Thursday, September 1, 2011

My Beliefs (With No Facts to Back Them Up)

I'm a free market guy.  You know who else is a free market guy?  Not Obama.  Ironically, as we chastise numerous emerging economies for not being free enough, our own economy is sliding into a centrally planned quasi-socialist economy.  By bailing out the banks and increasing entitlement benefits, we have incentivized failure and stagnation in the name of stability.  Channeling my inner Peter Schiff, it's akin to being a bodybuilder and deciding that what you have is good enough.  You say to yourself, well I don't want to get injured and I look good enough so from now on I will just be maintaining.  That is fine, but the ten other bodybuilders are all striving to get better.  Sure a few of them probably will get injured or burn out, but the other eight will now catapult in front of you. 

If we do decide on that road, it's not the end of the world, but some things will change. 

1. Bill Gross is right, but his timing was off.  Our treasury yields will eventually increase as US treasuries are no longer considered to be safe haven trades.  We are already seeing the big entities around the world trying to diversify away from the dollar, most notably into gold and swiss francs.  Because of the sad state of other currencies, the dollar has been strong and may even rally in the short term if global economies continue to slow down.  This is an extremely long term forecast.  Let's read this again when I'm bald.