08/04/2014 - The Amphora Report Investing In Financial Repression
READ: Amphora Report
In his latest report, John Butler sees a long-term stagflationary environment similar to the 1970s but it could be worse .. sees stagflation as the inevitable result of the aggressive, neo-Keynesian policy responses to the global financial crisis .. this report discusses the causes, symptoms & financial market consequences of the new stagflation .. “Stagflation is a hostile environment for investors .. Keynesian policies require that the public sector siphon off resources from the private sector, thereby reducing the ability of private agents to generate economic profits. So-called ‘financial repression’, a more overt seizure of private resources by the public sector, is by design and intent hostile for investors.”
He recommends avoiding financial assets & cash altogether – instead accumulating real assets like gold & oil .. “Some readers might be skeptical that, from their current starting point, gold, oil or other commodity prices could rise tenfold in price from here. Oil at $100/bbl sounds expensive to those who remember the many years when oil fluctuated around $20. Gold at $1,300 also seems expensive compared to the sub-$300 price fetched by UK Chancellor Brown in the early 2000s. In both cases, prices have risen by a factor of 4-5x. Note that this is the rough order of magnitude that gold and oil rose into the mid1970s .. But it was not until the late 1970s that both really took off, leaving financial assets far behind .. If anything, a persuasive case can be made that the potential for gold, oil and other commodity prices to outperform stocks and bonds is higher today than it was in the mid-1970s.”
Stagflation Is A Keynesian Phenomenon
