I was beginning a new post in my recent Hitting the Century series (and here), and realized my next 3 investment allocations were to real assets – Natural Resources, Agri & Property. This v quickly got me thinking about inflation, enough to devote myself to this post instead...
Along the way, dear reader, you may have noticed my pronounced distaste for fiscal & monetary policy in the developed world. Particularly in the US... That’s not intended to be a US slap-down…and certainly not praise for Europe either! It’s simply a pretty inescapable conclusion if you compare the US & (the hard-core of) Europe over the past 4 decades. Jesus, I struggle to think of somebody with any real power in the US who truly gives a flying f**k about their accelerating debt burden, debt monetization, or the long-term external value of the dollar. In contrast, the ECB & certain Eurozone countries still actually exhibit a painful reluctance to take that road to monetary & fiscal oblivion – even in the face of a European sovereign debt crisis!
Of course, this crisis simply illustrates European politicians are just as poor as their US counterparts in facing up to a problem. Their bumbling & procrastination over the past 2 years is the primary reason for the crisis, with bond investors’ sheep-like behaviour a close second, as far as I’m concerned. Don’t believe me? Well, look at greater Europe: The overall EU budget deficit’s around 4% of GDP, whereas a 7-10% deficit in the US now appears simply run-of-the-mill. The total US Debt/GDP ratio’s now at 102%, compared to the EU at 83%! [Sure, US Public Debt's only at 72%, but seriously...how long before that also exceeds the EU figure?!]. C’mon, do these EU numbers really look like a crisis to you (at this point), on a relative or an absolute basis?!
But somehow the hand-wringing, idiocy & sheer tomf**kery of EU politicians has now transformed this into a real crisis. I’m amazed to see European sovereign debt mutualization (whether total, or above a certain Debt/GDP threshold) still being offered up as a solution. Rather pointlessly, as it’s immediately rejected each time – understandably, as the hard-core would pay for it, while Flub-Med would presumably lose all control of their bowels, financially & literally… This song & dance is pretty mystifying to me. The obvious &…
