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Saturday, July 21, 2007

Puplava on inflation, commodities

Financial Sense, July 14: Jim Puplava discusses inflation figures and the management of our perceptions of inflation.

The effects of expanding the money supply must, he feels, eventually spill over from assets to consumer prices. He sees three scenarios:
  1. A credit contraction, leading to recession.
  2. An inadequate credit expansion, resulting in consumer price inflation.
  3. A change in public perception of inflation. If people expect their money to become progressively worthless, they will eventually try to get rid of it as fast as possible, in exchange for tangible things.

Conclusions:

  • Cut unnecessary living expenses, shop smarter.
  • Avoid bonds.
  • Because there is no sign of (1) or (2) above happening, we are heading for a US hyperinflationary depression, perhaps starting around the same time as the oil crisis, i.e. 2009. So invest in tangibles: gold, silver, oil.

By the way - some thought-provoking replies to listeners:

  • Puplava agrees that Israel may be sitting on a valuable oil field!
  • He says creditor nations in Asia may have a deflationary depression, while ours will be inflationary.
  • He notes that Iran now demands payment from Japan in yen, not US dollars.

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