With two rounds of Quantitative Easing complete, the US economy appears to be looking for firmer footing. Ahead of Helicopter Ben's speach tomorrow, expectations are low for QE3. Inflation expectations are bound to take hold, eventually. I advocate going against the recent grain, buying stocks on any dips.
Money supply is extremely high (http://en.wikipedia.org/wiki/Money_supply). Banks will eventually move the cash off their balance sheets in search for higher yields, as soon as they find an asset class they can believe in. My first guess would be apartment REITs as renters in high cost areas such as Washington DC pay extremely high rents. I like Avalon Bay of Arlington, VA (http://www.google.com/finance?q=avb).
The debasement of the dollar through Quantitative Easing is Bernanke's race. How quickly can the Fed chief single-handedly cause asset price inflation? Devaluing the dollar will have the following effects on the economy:
- asset price inflation
- cheaper exports, increased manufactured goods
- wipe away household debt (i.e. mortgage, credit card, stud loan)
- increased purchase of T-bills by China as they seek to retain the fixed rate of money exchange
- larger spread between actual and theoretical value of yuan, opens door to currency speculators
- less incentive to hold cash
At what point does M2 move through the system? My guess is the money moves to emerging markets and domestically into mixed-use commercial buildings. After all, real estate is currently very cheap in many areas, making commercial and multifamily development more enticing.
Gold will eventually shatter. I was wrong buying puts at 1,000/ounce. Two thousand an ounce is very tempting. The big picture is people don't trust governments to do what is in their economic best interests. However, by the time the bus falls off the cliff, it will be too late. Does anyone remember oil in the summer of 2007? The only reason to buy gold is fear. If a country is forced into pulling out of the Europen Union, this may be your final chance to get out. After all, a couple of hedge funds could easily have access to more capital than the Italian government. There is a giant game of chicken, and usually, whoever puts the most money on the table wins. Think Soros shorting the British Pound.
Money supply is extremely high (http://en.wikipedia.org/wiki/Money_supply). Banks will eventually move the cash off their balance sheets in search for higher yields, as soon as they find an asset class they can believe in. My first guess would be apartment REITs as renters in high cost areas such as Washington DC pay extremely high rents. I like Avalon Bay of Arlington, VA (http://www.google.com/finance?q=avb).
The debasement of the dollar through Quantitative Easing is Bernanke's race. How quickly can the Fed chief single-handedly cause asset price inflation? Devaluing the dollar will have the following effects on the economy:
- asset price inflation
- cheaper exports, increased manufactured goods
- wipe away household debt (i.e. mortgage, credit card, stud loan)
- increased purchase of T-bills by China as they seek to retain the fixed rate of money exchange
- larger spread between actual and theoretical value of yuan, opens door to currency speculators
- less incentive to hold cash
At what point does M2 move through the system? My guess is the money moves to emerging markets and domestically into mixed-use commercial buildings. After all, real estate is currently very cheap in many areas, making commercial and multifamily development more enticing.
Gold will eventually shatter. I was wrong buying puts at 1,000/ounce. Two thousand an ounce is very tempting. The big picture is people don't trust governments to do what is in their economic best interests. However, by the time the bus falls off the cliff, it will be too late. Does anyone remember oil in the summer of 2007? The only reason to buy gold is fear. If a country is forced into pulling out of the Europen Union, this may be your final chance to get out. After all, a couple of hedge funds could easily have access to more capital than the Italian government. There is a giant game of chicken, and usually, whoever puts the most money on the table wins. Think Soros shorting the British Pound.
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