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The coming inflation: Good or bad for investors?

November 10, 2010

INF is coming for sure, don’t kid yourself, Dr. Economist; don’t fool yourself, Mr. Citizen, it’s coming and it’s coming big! Here is what you need to know as an investor:

Inflation means that the numbers of dollars you make goes up, the purchasing power of each dollar you earn goes down but the number of dollars you pay in interest on loans stays the same! In short, you borrow valued dollars and pay back with devalued dollars – it is like you trade in your GM clunker  for a new Lexus and get some cash too! Your government printed too many dollars and you gain from it if you are a maverick investor (and if you are normal you will protest it). Why did they do such a stupid thing? Because they had to pay for their “projects.” What projects? Well, the war in Iraq, instead of making Iraq pay for it from its oil money, the US government made you pay for it! Why didn’t you tell your representatives not to do it? Because you are timid, you lost your assertiveness as a culture. What else? The war in Afghanistan, instead of supporting  Abdullah the foreign minister who had a good peace plan, whom the people loved, you opted to spend a trillion dollars on the corrupted bipolar Karzai. Why did your US leaders do it? Because their professional advisers are nincompoop, they don’t understand diddle shit about Iraq, Iran and Afghanistan cultures of violence and corruption. Actually they do it to get elected. You see, you like “nice” people who give your money away. you are a masochist. The cost: 3 trillion bucks. What else? Your government decided to take care of millions of lazy bums who don’t want to work hard the American way. Treasury decided to reward corrupt bankers who steal money from you, instead of facing a tempest in a tea-pot. Your secretary of State decided to send free money to foreign nations that love to take  your charity and – support terrorism. Bingo, now, since the American people don’t give you more cash (they are broke), you can go print more dollars to fight the terrorism. Hurrah, inflation will be here to stay – cash in on it!

What’s that got to do with investors? Plenty. They government is  screwing you up by creating a coming inflation, no more bang for your buck! At least benefit from it, buy things on credit now and pay later with cheaper dollars. If you are an investor, March 2009 was the best time to buy great stocks on margin, if you want a cheap home now is the time to get it. If you are smart, responsible and stable you have great credit. Now is the time to maximize getting great loans. Cheaper dollars will improve exports and retard imports, will bring in tourists, inflate the Dow Jones, hurt savers, save investors, get it and prosper from your government’s financial folly. First there was the recession when the DJ went down to 8000, did you buy? Next there was the housing market plunge by 50%, did you buy? Now, the inflation is coming, would you borrow now? Life’s good for those who understand elementary finance. Life will always be a struggle for those who are afraid to learn what works because it doesn’t sound right!

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