Brilliant idea!
Posted on 06/30/2009 12:58:54 PM PDT by BGHater
Fears about inflation and hyperinflation could create another economic downturn, bigger than the one the world went through, Hugh Hendry, chief investment officer at hedge fund Eclectica, told CNBC Tuesday.
The stock markets are due for a correction after having risen dramatically this year, but this is not likely to come in the summer and another rally is possible, Hendry, who said he was remaining risk-adverse this year, told "Squawk Box Europe."
"We have a huge intellectual conviction… that this is a more profound downturn that we're experiencing and markets will be under pressure," Hendry said.
"People get more get more concerned about government debt… and it sows the seeds of its own destruction," Hendry said. "We're actually tightening the screw, we make monetary policy tighter and tighter."
Long-term yields on government bonds have been rising, as investors fear central banks, especially in the US and the UK, will have to absorb excess liquidity from the system and raise interest rates to fend off inflation once an economic recovery takes hold.
"I think this paranoia today that inflation is happening today I think it puts in place a motion for a decline in the economy," Hendry said. "I think they're not printing enough money… with regards to the wealth destruction that has been happening over the past 18 months."
"We raised interest rates and actually we killed the golden goose," he added.
Stock Market Correction
A correction in the stock market is likely, but it will not come over the summer, and the S&P 500 index may even hit 1,000 before the downturn, according to Hendry, who admitted he is not stepping in to catch the tail of the rally.
(Excerpt) Read more at cnbc.com ...
Is this a relative of Phil?
How old is he?
Does he remember what 70s style inflation is like?
WRONG!!! What do the UK and US have in common???? Out of control gov't debt with no credible plan to bring things under control combined with central banks monetizing this debt. That is what people are scared about.
Opposition to Obama policies are calling for a deeper Capital Strike. There will be no hyperinflation as long as no one is spending money.
Brilliant idea!
THAT is what we are headed for if Obama is not stopped.
Spelled differently...Phil’s last name is Hendrie.
Premise: print more money to “compensate” for deleveraging and related activities (taken as being synonymous with deflation, which they are not)
Pros: helps while the economy is in tatters (especially for the quarterly results of these boys)
Cons: when economy recovers, releveraging, and other activities, acting upon the expanded monetary base to prior ratios will reveal (not result in) inflation. Great for the extremely rich 0.01% (the banks and subset of government contractors who have access to preferential risk-free “investment vehicles” and also taste the new money first before it trickles into the rest of the economy, and thus do not feel the loss of purchasing power in this newly created money) and for the extremely poor (those with high debt-to-savings and thus nothing to lose and everything to gain). Crap for everyone else, especially the productive-but-risk-adverse folks.
I guess you can destroy the economy enough so that the number of insolvent voters represents enough of the electoral pie to enable a winning inflation strategy...
And no, jacking up the money supply will not cause consumer spending to increase in response to worries about inflation. This did not work in Japan, it has not “worked” anywhere, save for Zimbabwe and Weimer. I tend not to admire basketcase economies.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.