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Stewart, MN | John, a lot of good stuff in here. Skipping around but will eventually read the whole thing. Have followed a lot of links posted by you, Von, ehoff, Fry, et. all and still in the process of absorbing it all, hopefully at a pace that pre-dates the eventual unravelling. One thing that caught my eye was;
“someone will pay. But there is a third option that is missing from Myers' dictum. ‘The
hit’ can be socialized…if it cannot be worked off by future labor, it will be worked off
by past labor, the net surplus of which was erroneously stored in debt and dollars. The
icing on the cake is that it is also the past labor of ‘someone else,’ if the profits can be
capitalized and the losses socialized. Precisely the process we have witnessed over
the past three years, for those with eyes to see.”
I understand the net surplus of debt being stored in dollars, ie bank your wages and sit in cash. What is an example of surplus labor being erroneously stored in debt? Is he simply pointing out that taking excess proceeds from your labor and buying bonds (soverign paper)?
IMO, past labor here implies savings in IRA's, 401k's, or any other paper asset you have chosen to salt away wealth with the hope of some reasonable return. This applies to a lot of bond funds, which in turn points the barrel at pension funds which tend to have a lot of exposture to "safe" bonds.
This paper does give one other paths to consider in the coming fight between inflation and deflation. Initial reaction will be deflation in almost all classes he mentions except for PMs, oil, food. I think we saw that in '08. The danger scenario in my mind is when bonds are no longer considered a safe haven, those $ will seek other assets/sectors, at high velocity, all the while competing for Gold.
I wish the train coming at us in the tunnel had two head lights, so as to better guage it's distance, and closure rate. I fear when the shock wave from the runaway train starts to push the air past us in the tunnel it will be to late.
KB
Edit: Shout out to the OP for bringing it to the forum~
Edited by knucklebuster 12/10/2012 23:19
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Very Interesting read on the "money bubble"
