10 JUL 2010, Saturday

• This remains THE question to be answered in this whole mess.
• Trying to tease out the fundamentals has been very difficult.  For example....
• Chart above...gold up indicates inflation...dollar up indicates disinflation...bonds up, against historic levels while government auctions more and more bonds, indicates deflation.
• Very tricky environment.  No clear signals from any direction.  Perhaps that indicates a transitionary environment?  Yet, the question remains...transitionary from what to what?  And, more importantly, how long does it last?  Timing is always the question.
• I personally think we're headed toward a deflationary environment...I'm in the minority.  It won't last forever.  But the government remains determined to do everything they can to resist those forces.  I don't think their powerful enough to overwhelm market forces and will eventually lose...just don't know when.  However, they've shown just how much they can do (while turning you, your kids/grandkids into debt slaves since debt equals future tax increases absent totally explosive economic growth)...my only question is what will be the unintended consequences and how painful will those be?  As stated in previous posts, I think they are basically setting up a situation where the pain will be stretched out over a much longer period of time but it will still be painful.  Ever heard the story of boiled frog?  PS...the frog is still gone to greener lily pads.
• I'm a "rip the band-aid off quickly" kind of guy.  Many folks aren't.  Personal preference, I guess.