Gyroscopic Investing

The same thing happened after QE1.

I don't recall anyone on TV predicting this would happen (either after QE1 or after QE2).

I thought all of a sudden China was going to "decide" to stop funding our confetti operation.

The foreign-held debt crisis is one I still have yet to hear a decent argument for... as long as we spend $$'s in other countries (ie, China), they'll have to put it somewhere. They'll either buy our bonds or our stuff (or invest here).  If the former, we won't have a debt crisis, if the latter, our balance of trade turns around and our factories start producing for Chinese consumers.

Somehow, pundits seem to miss the part where US goods are actually demandend beyond our productive capacity and our unemployment rates drop to 4% before we get to hyperinflation.

[quote author=moda0306 link=topic=1183.msg13005#msg13005 date=1310415880
Somehow, pundits seem to miss the part where US goods are actually demandend beyond our productive capacity and our unemployment rates drop to 4% before we get to hyperinflation.
[/quote]

I thought that the unemployment rate was  80% for the Zimbabwe hyperinflation, the Weimer hyperinflation was triggered by a general strike (what unemployment rate does that equate to?). Such classic hyperinflation scenarios come about when supply plummets due to no productive work getting done. If political factors or war damage prevents production then there are fewer goods for the existing $ to chase. The knee jerk reaction of the government is to make sure that the police and tax collectors can get enough food so money gets printed to pay them. In the UK after WWII we had extensive rationing of most goods. My guess is that if we had not done that, we could have had hyperinflation here.

I totally agree that currently there is spare productive capacity standing by that would be brought into use if customers could afford to buy what is being offered. I also think that even if unemployment was to fall below 4%, then even more productive capacity would be created.

I just wanted to draw everyone's attention to the title of this post once again since no one on TV seems to be talking about it.

It's exactly the opposite of what eveyone was certain would happen.

I've made much more money ignoring market gurus than I ever have listening to them.

LGrand85 wrote:

craigr wrote: I've made much more money ignoring market gurus than I ever have listening to them.

Something I have just really started learning since jumping in the PP

Sometimes I'm very tempted to take small amounts of money and trade exactly opposite the latest bit of punditry...ie, Jim Rogers shorting LTT.