In/Deflation Debate Summed Up

I was on vacation in Conneticut and, for kicks, decided to visit a psychic. I walked in the door and what do you know - that S.O.B. Peter Schiff was standing there with his crystal ball and ouija board - that's how he does it!



Copy the link and find Sept 12 3rd hour w Jim and John Part 2. Someone, who is not a neanderthal like me, may be able to post this mo betta.



http://www.financialsense.com/fsn/main.html

<a href="http://www.netcastdaily.com/broadcast/fsn2009-0912-3b.mp3">Here's the link in MP3 format.</a>

And here's the other side of the coin (same program, one week earlier, different guest, thinks deflation is coming) courtesy of Bob Prechter.



<a href="http://www.netcastdaily.com/broadcast/fsn2009-0905-3a.mp3">Part one in MP3.</a>



<a href="http://www.netcastdaily.com/broadcast/fsn2009-0905-3b.mp3">And Part 2 in MP3.</a>

And watch it on that neanderthal talk. I just learned how to walk upright last week.



<img src="http://idology.files.wordpress.com/2008/12/neanderthal1.jpg" alt="" />

[quote author="no_vaseline" date=1253091129]And here's the other side of the coin (same program, one week earlier, different guest, thinks deflation is coming) courtesy of Bob Prechter.



<a href="http://www.netcastdaily.com/broadcast/fsn2009-0905-3a.mp3">Part one in MP3.</a>



<a href="http://www.netcastdaily.com/broadcast/fsn2009-0905-3b.mp3">And Part 2 in MP3.</a></blockquote>


The last time Prechter was right about anything was 1984, and he still cites it.

[quote author="awgee" date=1253095472][quote author="no_vaseline" date=1253091129]And here's the other side of the coin (same program, one week earlier, different guest, thinks deflation is coming) courtesy of Bob Prechter.



<a href="http://www.netcastdaily.com/broadcast/fsn2009-0905-3a.mp3">Part one in MP3.</a>



<a href="http://www.netcastdaily.com/broadcast/fsn2009-0905-3b.mp3">And Part 2 in MP3.</a></blockquote>


The last time Prechter was right about anything was 1984, and he still cites it.</blockquote>


I only posted it because he (and his appearance) was mentioned in the first audio clip I posted. I listened to all fifty minutes and 13 seconds and figured I owed it to the IHB to find the other side since they went to such trouble to joust the guy. I haven't listened to it yet because I don't have another free hour to waste on nonsense today.

its all about Glenn Neely (neowave.com)



usually the exact opposite of prechter (that means he has been right about stuff since 1984..and actually he has!) except for this time, he also sees deflation coming.



actually..he saw deflation coming two years ago and warned about the September 08 crash way before it happened. saved me lots of $

CPI up 0.4%.



That is deflation?

[quote author="awgee" date=1253129484]CPI up 0.4%.



That is deflation?</blockquote>
But YOY it is -1.5%

USC. You up early too.



I personally see deflation in my business and my customers this year.

But also seeing signs the shrinking of the dollar could be on the horizon.

Suddenly all my export customers are very active in quotation.

Have a few customers who have left for Europe and moved shop from California.



Strange times. My building where I lease in Orange. Things are getting very poor. Many moving out or way behind on rent.

All the car/motorcycle guys are getting crushed. I could get another $400-$500 a month off my lease

without much effort. Thats lower than 10 years ago. Like .50 Cents a foot.

[quote author="USCTrojanCPA" date=1253130008][quote author="awgee" date=1253129484]CPI up 0.4%.



That is deflation?</blockquote>
But YOY it is -1.5%</blockquote>


CPI is negative? In which quarters?

[quote author="USCTrojanCPA" date=1253130008][quote author="awgee" date=1253129484]CPI up 0.4%.



That is deflation?</blockquote>
But YOY it is -1.5%</blockquote>


And Santelli just announced that China and Japan were net acquirers of US Treasuries in the month of July.



The dollar is in the tank and gold and silver are charging, but oil is sideways (!) industrial metals are, well, worse than sideways. Are we simply in a cycle of rebasing? Because if we are, I'd expect more trading commodities trading sympathetic to the weak dollar and I don't see it outside of gold and silver.

The meaning of commodity prices has been clouded by staggering amounts of speculation. Supposedly China is seeing retail investors speculating in industrial metals (I guess they know their stock market is pretty funky as well as we do). Sentiment changes and "greater fools" are driving things much more than fundamentals. Oil will almost certainly climb further in the future while iron, long-term, will always be cheap but both hit truly historic highs last year. Just casino gambling for now. The fact that casino gambling has overwhelmed the large real markets for these basic commodities is disturbing in itself.

[quote author="FairEconomist" date=1253137844]The meaning of commodity prices has been clouded by staggering amounts of speculation. Supposedly China is seeing retail investors speculating in industrial metals (I guess they know their stock market is pretty funky as well as we do). Sentiment changes and "greater fools" are driving things much more than fundamentals. Oil will almost certainly climb further in the future while iron, long-term, will always be cheap but both hit truly historic highs last year. Just casino gambling for now. The fact that casino gambling has overwhelmed the large real markets for these basic commodities is disturbing in itself.</blockquote>


Didn't we just get done "casino gambling" with housing?



Or with .com stocks before that?



Or with biotechs before that?



Or with computer tech companies before that?



I'm not trying to be an asshole here (who am I kidding? I am an asshole!) but I spend most of my time trying to not be the dumb guy. I cannot see any fundamental reason why gold/silver are as high as they are other than people are buying it, and I can't see a good reason to buy it other than to speculate.

<img src="http://www.zealllc.com/c2005/Zeal032505A.gif" alt="" />



I think we are seeing a pattern al la 1979 here. Does anyone think interest rates will stay this low forever? Look what happens to gold when they perk up!

A couple of days ago, I posted a CNBC video where Santelli claimed we were not in a negative real interest rate environment, gold was just a metal, and the other guy claimed we were in a negative interest rate environment and gold was going much higher as a result. It didn't occur to me that the second guy was absolutely right until this morning. Does anyone know where I can go to create a chart of real interest rates vs. gold for the past 35 or 40 years? I also want to track various maturities of treasuries against the same time frame.

[quote author="bltserv" date=1253132088]USC. You up early too.



I personally see deflation in my business and my customers this year.

But also seeing signs the shrinking of the dollar could be on the horizon.

Suddenly all my export customers are very active in quotation.

Have a few customers who have left for Europe and moved shop from California.



Strange times. My building where I lease in Orange. Things are getting very poor. Many moving out or way behind on rent.

All the car/motorcycle guys are getting crushed. I could get another $400-$500 a month off my lease

without much effort. Thats lower than 10 years ago. Like .50 Cents a foot.</blockquote>
I get up and trade the market but since I have a lot of option positions I'm more of a watcher which gives me more time to post on IHB in the AM.



I could have sworn that your business was over in Lake Forest (hence you living in QR apts). Oh well, how many SF are you renting? I'm actually working with a small business owner who has his lease coming up and he is interested in buying versus renting as prices are getting down towards rental parity. Have you done that analysis? Is the $.50/sf triple net or gross?

[quote author="awgee" date=1253132317][quote author="USCTrojanCPA" date=1253130008][quote author="awgee" date=1253129484]CPI up 0.4%.



That is deflation?</blockquote>
But YOY it is -1.5%</blockquote>


CPI is negative? In which quarters?</blockquote>
It is negative for the last 12 months Sept 08 to Aug 09 (most of the decline is due to lower oil and energy prices). The core CPI rate (excludes food and energy) is up 1.4% YOY.

[quote author="FairEconomist" date=1253137844]The meaning of commodity prices has been clouded by staggering amounts of speculation. Supposedly China is seeing retail investors speculating in industrial metals (I guess they know their stock market is pretty funky as well as we do). Sentiment changes and "greater fools" are driving things much more than fundamentals. Oil will almost certainly climb further in the future while iron, long-term, will always be cheap but both hit truly historic highs last year. Just casino gambling for now. The fact that casino gambling has overwhelmed the large real markets for these basic commodities is disturbing in itself.</blockquote>
The oil market is the biggest casino game out there in the commodities world (the "house" who pulls the strings is Goldman Sachs). If you look at the fundamentals, it should be in the tank along with natural gas.

[quote author="USCTrojanCPA" date=1253165760][quote author="FairEconomist" date=1253137844]The meaning of commodity prices has been clouded by staggering amounts of speculation. Supposedly China is seeing retail investors speculating in industrial metals (I guess they know their stock market is pretty funky as well as we do). Sentiment changes and "greater fools" are driving things much more than fundamentals. Oil will almost certainly climb further in the future while iron, long-term, will always be cheap but both hit truly historic highs last year. Just casino gambling for now. The fact that casino gambling has overwhelmed the large real markets for these basic commodities is disturbing in itself.</blockquote>
The oil market is the biggest casino game out there in the commodities world (the "house" who pulls the strings is Goldman Sachs). If you look at the fundamentals, it should be in the tank along with natural gas.</blockquote>


Spot on!!!

[quote author="BondTrader" date=1253166521][quote author="USCTrojanCPA" date=1253165760][quote author="FairEconomist" date=1253137844]The meaning of commodity prices has been clouded by staggering amounts of speculation. Supposedly China is seeing retail investors speculating in industrial metals (I guess they know their stock market is pretty funky as well as we do). Sentiment changes and "greater fools" are driving things much more than fundamentals. Oil will almost certainly climb further in the future while iron, long-term, will always be cheap but both hit truly historic highs last year. Just casino gambling for now. The fact that casino gambling has overwhelmed the large real markets for these basic commodities is disturbing in itself.</blockquote>
The oil market is the biggest casino game out there in the commodities world (the "house" who pulls the strings is Goldman Sachs). If you look at the fundamentals, it should be in the tank along with natural gas.</blockquote>


Spot on!!!</blockquote> Same reason I've been telling people to take profit on gold in the short term.