Tuesday, December 18, 2007

How Not To Stem Inflation

Last week, European consumer inflation registered at 3.1% - above the supposed 2.0% comfort zone. Now imagine how much higher the inflation REALLY is given that these numbers come from a government.

So what did the European Union do today?

That translates to $500 billion dollars in our own, beleaguered currency.

So on one hand they complain about inflation and on the other they find a reason to pump more "money" into the system. This time the excuse was "liquidity" and saving the "credit markets".

For your own financial safety, just assume that politicians will inexorably debase the currency - no matter what they say or do in the short term.

The euro currency got hammered last week; so after a rough start, my trade is now in the money.

Why did the euro roll over last week? Well, it's descent coincided with a few things: only a quarter point cut by the Fed, the higher EU inflation numbers posted above,...but it's not scientifically possible to explain small security fluctuations so I will refrain from conjecture.

Without disagreeing with the doom-and-gloom dollar prophets - you know, those opinionated folk that believe American dollars will soon be worthless - one has to remember that the dollar is competing with overseas politicians who are at least as Moronic as our own.

As politicos perpetually fumble currencies all over the globe, smart people will continue to try and sustain their wealth by hiding it under mattresses, in jewelry and artwork, and in commodities like oil and gold.

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