"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved."
- Ludwig von Mises

Tuesday, January 11, 2011

Can Ben Bernanke Really Tame Inflation When it Gets Out of Control?

Eric Janzsen of iTulip.com, has correctly predicted bubbles since the stock market/dot com era and has invested in gold since 2001.  I have been following his writings on his website iTulip since 2007.  He recently created an excellent video that explains the trap that the US Federal Reserve faces.  He combines a recent interview of Ben Bernanke and compares that with the actual data of the past few years.  His conclusion?  Janszen says that the market can only be fooled for so long and in the end, we will have a bond market crash.

I have mentioned before that there are three factors that we need to look at to see how this process unfolds.  These factors are: the Ten Year US Treasury yield, the price of oil, and the price of gold.  This is where inflation will be evident, in my opinion.  Actually, the trend in oil and gold is already there.  The Ten Year Treasury yield may have already reached a low last Fall and may trend upwards from here, we will see.

However, Eric Janszen believes that the US will not experience Zimbabwe-like hyperinflation, but rather high inflation, much higher than we experienced in the 1970s.  His site is definitely worth a visit.  Disclosure:  I frequently subscribe to his site, but there is also a lot of free material on it.

Here is the video:

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