Archive for 24. September 2008

Socialism Is Coming to America

ORIGINAL ARTICLE: CANADA FREE PRESS

Excerpt:

In his classic 1932 book, Toward Soviet America, Communist Party boss William Z. Foster wrote about how “The United Soviet States of America” will come about. As a result of various capitalist crises, the national government would assume more and more control over the economy. “In finance,” he wrote, “it will mean the nationalization of the banking system and its concentration around a central State bank…”

How A Clinton-Era Rule Rewrite Made Subprime Crisis Inevitable

ORIGINAL ARTICLE: INVESTOR’S BUSINESS DAILY

Synopsis of some good thoughts on Deflation

from an email I received from someone who wishes to remain anonymous:

Invest with Deflation, Not Inflation, in Mind, Writes GaveKal (GaveKal) According to GaveKal, fears of accelerating inflation are unfounded and investors should avoid the “inflationary trades” and instead buy “volume monetizers.” People are forgetting that when banks fail, the velocity of money collapses, which is a deflationary force. So, despite the money-printing ways of central banks the world over, inflation should not resurface since the additional liquidity simply counteracts the decline in velocity. Case in point, Japan since 1990 has more than tripled its government debt as a percent of GDP, yet there was no surge in inflation. Additionally, there are signs all over of deflation, not inflation: realestate prices continue to fall (even in China), wage costs are rolling over, shipping costs have rolled over, and inventories in China remain very high. Therefore, investors should not chase “inflationary trades” like gold and oil. Instead, investors should buy “volume monetizers,” companies that expand their bottom lines by increasing volumes rather than prices. These companies should benefit from a deflationary, strong dollar environment.

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