Thursday, June 19, 2008
Rob Kirby on the mark
Rob Kirby, writing over at Financial Sense has written a great article entitled Something[s] That Need to be Said. An acquaintance in my personal life emailed me yesterday about the Ambrose Evans-Pritchard doom article and asked [quote] "Do you think it is alarmism, pretty close or just too late to move into cash?" Read Kirby's missive, then think. FWIW, here was my response to my friend's mail:
Ron, the article's premise, that 'debt deflation' will cure high prices is wrong. When the deflation in asset prices comes it is going to create a whopper of a continued inflation problem because inflation is now and always a matter of official and wrong headed munny policy and if oil, grains etc. do decline the Fed will inflate to beat the band with funny munny printed out thin air to fight the dreaded deflation.
But until we get there, yes, I suppose we are screwed. The Fed can't inflate while everybody is screaming about inflation. So this whole mess could bring about its own demise.
All that said, I think the article is alarmist and just the sort of media stuff that makes people make emotional decisions.