The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Saturday, September 15, 2012

What asset-class protects you against both deflation and inflation?

I call it the 'Humvee' of all-terrain investments. You can read about it in the Weekend AFR for free here. Excerpt below:

If anyone tells you with confidence what is going to happen over the next year or so, you should probably switch off. Nobody can forecast our chaotic and complex futures over the long run. The best you can do is plan for a range of contingencies.

I find it helpful to conceive of two extremes. The first involves deflation, global recession, and ultra-low interest rates. The second is a world that has some growth coupled with rampant inflation and, eventually, stonking interest rates.

Put a gun to my head and I’d speculate that all roads ultimately lead to inflation. Most developed counties are wilting under the weight of ballooning public and private debt burdens. The quickest ways to reduce debt are to default or to allow inflation to chisel away at the fixed dollar value of your obligations.