Excellent points Chris. I'm more scared now than when I started this topic. What's your long-term assessment viz a viz inflation , alternatives to holding $'s £'s €'s ? Some posters elsewhere on AAM are talking about gold - any thoughts ?
Well I have posted in other threads about my opinion on gold. I own a substantial amount and will continue adding to my holdings. I also own equities in industrial, mining, and agricultural companies, I have very little euros, no sterling and no US$ exposure at all.
Don't take any of this as advice to buy or not buy certain assets, always do your own homework.
I don't think we will see hyperinflation in the Euro zone, as a fear of it is ingrained in Germany. But I am almost certain that we will see substantial two digit price inflation. I made a post last year about what inflation is, as there is a very common misconception about it:
http://www.askaboutmoney.com/showthread.php?t=141913
You don't see any difference between the monetary authorities printing money as part of its management of the economy and private citizens having a free hand at printing as much they want?
In general I don't. Both actions inflate the money supply and do damage to the economy. The only difference is that central banks do it under the guise of benefiting the economy (while only those that receive the money first benefit), and criminals do it to advance their criminal ventures.
You cannot create economic wealth by creating more of the medium of exchange. If it were so easy, then there would be absolutely no reason why there should be poor countries. The only way you can create economic wealth is through production.
Just look at what happened in the last 30 years in the US (the biggest inflator in the industrialised world) and how much damage has been done through manipulation of the money supply:
- after the savings and loans crisis in the late 80s (caused by easing of monetary policies) interest rates were cut and money printed, this ultimately gave rise to the dot com bubble within 10 years
- after that bubble burst, interest rates were again slashed and more money pumped into the system, which gave rise to the housing bubble within 7 years
- after this huge bubble burst interest rates were slasched to pretty much zero, and an enormous amount of new money has been printed, and will continue to be printed
Now the question is, what bubble have they inflated now? Sovereign bonds are the most obvious candidate, and we are heading into the 4th year after the burst of the last bubble. If or when this bubble bursts, it will make the housing bubble and credit crisis look like a walk in the park.