2008/11/01-2 Ask the Experts with Barry Ritholtz 11/01/2008
Submitted by Liberty Valley on Fri, 2008-10-31 20:52.
2nd Hour with Eric King & Guest Expert:Barry RitholtzCEO, Director of Equity Research,FusionIQTopicHow did we get into thisfinancial mess&where are we headed?
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Our comment:
It is a good interview, and Barry Ritholtz points out how unpredictable markets are. Even when pressed, he didn't waver from the possibility that we could have more credit contraction before inflation gets going again.
Over the long run, inflation should win, but the bursting of the largest credit bubble in history is a serious counter force. When comparing the 1930s depression, the 1970s inflation, and the current environment, debt to foreigners is the highest now and entitlement obligations as well. Both of these are the main motivators in my opinion for the people in charge to deliberately chose inflation. So according to that, inflation should be no less than in the 1970s, but even if it is, it can't get close to the 1930s. In both phases though, gold has roughly gained an order of magnitude against stocks.