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Central Missouri | Von, You will notice that I very seldom give my thoughts on exactly where prices are going or what the economic outcome will be for 2 reasons 1. its very easy to be wrong and you get slayed on this forum if you are too sure of yourself 2. the old teach someone to fish axiom. But here goes on your question. Initially, we will and do have deflation on the asset side of the consumers balance sheet but we have big inflation on the expense side (food, clothes, insurance,etc) as is shown by John Williams at shadow stats. That I believe will continue for some time and quite possibly will get much worse. That is very very bad for john q public and for the banking system and govt tax revenue.
So what will the govt response be? Well Ben let is know yesterday and they are working as hard as possible to create inflation on the asset side of the balance sheet. Obama said they need to get the consumer borrowing and spending. That tells me how out of touch they are. John Q is hunkered down and not gonna spend. So they aren't gonna be able to fix the asset side imo.
The expense side imo is just gonna get worse. Look at what your family expenses are now compared to what they were 5 years ago. Its shocking. One of the biggest shocks to come is how much your health insurance premiums are gonna go up over the next 3 years. The healthcare bill which is inended to help is gonna crush people because the folks that already have insurance are gonna pay for those that don't in higher rates.
So how does it end? The govt will devalue the currency and print money for the forseeable future in hopes of fixing the asset side. In the end imo it won't work. How or when it eventually plays out is anyones guess but its not gonna be good.
In the meantime as farmers we are in the drivers seat as profits for many are way up. Its what you do with those profits that very well could determine how well off you are in 10 years. We are investing some of them in asstes we feel will protect us through the above scenario. That includes fixing interest rates and rolling them lower as the 10 year note goes up in price. It is all about business risk management. One of the biggest risks to raising a corn crop is putting all of your N on ahead of planting. One of the biggest business risks is having variable interest rates. If all goes to hell in the next 10 years there will be folks who make a fortune by being in the correct investments. I'm working very hard in my spare time to figure what those investments will be. Hope this answers your question. | |
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Bernanke says we need more inflation
