Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

[LargoWinch]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

If [when?] we go into the next great inflation I would expect it to be led by crude 'n food. While I hold Au has "insurance" I am mindful of jk's observation that it doesn't really serve any useful purpose in end-of-the-world scenarios.

I have a close friend and sailing companion who was 6 years old when he survived the Dresden firestorm [there must be something about ocean racing that extends your life, as he is in better physical shape than me]. He's told me stories of German survivors of the war trying to exchange their gold for food and firewood. Unsuccessfully.

I am also a believer that a case or ten of good whiskey might be useful "currency" in the event of Armageddon [although I am certainly not predicting such a catastrophe]

True enough.

However, I think the "Dresden" or "armageddon" event is so remote that I do not invest based on this scenario. Even if this would happen, I doubt that my crude or corn ETF would do much for me...

In my book, high inflation is what's ahead. Hence, storing whiskey bottle is both too tempting and costly for me at this time.

[rabot10]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

the #1 unit of currency in russia after the soviet collapse... vodka.

not relevant to the usa case, however.

seems to me rogers hopes the dollar is devalued... maybe that'll help his in the toilet fund. it's off 37% this year.

since inception in 1998 the fund has returned 179% vs gold up 250%.

Good point - I think Rogers is a moron jmho - he can stick his bow tie up his well u know what

[LargoWinch]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

the #1 unit of currency in russia after the soviet collapse... vodka.

not relevant to the usa case, however.

seems to me rogers hopes the dollar is devalued... maybe that'll help his in the toilet fund. it's off 37% this year.

since inception in 1998 the fund has returned 179% vs gold up 250%.

Mr. metalman, I would be careful to bet against Rogers; I do not know about you, but he has been right more often then me and he also has the dough to show for it.

Again, my wealth is heavily titled towards gold (disclosure), but I feel that one has to think long and hard whether or not to diversify its portfolio to include Agriculture and especially Crude Oil. This is certainly true at this juncture.

You said it before: these CB buggers can be real son of a b*******. What if they all decide to confiscate gold? They surely cannot do this will Ag and Crude Oil as well...

[LargoWinch]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Good point - I think Rogers is a moron jmho - he can stick his bow tie up his well u know what

RickBishop, I have to disagree with your comment. Rogers is on "our" side, lets not forget that.

[medved]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

the #1 unit of currency in russia after the soviet collapse... vodka.

Not exactly. Vodka has always been currency in Russia, no mattter collapse or not.

not relevant to the usa case, however.

Correct. But the relevant part is, US now will develop something that it has not had in modern times, but Russia never abandoned, namely the black market.

seems to me rogers hopes the dollar is devalued... maybe that'll help his in the toilet fund. it's off 37% this year. since inception in 1998 the fund has returned 179% vs gold up 250%.

It depends on how the globalisation bubble deflates. Of course, it may go back to some inflated state. But it may pop totally, then $US will stay strong.

[Jim Nickerson]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

True enough.

However, I think the "Dresden" or "armageddon" event is so remote that I do not invest based on this scenario. Even if this would happen, I doubt that my crude or corn ETF would do much for me...

In my book, high inflation is what's ahead. Hence, storing whiskey bottle is both too tempting and costly for me at this time.

Winch,

Not trying to put any serious pressure on you, but when you write "high inflation is what's ahead," do you personally have a sense of when that will begin to show up?

My answer is that I think we are in for continued deflation and my guess is for 6 months or a year at least, and that is based on having shit for brains (and continuing to watch the FDI and Baltic Dry Index).

It is my impression that many posters here think inflation should have started yesterday or six months ago, and that it hasn't only means it will begin tomorrow. I opine that those who are geared up for soon-to-arrive inflation will be disappointed for months to come.

For sure the end of the world lies ahead, literally, but the critical question is When?

[Rajiv]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Jim,

All I can say is that the changes occurring in Finster's FDI are unprecedented as can be seen for the hundred years his index covers.

If I am right that it is because of the massive deleveraging occuring, then I think the deflation should last at least another six months, and perhaps a year -- because I think the credit card and auto loan market is going to implode -- primarily because of increased unemployment that appears to be coming around -- coupled with the increasing inability of the remaining consumers to take on more debt (for I truly believe that the suddenly jobless will come around to relying increasingly on their family -- which will result in belt tightening all the way around!)

There may be a few more economic minefields around also.

[LargoWinch]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

But it may pop totally, then $US will stay strong.

Can you please expand/clarify that?

[Jim Nickerson]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Jim,

All I can say is that the changes occurring in Finster's FDI are unprecedented as can be seen for the hundred years his index covers.

If I am right that it is because of the massive deleveraging occuring, then I think the deflation should last at least another six months, and perhaps a year -- because I think the credit card and auto loan market is going to implode -- primarily because of increased unemployment that appears to be coming around -- coupled with the increasing inability of the remaining consumers to take on more debt (for I truly believe that the suddenly jobless will come around to relying increasingly on their family -- which will result in belt tightening all the way around!)

There may be a few more economic minefields around also.

Thank you, Rajiv. I just read John Mauldin's Friday night note, and it seems to offer some explanation (like "considerations for inflation and deflation for dummies or near-dummies") which suggest to me that inflation, despite various interpretations of increased money supplies, is likely not just around the corner or coming soon after xmas. http://safehaven.com/article-12018.htm

[D-Mack]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Thank you, Rajiv. I just read John Mauldin's Friday night note, and it seems to offer some explanation (like "considerations for inflation and deflation for dummies or near-dummies") which suggest to me that inflation, despite various interpretations of increased money supplies, is likely not just around the corner or coming soon after xmas. http://safehaven.com/article-12018.htm

Forecasting inflation from a money-supply graph is very difficult. It used to be a lot simpler, but in recent decades has been very unreliable, for reasons we will look at in a moment. But it is much too simplistic to draw a direct comparison between inflation and an arbitrary money-supply measure.

If we look at a graph of M2, which includes time deposits, small certificates of deposit, etc., we again see a rise in recent growth. M2 is the measure of money supply that most economists use when they are thinking about inflation. And we see that M2 is growing at a sprightly 7% year over year. This is not all that high historically, but again it is up significantly from the past few years. See the graph below. Note that there have been several times (as recently as 2000) when annual M2 growth was over 10%.

I was reading this and it reminded me of an itulip graph showing a good correlation between M3 and inflation. (Or am I mistaken?)

[Jim Nickerson]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Forecasting inflation from a money-supply graph is very difficult. It used to be a lot simpler, but in recent decades has been very unreliable, for reasons we will look at in a moment. But it is much too simplistic to draw a direct comparison between inflation and an arbitrary money-supply measure.

If we look at a graph of M2, which includes time deposits, small certificates of deposit, etc., we again see a rise in recent growth. M2 is the measure of money supply that most economists use when they are thinking about inflation. And we see that M2 is growing at a sprightly 7% year over year. This is not all that high historically, but again it is up significantly from the past few years. See the graph below. Note that there have been several times (as recently as 2000) when annual M2 growth was over 10%.

I was reading this and it reminded me of an itulip graph showing a good correlation between M3 and inflation. (Or am I mistaken?)

I am sorry I can't answer your question. The thing I watch and shall continue watching is the FDI. I don't rightly have an opinion now as to what I would consider a reversal in it, but for sure it would have to go down for at least two weeks, and so far since the end of June it longest decline has been a week on two occasions.

[Rajiv]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Listen carefully also to Neel Kashgari -- particularly when he is asked the question as to when the banks will begin lending again.

The answers somehow left me with the feeling that he was "whistling past the graveyard"

[LargoWinch]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Winch,

Not trying to put any serious pressure on you, but when you write "high inflation is what's ahead," do you personally have a sense of when that will begin to show up?

My answer is that I think we are in for continued deflation and my guess is for 6 months or a year at least, and that is based on having shit for brains (and continuing to watch the FDI and Baltic Dry Index).

It is my impression that many posters here think inflation should have started yesterday or six months ago, and that it hasn't only means it will begin tomorrow. I opine that those who are geared up for soon-to-arrive inflation will be disappointed for months to come.

For sure the end of the world lies ahead, literally, but the critical question is When?

Jim, if I knew, I would be a rich man or at least a lot less worried about my portfolio.

My point, to the post which you replied, was that I expect high inflation and not the "end of the economic world".

I do not know when, but if you do, I am all ears.

[LargoWinch]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

Not trying to put any serious pressure on you

Jim, I know you are one hell of an iTulip gentleman. But just to clarify: feel free to put all the "pressure" you want: I usually learn best when challenged.

[Jim Nickerson]

Re: Rogers Says Dollar to Be `Devalued,' Buys Commodities (Update2)

- Jim - , if I knew, I would be a rich man.

My point, to the post which you replied, was that I expect high inflation and not the "end of the economic world".

I do not know when, but if you do, I am all ears.

In this media, you would better be "all eyes." I wrote I think it is 6-12 months off before we may begin to see an end to the current deflation, but you know that is just my wild-assed guess. Things will continue to evolve as we go forward, and all I shall do is try to keep trying to understand the evolution.