Friday, July 22, 2016

Dr. Albert Friedberg*:
A Wave Of Inflation 
May Take Markets & Officials By Surprise
Quarterly conference call: Friedberg emphasizes that steadily accelerating inflation is likely - says stocks (as an asset class) are "cheap" relative to other asset classes like bonds .. suggests investing in stocks & commodities.
[Cliff Comment: Repeat: 'stocks are cheap relative to other asset classes like bonds'. Have we said the same thing often enough & in enough different ways? The most overvalued asset class in history are government bonds (which doesn't mean they won't get even more overvalued before it ends). Currencies are being turned into trash so that other assets magically appear to maintain their value. The crash that others keep predicting for the stock market? Stock prices are too high based on historic valuations? Remember that historic valuations were against currencies that had not been so badly debauched. The 'measuring stick' (the accounting unit) is being made to crash in the hope that will keep other asset classes from crashing.]
From The Report: "Our forecast, and the direction taken by our portfolios, is for accelerating inflation over the coming months. This phenomenon will take markets and officials by surprise, and I believe that it will change the world we know today. Financial repression will continue to be the order of the day, partly because central bankers will remain in intellectual denial and partly because of fears that rate normalization will bring economic activity tumbling down. The early part of this period of accelerating inflation should prove beneficial to many assets, among them commodities and well financed equities. Coming out of denial — beyond our investment horizon — will be painful and very damaging to debt burdened sovereigns and corporations."
LINK HERE to the Quarterly Conference Call - 45 minutes
LINK HERE to get the Report in PDF

Pater Tenebrarum of 'Acting Man' website supports Dr. Friedberg's outlook in a great essay you should read. An excerpt: "It seems increasingly likely that some form of 'helicopter money' will be adopted by central banks as the next step in their misguided 'fight against deflation' – or even simply in order to prevent a recession.  Almost no-one expects price inflation to become a problem. Does anyone still remember the late 1970s? At the time almost no-one believed that disinflation and potentially even deflation would ever again become an issue. Allowing for this possibility was the most contrarian stance one could take at the time. And yet, money supply growth had been slowing for a few years already and was about to go negative (this finally happened in 1981). Today the situation is the exact opposite. The money supply keeps growing by leaps and bounds in every major currency area, and “deflation” is the greatest fear. Not only is price inflation not considered a potential problem, policymakers are actually pining for it and are actively pursuing policies aimed at promoting it. This should certainly give everybody pause."
LINK HERE to the essay

1 comment:

Anonymous said...

what you think is a wave of inflation,, is the sudden correction of the canadian dollar to .22 cents