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The world is careening towards an inflationary shock. As was the case with
the beginning of the Housing Crash, few are noticing what’s happening and even fewer realize the true scale of what’s about to take place.
The original article, written by Graham Summers, is presented here by munKNEE.com – “ The internet’s most unique site for financial articles! (Here’s why)” – in an edited ([ ]) and revised (…) format to provide a fast & easy read. Visit our Facebook page for all the latest – and best -financial articles!
The chart below shows the Producer Prices Index for the four largest economies in the world: the US, the EU, China, and Japan. Note, that Producer Prices are SPIKING in all four economies.
H/T Jeroen Blokland
Put another way, a full 66% of world GDP is currently experiencing a spike in prices. Inflation is already rippling through the economy.
Why does this matter? Because the Bond Bubble trades based on inflation. When inflation rises, so do bond yields to compensate. When bond yields rise, bond prices FALL and when bond prices fall, the Everything Bubble bursts.
Take a look below at the chart for the 10-Year US Treasury. We’ve already taken out the bull market begun in 2007. The single most important bond in the world is tracking lower just as housing prices did in 2006 before the housing bubble burst.
Put simply, BIG INFLATION is THE BIG MONEY trend today and smart investors will use it to generate literal fortunes. Imagine if you’d prepared your portfolio for a collapse in Tech Stocks in 2000… or a collapse in banks in 2008? Imagine just how much money you could have made with the right investments. THAT is the kind of potential we have today and, if you’re not already taking steps to prepare for this, it’s time to get a move on.
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higher inflation will translate to higher interest rates, higher interest rates will create a recession but attract the worlds money. Treasuries are still considered safe and people all over the world will want those higher treasury rates…I suspect that will mean a higher dollar. Therefore, deficit spending and tax cuts are the wrong strategy. All tax reform should be applied to balancing the budget, bailing out social security and medicare, and paying down the national debt. Fiscal solvency and responsible behavior is the only option to battling higher interest rates. Increasing debt will tie our hands for a needed stimulus during a recession.
If one makes a lot of money by speculating an the right side of an inflation trade, won’t the payoff be made in the form of an inflated currency? Seems like it would be a larger pile of chips that buys the same or less than the pile used to make the trade in the first place.
There will be a global currency replacement soon, with some kind of a local scrip issued (not earned or traded for) electronically to facilitate day-to-day living for the masses. A few really wealthy AND well connected folks may keep the abiity (right??) to hold, trade, and spend some kind of real asset, but not many. If your name is not on a short list, you are going to be as broke and beholden as the poorest urchin pretty soon. Prep for that, if you can.