Friday, 24 December 2010

Inflation at the bottom of the Pyramid

I think this link sent by Abhishek speaks volumes. It is a clear illustration that the worldwide tsumani of QE type money printing is finding its way to the bottom of the purchasing power pyramid.

Indebted governments (who vest monetary authorities with their power) hate deflation more than anything else. It causes the value of their debts to go up in real terms. It also reduces their power to buy votes through government programs, which enables them to stay in power. QE style government debt monetization suits them just fine ... killing 2 birds with one stone – no deflation and no check on their spending habits.

As long as the monetary authorities do their best to “print their way out of trouble” the worldwide inflation in “things we need” will be unstoppable.

Those looking for a deflationary collapse will have to wait for a complete breakdown of the system. There may be mild deflation in leveraged assets such as housing but basics like food, oil, precious metals cannot be “printed” or “manufactured”. Their demand is constant and unyielding. Their supply is limited.

We live on a spherical planet. There is only one outcome of an exponential growth in the money supply and it is plain to see. Agri-foods may be one of the top investments of the coming decade given this scenario. From :

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