torsdag 31 juli 2014

There is no growth, there is only inflation

Peter Schiff's verdict in short on the state of the US economy, on his podcast interview with Doug Casey (transcript here):

Peter: And that makes a lot more sense to me, given what I’m observing in the actual economy. The critics who argue that that’s impossible, that the people who think that inflation is more than 2-3% percent, they say they must be wrong, because that would mean that the economy has not experienced any legitimate economic growth. And to that I would say, absolutely, it hasn’t. The growth is all a fantasy. It’s all a result of the assumption that there is no inflation, when there really is because what we have is inflation masquerading as economic growth. But the bottom line is the economy is really contracting, that’s why the labor force is shrinking, that’s why we’re using less energy, that’s why the people’s standard of living is going down, and real incomes are falling and job opportunities are disappearing. It’s because we’re in a recession and no one wants to admit it.

Also worth pointing out is a chart from zerohedge showing how High Yield credit already a week ago pointed to S&P 500 shortly going below 1800:

And remember, this is how much S&P 500 has fallen from its all time high,
after a historically large and long rally: approximately just 1% as of yesterday's close

3 kommentarer:

  1. I discovered your blog via Danger and Play. I really enjoy your writing. For the last 10 years I've been paying astute attention to the contrary an investors. Like Schiff and reading sites like Zero Hedge but I find the gloom and doom they talk about brings me really down. How do you balance the need to really know what is going on with the negative effects these sources of information have on one's psyche.

    1. Hi

      Thank you for the kind comment.

      I am not sure I actually do cope, or manage to avoid becoming too negative. However, since I am constantly bombarded with bullish (positive) comment and research from 20 of the world's largest broker and research houses, I get both sides no matter if I want to or not.

      It helps being a hedge fund manager that is fully immersed in the world of finance. My problem is often the opposite, i.e., it can be difficult being negative enough and long enough in an environment where everybody makles their living from being positive, selling shares that are supposed to rise forever, apologists for rich valuations etc...

      It also helps that I simply have a very sunny disposition, I just don't get depressed. Luck, I guess.

      Kind regards,


  2. Thanks for the reply. Interesting insights to hear from someone on the inside seems the sun will always shine for Finance so long as the Central Banks keep printing money. I really enjoy your blog, keep posting, it's definitely always worth reading