Deflation vs. stimulus spending

"What if Bernanke, the Chinese, Putin, Obama, his Congress and all the other interventionists are impotent? What if they do not matter? Perhaps it is the debt, stupid. Perhaps the incremental GDP from all of this economic stimulus spending is zero. And, as Japan has foretold, perhaps all of this year's interventions will be unable to lift the global economy from its funk. And, if this is so, you will not require all those inflation hedges; you have been sold a FAKE."

http://www.scribd.co...y-November-2009

"What if Bernanke, the Chinese, Putin, Obama, his Congress and all the other interventionists are impotent? What if they do not matter? Perhaps it is the debt, stupid. Perhaps the incremental GDP from all of this economic stimulus spending is zero. And, as Japan has foretold, perhaps all of this year's interventions will be unable to lift the global economy from its funk. And, if this is so, you will not require all those inflation hedges; you have been sold a FAKE."

http://www.scribd.co...y-November-2009

I very much agree with the storyline here. The interventionists are powerless in the big scheme of things. They seem powerful with all the noise about bailouts, stimulous programs and such as well as market interventions to affect prices, but in the end the diminishing marginal GDP growth vs incremental debt will kill them, probably sooner given their recent moves , they just accelerated the schedule.

GS.

Edited by goldswinger, 14 November 2009 - 03:01 AM.

Bond, stocks & dollar...It is easy to see why many astute investors were taken by surprise by the july-nov part of the rally...Only here we had bond and stock diverged from their time honored tradition of running in opposition..They both went up as. Higher liquidity (a mental judgement) means stocks going up...The big kahuna buying bonds meaning bonds will go up to..So obviously it is not market in operation here but govt backed buying binge...In order to compensate for bond buying of the FED, the market deemed fit to devalue dollar and hence the dollar-stock correlation.. It seems, though, this has run its course and when market is let go (albeit gradually/partially) from govt interference, we would know the end game.. See how bond -stock correlation really diverged from july and they both tracked higher..An anamoly indeed...