Sunday, September 21, 2008
If the bailout package makes its way through the U.S. Congress, the deflationary scare is over. If you were playing that trade, it is OVER.
Inflation will be back - HARD.
This is NOT the 1930's. The U.S. is not on a Gold standard, an Oil standard, or any other kind of standard. The Fed and Treasury have unlimited ability to debase the currency, the ability to bring the Fed Funds rate to near (or to) zero, and inflate credit. If you are not a believer, you will be soon, so don't hold on to losing positions betting on continued deflation. You would be better off FLAT (no positions).
No, this won't happen overnight (does anything ever?), but it will happen, in my humble opinion. The entire planet will be following the U.S. on its hyper-inflationary mission, so I like the "stuff" more than any particular currency.
Don't waste time shouting into the wind. This bailout package is GOING to happen, and it was probably the ONLY rational thing that could have been done. No, it ain't right, it ain't fair, blah blah, blah... that's life. Hopefully, Congress won't try to tag it with too much baggage.
For this week, trading is only for the stout hearted, and the VERY disciplined. If that ain't you, take your football and go home.
BTW... Did I mention that the US$ rally is over? Kaput. Sunk. Glug.
Mentatt (at) yahoo (d0t) com
Posted by The Short Story Man at 6:50 PM