It’s October again, and…. uh oh…. the deflation monster seems to be on his way! Here I present a chart that represents sentiment pertaining to the inflation vs deflation debate.

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Lacking the haughtiness of the pure ‘intellectual’ fields, the investment business is often thought to consist of all-encompassing ‘camps’ rather than ‘schools’. Apparently, if you’re buying gold, then you’ve got to be in the ‘inflationista’ camp; if you’re long government bonds, then surely you’re a patriotic bond bull; if you’re long stocks then of course you regularly sport rose-tinted glasses and are ever-vigilant for the silver lining,… right?

 

Wrong! We cannot stress enough that it’s most prudent to be in your own unique camp! However, for anyone who cares to listen, here I outline a key conviction of the greshams-law.com pack (yes… we’re even more brutish than the established investment community): — that it makes sense to be both long gold and long the dollar! continue reading »

We must apologise (profusely!) for the lack of new content of late. It was our intention to publish a lengthy piece for Monday but evidently we ran out of time. So, to tide you over until the weekend, I thought I’d post a few links to some of the timely greshams-law.com pieces of 2011. This may be a little boring for our super-loyal readers, but for everyone else we’d like to stress that many (if not all) of the concepts outlined below remain valid and interesting. Recall, we do not care to comment on the daily flow of news, we focus on long-term monetary trends so that our intellectual efforts compound fruitfully over time. It’s not that the news is useless as such — rather much of it is an indulgence of sorts (think about all that precious time wasted on the intricacies of nuclear reactors and Gaddafi’s childhood this year! Those guys will never get that time back! And yet our readers will continue to prosper both intellectually and monetarily as they continue to ‘out-grasp’ relevant concepts that are unacceptable and/or incomprehensible to the herd!)

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The ever-insightful Hugh Hendry was interviewed yesterday on a rather pro-government program… shall we say. Besides the irritating premises of the interviewer and one other interviewee, it’s a decidedly worthwhile video! See below for the video.

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Over recent months we’ve noticed that the public sector has been making attempts to ‘clean up’ its balance sheet (however half-hearted those attempts may have been). The Fed in particular has been engaged in increasing the degree to which the Federal Reserve note is ‘good for’ the pseudo-traditional central banking asset of the long-term US government security. First it was by the mechanism of QE2, second it was by selling the junk accumulated over the past few years and buying the long-end of the national debt, and now, with the news coming out over the past few days it it will be via the alteration of the maturity of the Fed’s assets. They’re ‘sticking to the plan’ (as we have maintained over recent weeks), the question is only; what kind of price action will induce the resumption of indulgently debauched monetary policies of 2007/2008? Here I present the usual Federal Reserve balance sheet charts.

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Since our last update on 11/9/11, US Treasury cash has increased from just under $17 billion to a healthy $61.59 billion. In that update, we noted that the peculiar lagged correlation between the US Treasury’s total operating balance and US equities had begun to break down meaningfully for the first time since the establishment of greshams-law.com. Indeed, this trend has continued over the past two weeks. Here I present a quick review of recent operations by the US Treasury and an update of the usual daily treasury statement charts.

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Jim Grant was interviewed on BNN on 12/9/11. He spoke about the European sovereign debt crisis and the unintended consequences of modern monetary policies. See below for the video and summary.

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