Fixer Upper

Maybe someday
Saved by zero
I'll be more together
Stretched by fewer
Thoughts that leave me
--The Fixx

Interesting comparison of US versus Japan monetary response early in the game. One thing not discussed is how much of the money created so far in the US is actually making it into credit system where it can be pyramided.

If, as proposed in the article, the difference between US and Japan outcomes thus far is one of savers vs debtors, then if former users of credit in the US are no longer borrowing but saving instead, then the end result may be the same no matter how much 'money' is created.

Make no mistake, however, the huge money creation is benefiting one entity: the banks. Getting money free from the Fed, then investing it in bonds, is a pure carry trade gift.

That said, I must admit that I've been upping my chances of the inflationary scenario a bit. Perhaps risk seeking behavior increases again and credit does significantly expand. There's anecdotal evidence, for instance, that house flippers are back. Moreover, econometrics continue to improve toward a 'recovery' theme. And bullishness continues to escalate.

Boo is saying the setup is perfecting for tipping a one sided boat. Sentiment and demark indicators are getting pretty extreme. And if somehow we get another wave higher in borrowing and risk taking, then the decline that follows will likely make the recent downleg look tiny.

I hear you my ursine friend. But I'm adding a bit of upside exposure just in case. My vehicles of choice are the commodity ETFs. I see no value in stocks here. In a world of currency debasement, the better bet is likely hard assets and their proxies.

positions in DBA, DBC, GLD, SH