, it isn’t going to happen. The path of least resistance, especially for professional politicians who harbor not one iota of nationalistic pride, is to “extend and pretend.” If that’s the case, ask yourself, what asset class will be the big winner in such an egregious scenario?
Once you figure it out and come to grips with reality, like I have, you will be able to invest freely, without a care in the world–for time, in every sense of the word, is on your side.If you enjoy the content at iBankCoin, please follow us on Twitter