Turning Hard Times Into Good Times

Alasdair Macleod, John Rubino & Quinton Hennigh are this week’s guests. Recently, Doug Noland, the portfolio manager for the McAlvany Management Tactical Short fund, wrote the following: “History suggests today’s festering issues in credit derivatives and structured finance will prove woefully worse than anyone today appreciates. And there is little policymakers can do to remedy the situation. The cycle has changed. The amount of stimulus necessary to one more time resuscitate Bubble Dynamics would risk hyperinflation.” But what needs to be understood is that inflation is not rising prices but rather it is diminishing the purchasing power of the currency and bank deposits. In a world awash with currency and bank deposits, the real concern is the increasing desire of economic actors to reduce these balances in favor of an increase in their ownership of physical assets and goods. As the crisis unfolds, we can expect increasing numbers of the public to attempt to reduce their cash and bank deposits with cata