Tuesday, May 20, 2008

Inflation "Contained"?

Dr. Salani, our resident mad scientist casually remarked to me today that with Oil going into contango (meaning the latter delivery months are priced higher than the front month delivery contract) will the Federal Reserve Chairman Ben Bernake and the U.S. Treasury Secretary Henry Paulson continue to try and make the case that inflation is, what is their favorite word? Contained?

To me, his words were like a punch in the mouth. Inflation has built up like water behind a dam, and with Oil prices rising so high and going into contango, that dam has collapsed and our economy, our currency, and our financial markets are all happily going about their business downstream of the coming deluge.

This is no joke, and it is certainly not funny. In 1979, the world's currencies lost 25% of their purchasing power. 2009 could look a lot like 1979, and 2008 might not be much better.

Wall Street fairy tale will be out in full force telling you to "hang in there", "things will turn", the oil thing is all just a bubble... So go home and watch some T.V. interspersed with commercials extoling you to EAT! DRIVE! DIET! - lull yourself into believing their B.S. and when you wake you will feel like you have been sexually violated.

What to do? Let this be your guiding principal. Currencies are no place to store value. Currencies are no place to store value. Currencies are no place to store value. Say it over and over and over again. Take some money out of your pocket, look closely at it. It will have no value at some point in the future. What can you buy with your money - RIGHT NOW - that will be a good store of value? THAT is what to do.

Yours for a better world,

mentatt (at) yahoo (d0t) com


Anonymous said...

What do you suggest as a good store of value?


Anonymous said...

Precious, life saving Gold! Like a rock you can tie yourself to when all others are swept away in an economic hurricane. It is that simple. Can't get any simpler. Nuff said.

Chuck H.

Anonymous said...

I'm also partial to ammo.
Much like precious metals, firearm ammunition will store for a vary long time (50+ years for brass or lacquered steel cartridges) with no loss of functionality, prices are up roughly +200% over the last two years alone, and it is both readily fungible, divisible, and resalable. Plus, you never know when you might need it (god forbid), and any further restrictions imposed in the future will only drive prices higher, and lower availability.
As with all investment advice, your mileage may vary.

Anonymous said...

Other decent choices in this era of ravaging inflation are anything you will eventually need, use, or buy anyway that will keep over time, such as storeable food, personal hygiene supplies, a good sturdy bicycle, hand tools, clothing/footwear, etc.

Greg T. Jeffers said...

Thanks to all for your comments.

Precious metals, row crop land (level farm land), precious metals, livestock, precious metals, orchard property, precious metals, energy equities and precious metals would be excellent stores of value.

Did I mention I like precious metals?