Friday, July 20, 2012

GETTING AWAY WITH PRINTING MONEY

1926. Blasé...
1926. By elinor04

Jan Luthman of Liontrust, on 19 July 2012, has some survival tips for a financial meltdown

Luthman points out that certain currencies have been doing well.

According to Luthman: "To get access to these appreciating currencies, invest in companies that generate significant and growing proportions of their earnings from consumers in emerging markets and rapidly growing economies." 

Luthman points to companies like Unilever.


1930s USA. Website for this image

Luthman points out that there has not been hyperinflation in the USA or Europe or Japan.

The dollar has not suddenly become worthless relative to, say, the UK's Sterling or the Japanese Yen.

This is because the USA, Europe and Japan are all, more or less, in the same boat.

According to Luthman, "our currencies are sinking together and because we trade principally with each other, we are not yet importing inflation."

The dollar, and similar currencies, have weakened relative to certain emerging market and resource-based countries.



On 17 July 2012, Mark Smith, at FE Trustnet, reminds us that the USA is already expected to reach the $16.4trn cap on its debt before the end of the year.

And, "the expiration of Bush-era tax cuts and $1.2trn spending reductions could push the US into recession at best and, at its worst, bring about a full US default."

http://www.trustnet.com/News/Research.aspx?id=351726



However, Luthman suggests that "this may just be the one time in history when major economies get away with printing money.

"By devaluing our currencies relative to those of low-cost economies, we should be able to price ourselves back into the global economy and re-create at least some of the jobs that we have lost...

"An implosion of the pound, dollar or yen could only realistically be brought about by sudden repudiation of sovereign debt and that seems to me hugely unlikely...

"The euro, however, is different...

"Frankly, it is difficult to see how at least a partial default of a eurozone country could be avoided without massive buying-in of peripheral sovereign debt by the ECB via QE."


Gold has not been doing too well in recent months and is at $1,582 an ounce.

2 comments:

Anonymous said...

Pull up a chart of the INRUSD or the BRICS generally. EM currencies have provided nothing of a safe haven. Then look at the INR-AU crosses. The comments are inaccurate, Shallow and speak to a lack of understanding of the FX markets their collateral backing

http://blogs.ft.com/beyond-brics/2012/05/22/rupee-at-yet-another-all-time-low-as-the-55-threshold-is-breached/


As for what is appreciating EM currencies or AU...just look at the chart
http://www.gold.org/investment/statistics/gold_price_chart/

Anonymous said...

Pull up a chart of the INRUSD or the BRICS generally. EM currencies have provided nothing of a safe haven. Then look at the INR-AU crosses. The comments are inaccurate, Shallow and speak to a lack of understanding of the FX markets their collateral backing

http://blogs.ft.com/beyond-brics/2012/05/22/rupee-at-yet-another-all-time-low-as-the-55-threshold-is-breached/


As for what is appreciating EM currencies or AU...just look at the chart
http://www.gold.org/investment/statistics/gold_price_chart/

 
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