Oct 032010
In a recent post titled Not What I would call Deflation commodity prices exceeding 20% in the last year were highlighted.
Despite what the Fed and government would want you to believe, there is inflation and it is beginning to show up in prices. To argue that we will have deflation with unprecedented expansions in money supply is to defy the earliest recognized empiric in economics — the relationship between money and prices.
Puru Saxena states “deflation is an urban myth and the global economy will have to contend with very high inflation.” His article explains why.
Over the course of these last two years, one of my most successful investment moves is my US dollar carry trade: I borrow on margin US dollars to purchase oil & gas and gold mining companies in Canada, trading them in a US market and keeping them in my US account. Currently, the loonie is largely keeping up with the greenback in being inflated to oblivion, but I expect that loonie will soon become stronger in the coming months. I think that we are indeed seeing real inflation now, despite the CPI, which according to shadowstats.com is a lie and should be at 8%. The housing bubble in the US is keeping inflation down, but here in the Toronto area, a house I purchased in 2007 at 340K could now list at 400K.