I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Joined: Mar 12, 2007 Posts: 1008 Location: As close as I can get to the beginning of the pipe.
Posted: Fri Oct 10, 2008 3:06 pm Post subject: Re: Jim Rogers: We Are Facing An Inflation Holocaust
Jim, you da man. He is spot on. It's going to be inflation; you've just got to give it time to rear its ugly head. _________________ "When fascism comes to America it will be wrapped in a flag and carrying a cross." --Sinclair Lewis
Joined: Dec 07, 2005 Posts: 1986 Location: Australia
Posted: Fri Oct 10, 2008 5:38 pm Post subject: Re: Jim Rogers: We Are Facing An Inflation Holocaust
I agree and re-iterate what I said a few times earlier; action is always in reaction not as a pro-active move. We need to have crash and chaos threats before serious inflation can take place.
Given that any amount of money can be printed, and if authorities willing, distributed via helicopters, it eventually comes down to their determination until the money they spread around loses it's status as actually being money.
I actually can't remember reading Jim Sinclair talking about Weimar like this before. Normally he has talked about inflating and dropping USD but then stabilizing the situation with a new quasi-gold standard when gold is at or above $1650.
If he firmly believes his own statements he should perhaps recalculate that number. Having that said, he likes to be conservative in estimates.
Dear Friends, Stay the course or jump directly into the fire! That's the soundest advice I can give you in this highly volatile market period. I told you that you would see volatility in gold beyond your wildest imagination. That statement usually went along with my warning that by margining anything gold you were putting yourself in great financial risk.
Today has to seal the veracity of that advice. Now get a hold of yourself. There is absolutely no way governments can make a problem of this size go away over a weekend. Those that question me on this issue are the same ones that laughed in 2000 when I said the growth of OTC derivatives was going to break the world. I told the lead director of Bear Stearns at the time that OTC derivatives were going to break his firm but the profits from them was simply too intoxicating for anyone to listen. Now I am asking you to listen.
Whatever is done to resolve this global financial crisis is going to inject incomprehensible amounts of new money into the global financial system.
Academics see the world as a 'Picture In Time." That means they are static thinkers who can't perceive motion. Visionaries like Harry, Monty, Trader Dan & Tony are "Dynamic Thinkers." At present, some academics are promoting the dumbest line I have ever heard. They say that all this new money going into the system is not monetary inflation because it is simply replacing all the money lost and therefore is a wash. That is part of the thinking pattern I am talking about and it's dead wrong.
Dynamic thinkers know that the outflow of these losses has existed from the time of transaction and therefore prior to truer valuation as mandated by Financial Accounting Standards Board (FASB).
The day the FASB mandated truer value had existed for years but was not recognized as such because it was generally accounted for off balance sheet. Just because financial institutions tried to hide their losses, those capital depletions were already a growing cancer inside their organizations.
You can be certain that a repetition of Germany's Weimar crisis is coming soon. There is nothing that can be done to make matters better - even if done by governments unilaterally in a unified action. In fact, such action will only serve to make matters worse.
The larger the financial action, the deeper the financial fall. The G7 still thinks they run the world. That should tell you something about the degree of what they can do.
Gold is honest money that will push all crappy paper out of its way. Why do you think so much intervention took place in gold in US market hours today?
All I can tell you is to stay the course or jump directly into the fire! If the heat in the kitchen is too hot for you, there is nothing I can do for you.
Regards,
Jim Sinclair
Quote:
Dear CIGAs,
Merrill Lynch issued a big report today on the banking crisis.
Here are the main points:
Everyone is waiting for the big government solution.
Coordinated moves will not necessarily be effective, but it will be historic if it happens.
We are barely past the halfway point of the credit down cycle.
People will continue to crowd into treasuries Rosenberg (and in my opinion, gold).
Corporate profits not yet impacted will go lower.
Private sector interest rates are rising.
As Jim Sinclair has predicted in his model, Merrill Lynch’s David Rosenberg, who is their chief economist corroborates my opinion. He states “It is truly a modern day depression, in our view- what else do you call it when an entire industry vanishes (investment banks) in less than a year: the ranks of the unemployed soar more than 30%, and nearly one in ten homeowners with a mortgage are either in arrears or foreclosure?”
Like us, he goes on to say “Now let’s not confuse that with the Great Depression - this is not the 1930’s all over again.”
More points: The government will have taken over many banks before this ends. Finally, Rosenberg states that the current money supply boost may not be inflationary. His argument is that the velocity of money is shrinking in the US and Europe, and that is clearly true. Over the short term I agree with him. For this reason I stated a few weeks ago that the inflation rate would moderate for a few months.
It will moderate over the short term; long term is a different story. Once the velocity of money resumes its normal functioning, the massive amounts of money currently being pumped into the system worldwide will create a big inflationary bubble. The inflation will not hit in the next few months, but it will be big when it does hit. As Jim Sinclair likes to say, “Weimar on Weimar.”
Respectfully yours,
Monty Guild
(my emphasis in bold of keywords) _________________ It's not a bailout, it's a buy-in" - Nancy Pelosi
Last edited by Micki on Fri Oct 10, 2008 5:53 pm; edited 1 time in total
Posted: Fri Oct 10, 2008 5:50 pm Post subject: Re: Jim Rogers: We Are Facing An Inflation Holocaust
Jim Rogers has lots of egg on his face. His mantra has always been that commodities are on an unstoppable bull run. He was profoundly wrong, and people who kept the faith in him lost their asses.
At the moment, his "Rogers International Commodity Index" is down by about 40%. That's pretty much all you need to know about his credibility. If he's so good at seeing the future, why didn't he see that future?
He's just trying to change the subject away from his own failures. If the interviewer had any sense he/she would have kept pounding him about his failure to call the commodity crash. _________________ Think outside the petri dish.
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Fri Oct 10, 2008 5:51 pm Post subject: Re: Jim Rogers: We Are Facing An Inflation Holocaust
I've said this many times before but some still don't believe it - in the middle of the 1930s depression the US government was able to devalue the dollar and raise commodity prices 75%. Stocks prices also rose sharply during the beginning of the devlauation period.
Now, with liquid-nitrogen super-computers spitting out $1 trillion in new dollars in just the last few weeks, Sinclair is already behind the times when he says a 'Weimar crisis is coming soon'. It's already here. The rate of commodity inflation will eventually exceed the successful dollar devaluation experiment of the 1930s, which created inflation in a very depressed economy, although inflation won't get into gear until money starts coming out of one month Treasury bills earning the extremely low interest rate of 0.01%.
Also there will be no bank 'holidays', at least not until the dollar crashes. The President will just decree full FDIC backing of all deposits and bank assets if necessary.
The bad news is that the clock is now ticking on the coming dollar crash, which should now arrive before the end of 2010. _________________ It's already over, now it's just a matter of adjusting.
Last edited by DantesPeak on Fri Oct 10, 2008 6:31 pm; edited 2 times in total
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Fri Oct 10, 2008 5:55 pm Post subject: Re: Jim Rogers: We Are Facing An Inflation Holocaust
JohnDenver wrote:
Jim Rogers has lots of egg on his face. His mantra has always been that commodities are on an unstoppable bull run. He was profoundly wrong, and people who kept the faith in him lost their asses.
At the moment, his "Rogers International Commodity Index" is down by about 40%. That's pretty much all you need to know about his credibility. If he's so good at seeing the future, why didn't he see that future?
He's just trying to change the subject away from his own failures. If the interviewer had any sense he/she would have kept pounding him about his failure to call the commodity crash.
Did you bother to watch the interview?
Rogers readily admits there will be wild swings in commodity prices.
He never stated, as you implied, there couldn't be a temporary commodity price plunge.
I'm sure anyone who has invested in his funds before 2008 has done very well, and those investing five years ago extremely well.
He even says commodities could fall further from here, but bascially, prices should rise rapidly soon. _________________ It's already over, now it's just a matter of adjusting.
Joined: Dec 18, 2004 Posts: 4886 Location: One Mile From the Columbia River
Posted: Fri Oct 10, 2008 5:56 pm Post subject: Re: Jim Rogers: We Are Facing An Inflation Holocaust
JohnDenver wrote:
Jim Rogers has lots of egg on his face. His mantra has always been that commodities are on an unstoppable bull run. He was profoundly wrong, and people who kept the faith in him lost (big).
No JD you're wrong, again. None have 'lost' any money until they sell. It's idiotic to sell in a chaotic down market like this.
Inflation, and particularly commodity inflation is getting ready to IGNITE! _________________ Got Dharma?
Posted: Fri Oct 10, 2008 5:58 pm Post subject: Re: Jim Rogers: We Are Facing An Inflation Holocaust
JohnDenver wrote:
Jim Rogers has lots of egg on his face. His mantra has always been that commodities are on an unstoppable bull run. He was profoundly wrong, and people who kept the faith in him lost their asses.
At the moment, his "Rogers International Commodity Index" is down by about 40%. That's pretty much all you need to know about his credibility. If he's so good at seeing the future, why didn't he see that future?
He's just trying to change the subject away from his own failures. If the interviewer had any sense he/she would have kept pounding him about his failure to call the commodity crash.
Doesn't it make sense to you that the "solution" to the problem will be govt induced inflation? I don't think anyone would disagree that YOU were absolutely right about why the price of oil careened into the stratosphere. How do you see a coordinated governmental solution to a deflationary collapse being implemented that wouldn't cause inflation?
Joined: Dec 07, 2005 Posts: 1986 Location: Australia
Posted: Fri Oct 10, 2008 6:52 pm Post subject: Re: Jim Rogers: We Are Facing An Inflation Holocaust
No point in arguing that prices are down.
What I am looking at is mainly gold mining companies and they are dropping on volumes that are 10-20% or less of their normal trading volumes.
Yesterday I watched a stock that normally as 1-2 million shares traded in a day drop 46% on 90,000 shares.
To me that looks like only the small guys are selling these particular shares.
That doesn't speak for the asset class in total but suggests big boys are expecting some shares to potentially rocket up again.
If they didn't excpect that, it would be better to sell off and then to buy in again when prices settle down at bottom.
Also looking at the stomping of Silver yesterday. It was down to $10.50 at close and then taken down further 50c in the thinly traded access market. It screams tape painting and attempt to set of stops and blackboxes on Monday. As usual there doesn't seem to be anywhere in Melbourne that I can buy Silver near spot. That makes me very very frustrated.
Anyway, now I started waffling about different things than I was supposed to. Was just browsing Reuters and came across Paulson indicating Treasury is very close to start buying equities in financial firms.
Quote:
U.S. planning to buy equity in financial institutions
WASHINGTON (Reuters) - Treasury Secretary Henry Paulson said on Friday the United States was developing plans to buy equity in financial institutions if necessary to halt market turmoil.
Wonder if we have to change our thinking that USA is going to Fascism to full blown Socialism instead. (Well there have been a number of posters here at PO who seem to think that is the preferred solution. Personally I cringe at the thought.)
Naeh...I still think they will just prop up prices, but junk and then anything that goes up in value again will be sold back at bargain price to select partners. Fascism it is. _________________ It's not a bailout, it's a buy-in" - Nancy Pelosi
Posted: Sat Oct 11, 2008 2:40 am Post subject: Re: Jim Rogers: We Are Facing An Inflation Holocaust
DantesPeak wrote:
The bad news is that the clock is now ticking on the coming dollar crash, which should now arrive before the end of 2010.
Could you give any reference, how an estimate timing of dollar crash can be calculated?
I am finding all this economy collapse quite fascinating and I would love to learn more details about driving forces of that.
In principle I knew that it must collapse. My general consideration was that sufficiently complex and interlinked system must fail at some point in chaotic fashion and no amount of intervention from outside can stop it because of unforeseen and yet devastating side effects of such intervention.
I am really fascinated by observing of unfolding collapse.
Posted: Sat Oct 11, 2008 2:49 am Post subject: Re: Jim Rogers: We Are Facing An Inflation Holocaust
DantesPeak wrote:
I've said this many times before but some still don't believe it - in the middle of the 1930s depression the US government was able to devalue the dollar and raise commodity prices 75%. Stocks prices also rose sharply during the beginning of the devlauation period.
Now, with liquid-nitrogen super-computers spitting out $1 trillion in new dollars in just the last few weeks, Sinclair is already behind the times when he says a 'Weimar crisis is coming soon'. It's already here. The rate of commodity inflation will eventually exceed the successful dollar devaluation experiment of the 1930s, which created inflation in a very depressed economy, although inflation won't get into gear until money starts coming out of one month Treasury bills earning the extremely low interest rate of 0.01%.
Also there will be no bank 'holidays', at least not until the dollar crashes. The President will just decree full FDIC backing of all deposits and bank assets if necessary.
The bad news is that the clock is now ticking on the coming dollar crash, which should now arrive before the end of 2010.
Neither Weimar or the 1930s crash is a good analogy Dante. the only good analogy extant is the crash of the Roman Empire.
There will be some transmission of the inflation in the currency for as long as the accounting system is stabilized through the printing press. However, it cannot be maintained long, because there is no real wealth behind it. In the case of Weimar and in the case of the 1930 crash, there WAS real wealth extant to absorb the blows.
I hold to my prediction that the monetary system crashes before we see hyper inflation. Disabuse me of this notion please.
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