Sailing on Oceans of Liquidity

wp-casinocap-header.jpgQuoted from this weekend’s Barron’s interview with legendary trader, Jim Rodgers:

This is the first time in recorded history that we have all the major central banks, all the major governments actively debasing their currencies. Japan has said it will print unlimited amounts of money. So Ben Bernanke said, “Wait a minute, we can throw in a trillion dollars a year.” And the Europeans said they’ll do “whatever it takes.” There’s a gigantic ocean of liquidity, and the people getting that liquidity are having a wonderful time. But it’s totally artificial, and it’s going to end badly when it ends, I assure you.

[No inflation?]

According to the U.S. government! But you must buy some things: insurance, food, even paper. The price of nearly everything is going up. We have inflation in India, China, Norway, Australia—everywhere but the U.S. Bureau of Labor Statistics.

I’m telling you they’re lying. Go to a restaurant in New York, or a grocery store, and tell me that there’s no inflation. Look here: In 2001, it cost $9 to go to the top of the Empire State Building. Now it’s $27 to go to the 86th floor, $44 to go to the top, and $67 to go express. The Museum of Modern Art in 2001 was $10, now it’s $25. A cab from Kennedy airport to Manhattan in 2001 was $30 plus tolls. Now it starts at $52.

While we do not see general price inflation as defined by the US Bureau of Labor Statistics, we see radical relative price changes across goods and services. Those sellers with pricing power have raised prices steeply over the past few years and the price changes will continue under this central bank regime. The prices that will not go up are the COLA adjustments on wages and Social Security.


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