By 2 Cents on October 15th, 2010 | Category: Economics |  In my opinion, the crisis and the sharp recession of the past two years and the subsequent rescue packages around the globe did not provide the necessary catharsis that recessions need to bring to economies.
~ George Athanassakos
Update: This article was selected for the Best of Money Carnival #73 posted at Redeeming Riches. Thanks!
I chose a recent article from the Globe and Mail for today’s Friday Food for Thought. This one is by George Athanassakos, a professor of finance. He has been wondering about what the rise in both bonds and gold means for a couple of years now and provides some updated insights in this article: Who Is Right? Bond Bulls or Gold Bugs?
Usually a rising gold price indicates that investors see inflation coming. Rising bond prices, and the accompanying lower yields, usually portend slowing [...]
Read on and enjoy … Can Gold and Bonds Both Be Right?
By 2 Cents on September 20th, 2010 | Category: Economics |  There’s an alternative. There’s always a third way, and it’s not a combination of the other two ways. It’s a different way.
~David Carradine
Update: This article was included in the Carnival of Financial Planning #159 posted at The Skilled Investor. Thanks!
When I last wrote about inflation vs. deflation, I was trying to figure out which one would prevail and how best to position our money. At the time, I felt like we would likely see deflation first, with a bout of inflation down the road at some point. We could even see hyperinflation if global central banks devalue their fiat currencies in a race to the bottom. A couple of wise readers (Kevin from Invest It Wisely and Kevin from Out of Your Rut) pointed out that we are actually experiencing both inflation and deflation, but [...]
Read on and enjoy … Are You Ready for Biflation?
By 2 Cents on August 30th, 2010 | Category: Economics | Numbing the pain for a while will make it worse when you finally feel it.
~Albus Dumbledore, Harry Potter and the Goblet of Fire
Is the Federal Reserve a hero or a villain? You can find plenty of Nobel Laureates, pundits, and civilians like myself on either side of that debate. Nassim Taleb, author of The Black Swan has been saying for quite some time that the Fed steered us into the ditch and that it’s shameful that the same group that got us here is still in the driver’s seat. Perpetual overspending and record low interest rates have not only failed to solve our problems, but are the major causes of them. It is therefore ridiculous to turn to them to solve our current challenges.
Paul Krugman is probably the most vocal Nobel Laureate who supports the Keynesian spend-till-you-drop/debt-levels-don’t-matter viewpoint. He has been a supporter of [...]
Read on and enjoy … Will the Fed Save the Day?
By 2 Cents on August 23rd, 2010 | Category: Economics | When the elements of deflation combine in the right order, the central bank can print a boatload of money without bringing about inflation. And we may now be watching that combination come about.
~ John Mauldin
Update: This article was featured in the Canadian Personal Finance & Investing Carnival posted at Investing Thesis. Thank you!
I’m officially back from a 2-week vacation today, although I sort of cheated and put up a new post on Friday. It’s great to be back. I’d like to thank those who filled in for me with their thoughts and insights in my absence. In the meantime, however, the financial world went on without me while I caught up on some reading. I learned a lot as a result, and I’ll be sharing some of that with you over the coming weeks.
The inflation vs. deflation debate [...]
Read on and enjoy … The Periodic Table of Deflation: How Many Elements Do You See?
By 2 Cents on July 30th, 2010 | Category: Investing | A nickel ain’t worth a dime anymore.
~ Yogi Berra
Update: This article was chosen for the Best of Money Carnival, #Sexty-Two at Budgets Are Sexy. Thanks! It was also included in the first ever Carnival of Wealth posted at Personal Dividends. Thank you!
When we looked at the current pros and cons of investing in commodities and real estate, it became quite apparent that there are some pretty good arguments on both sides of the debate. We often hear contradictory truisms. Cash is trash. Cash is king. Which is it?
The correct answer is likely “it depends”. There are times when it’s prudent to hold more cash, and there are times when it makes sense to move more money into riskier assets like the ones we’ve been discussing this week. Today, we’ll take a look at the case for each and [...]
Read on and enjoy … Cash: Is It Trash or King?
By 2 Cents on June 30th, 2010 | Category: Investing | It’s better to stir up a question without deciding it, than to decide it without stirring it up.
~ Joseph Joubert
Update: This article was included in the Carnival of Financial Planning #150 posted at Military Finance. Thank you!
I’m going to try to raise some of the key issues that might affect interest rates over the second half of 2010 and beyond. Like most of the economic and market analysis we undertake here, these will just be the observations of an interested amateur. They are designed to be food for thought, and not definitive investing advice.
Interest Rate Drivers
On Monday we looked at inflation and deflation. Getting the call on that debate right will likely determine the relative success of any portfolio over the next decade or so. It will also have a profound effect on interest rates. [...]
Read on and enjoy … Interest Rates: 2010 Mid-Year Review
By 2 Cents on June 28th, 2010 | Category: Economics | Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.
~ Sam Ewing
Will we have inflation or deflation? This is probably the most important question facing investors right now. There are plenty of smart people who argue convincingly for each. All of them make very good points. But who is right? If you asked me if we should be worried about inflation or deflation, I would probably answer as follows: Yes.
Inflation & Deflation Defined
You know you’re going to have a hard time answering a question correctly when the experts can’t even agree on the basic definition of the terms of the problem. Not only is there a huge and varied debate in the financial community about whether inflation, deflation, both, or neither is a threat, many [...]
Read on and enjoy … Inflation or Deflation: Which Is It?
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