The Daily Reckoning

The Daily Reckoning is a good daily read, full of investment ideas and philosophy. You can sign up for free daily e-mails. A sample:

Americans, consciously or unconsciously, are betting on inflation. They are hoping their favorite swindlers at the central bank will continue to engineer a gradual devaluation of the dollar so as to ruin their creditors rather than themselves. The dollar lost half its value during the Greenspan years alone. And now, the Bush administration is adding more debt than all the other administrations in U.S. history combined. Inflation looks like a sure bet...a "done deal."

Commodities are rising. Health care, education, housing, energy -everything measured in dollars that the Asians can't produce and Wal-Mart can't put on its shelves, is soaring. Gold is rocketing. Gold is outperforming stocks, commodities, bonds, the euro, housing - everything.

How nice it would be if the empire's creditors would go gently into that good night! They must read the papers. They must see the dollar going down and gold going up. Imagine yourself in the same situation; wouldn't you be tempted to shuck some of that green paper in favor of the yellow metal? Wouldn't you want to protect yourself?

But, according to lumpen-American economic theory, the creditors just stand there, stock-still, while the big inflation bus runs over them. Not only do they not sell their U.S. bonds and dump their U.S. dollars, they continue adding to their inventory, like collectors of Cabbage Patch dolls long after the fad has moved on.

God bless 'em. But we doubt the lenders are quite as dumb as the borrowers believe.

Some of these themes have been echoed on this blog. In particular, I'd like to emphasize my agreement with the pithy inflation comment: "Health care, education, housing, energy - everything measured in dollars that the Asians can't produce and Wal-Mart can't put on its shelves, is soaring." That's exactly what's happening. Cheap Asian electronics and imports on Wal-Mart shelves keep getting cheaper, but everything else in American life is going through the roof. The CPI understates the true cost of living.

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