Friday, November 6, 2009

Nouriel Roubini Doesn't Understand Inflation and Deflation (well well...)

Source: Reuters

FORT LEE, N.J., Nov. 5 /PRNewswire/ -- The National Inflation Association
today released the following statement to its members:

"After the financial collapse of 2008, Nouriel Roubini emerged as one of the
world's most well-known and respected economists.
Roubini this week called Jim
Rogers' prediction that gold will reach $2,000 in the next decade 'utter
nonsense' and said that there is no inflation to drive gold prices that high.
He also said that oil's rise from $30 to $80 per barrel is 'very difficult to
justify' when demand for oil is down to year 2005 levels. Although Roubini was
accurate at predicting the housing collapse in 2005 and how it would sink the
economy, many other people including the co-founders of NIA were also right
about the housing bubble in 2005. While we consider Roubini to be more
intelligent than most other economists out there today, he is dead wrong when
it comes to inflation and deflation.

"We believe Roubini needs to wake up and realize that inflation is already
here today. Gold rising to a record high on Wednesday of $1,098 per ounce and
oil rising to $80 per barrel is a symptom of inflation. The Federal Reserve
printing dollars at an unprecedented rate by definition is inflation. Just
because we haven't seen a rise as of yet in the government's phony CPI index,
doesn't mean we don't have inflation today.

"Roubini expects to see heavy deflationary forces through 2012 from industrial
overcapacity, falling labor costs and a still damaged financial system; but it
is our belief that with the Federal Reserve leaving interest rates on
Wednesday at 0%, a massive overdose of excess liquidity will override these
deflationary forces and ultimately lead to hyperinflation. Inflation is the
easiest thing for any central bank to create and the Federal Reserve is
clearly pulling out all the stops to see that we have inflation.
Unfortunately, the Federal Reserve doesn't have an exit strategy. By the time
inflation becomes the top story on the news each night, it will be impossible
to control.

"In our opinion, the world will be shocked at how quickly gold rises to
$2,000. Jim Rogers' prediction of $2,000 per ounce of gold in the next decade
is extremely conservative, it could happen next year. Jim Rogers based his
prediction on the fact we have been discussing for a long time, gold's high of
$850 in 1980 adjusted for inflation is $2,300 per ounce in today's dollars.
Compared to 1980 when we were the world's largest creditor nation, today we
are the world's largest debtor nation with a national debt that is about to
hit $12 trillion. With the U.S. government itself estimating a $9 trillion
budget deficit over the next decade, we will eventually get to a point where
50% of taxes collected by the treasury will be needed to pay the interest on
our national debt. Combined with unfunded liabilities for Social Security,
Medicare and Medicaid, we believe hyperinflation is inevitable.

"We agree with Roubini that U.S. stocks have run too far too fast and another
dip in nominal terms is more likely to happen than not. What we know for sure
is, U.S. stock markets are going to fall substantially priced in gold. History
tells us that gold is the only real safe haven and after the collapse of a
financial bubble, the Dow Jones/Gold ratio always falls to a level between 1
and 2.

"In 2008, the world rushed out of stocks and into U.S. dollars as a safe
haven. We said U.S. dollars were the riskiest asset of all and that gold was
the only real safe haven. Since then, the world has been rushing to get rid of
their dollars by buying stocks, commodities and precious metals. With
unemployment numbers being released on Friday, it is possible that investors
will soon realize the U.S. economy is not truly recovering and stocks are
rallying only due to inflation. This time around, as investors cash out of
stocks, more people will stay clear of the U.S. dollar and rush to buy gold
instead. We predict a major short-term decline in the Dow Jones/Gold ratio
from its current level of 9, back down to the low of 7 we saw earlier this
year. Over the next 12 months, the Dow Jones/Gold ratio is likely to make new
lows for the current bear market."

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About us:

The National Inflation Association is an organization that is dedicated to
preparing Americans for hyperinflation. The NIA offers free membership at and provides its members with articles about the
economy and inflation, news stories, important charts not shown by the
mainstream media; YouTube videos featuring Jim Rogers, Marc Faber, Ron Paul,
Peter Schiff, and others; and profiles of gold, silver, and agriculture
companies that we believe could prosper in an inflationary environment.


Anonymous said...

Καλησπέρα - πρόσφατα ανακάλυψα το Blog, συγχαρητήρια για τα εξαιρετικά posts.

Θα ήθελα να σας θέσω και μια ερώτηση, καθότι πρόφατα ενδιαφέρθηκα για αγορά χρυσού, και απ' ότι έμαθα, η μόνη αγορά που μπορώ να κάνω είναι στη μορφή χρυσών λιρών από την τράπεζα της Ελλάδας (και μάλιστα, επειδή στην επαρχία που ζω δεν υπάρχει απόθεμα, πρέπει να πάω στην Αθήνα).

Μήπως μπορείτε να μου προτείνετε έναν καλύτερο τρόπο απόκτησης χρυσού, για τις λίγες έστω οικονομίες που διαθέτω?

Αντιλαμβάνομαι ότι δε θέλετε να δώσετε "επενδυτικές συμβουλές" (το λέτε άλλωστε και στο disclaimer), αλλά από την άλλη εγώ έτσι και αλλιώς το έχω ήδη αποφασίσει, απλά δε γνωρίζω το ΠΩΣ θα το κάνω (όχι το ΤΙ θα κάνω ή το ΑΝ θα το κάνω)

Ευχαριστώ και καλή συνέχεια - έχουμε ανηφόρα απ' ότι φαίνεται εξάλλου

Apprentice said...

Φίλε ανώνυμε,

θα σε παραπέμψω σε ποστ του Chrysothera ο οποίος έχει αναλύσει διεξοδικά το θέμα των πολύτιμων μετάλλων. Αφιέρωσε λίγο χρόνο στα μπλογκς του.

Anonymous said...

Σε ευχαριστώ για το λινκ, το έχω υπόψη μου το blog αυτό που μου προτείνεις, το είχα ξανασυναντήσει αλλού (στο, δεν είχα δει όμως τη συγκεκριμένη ανάρτηση για τους τρόπους απόκτησης χρυσού.

Πάντως μου κάνει εντύπωση το ότι είναι τόσο δύσκολο να αγοράσεις χρυσό, νόμιζα ότι θα ήταν ευκολότερο.

Καλή συνέχεια