Schiff Responds to Shedlock

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First of all, the hyper inflation issue is a straw man at best. While I often talk about the possibility of hyper inflation, I have always said that it would be a worse-case scenario that would play out over many years. The fact that it did not appear in the first year of the economic crash (2008) does not invalidate my position.

Personally I’m still not convinced. Schiff was on CNBC just a couple weeks ago proclaiming “inflation is here.” Now he appears to be back peddling. I’ll stick with Shedlock.

Yves Smith also chimes in.

Shedlock vs. Schiff

I would advise Schiff to toss his hyperinflation theories out the window and listen more to his research analyst. However, Schiff cannot and will not change because he has two books calling for hyperinflation.

On the other hand, I can change. I called for deflation and it is here right now. I do not have to wait for it. The only debate is how long it lasts.

At the appropriate time, I expect to transition my stance towards a stagnant slow growth period in which there will be inflation but not by a lot. In such a scenario, the US would hop in and out of recessions for up to a decade, much like Japan.

Time will tell whose model is correct. I reserve the right to change my model. It’s too late for Schiff to change his. The damage has already been done.

Personally I put more faith in Shedlock, having followed his blog for about a year now I think he really hits things pretty spot on. Schiff loves to rant and is clearly (from his commentary on CNBC’s Kudlow) a hyper-partisan.

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Interesting ETFs

ProShares Ultra ETFs are leveraged 2 to 1, so you double your return or loss.

Here’s a complete list of Ultra ETFs from ProShares. They just added some commodity funds for both gold and silver which are interesting. If you’re long on gold for example, why not double the return rather than buying the actual metal? I wonder what the added risks are, I’ll have to do some research. ProShares make going short really easy by spreading the risk out over indexes rather than individual stocks. Pretty cool.

Quote Of The Day

Nancy Pelosi, 4:47 PM: “We think it is possible that we will have a viable automotive industry by March 31.”

From the draft bill –

(A) stimulates manufacturing and sales of
automobiles produced by automobile manufac
turers in the United States;

(B) enhances the ability and the capacity
of the domestic automobile industry to pursue
the timely and aggressive production of energy
efficient advanced technology vehicles;

(C) preserves and promotes the jobs of
355,000 workers in the United States directly
employed by the automobile industry and an
additional 4,500,000 workers in the United
States employed in related industries;

(D) safeguards the ability of the domestic
automobile industry to provide retirement and
health care benefits for 1,000,000 retirees and
their dependents; and

(E) results in a viable and competitive do
mestic automobile industry that minimizes ad
verse effects on the environment.

Funny, but I don’t see anything in this that’ll create a “viable automotive industry” in three months. Maybe I missed something? How do you incentivize consumers to buy cars they don’t have the credit for and can’t afford by motivating the auto manufacturers to produce cars consumers don’t want? Not to mention, the bill specifically denies participants from paying dividends on stock ownership. Another 25 billion down the rabbit hole.

Bubble v3.0

If this “speculative bubble in commodities” is just like every other bubble over the last few decades, it will meet its pin and those who dabbled in natural resource investments will get their fingers burned just like those who bought Pets.com in 1999 and Miami condos in 2005.

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