Tomato Inflation

I downloaded my latest set of images from the TomatoCam and made a short video from it yesterday. I like the results, even if the image quality is marginal. Check it out.

I think I'm done with this experiment. I learned quite a bit from it, but I'm not sure where I'll take it next.

Inflation

I read an excellent summary of where we are with inflation and how to invest in the upcoming environment. I found it on Zero Hedge which tends to be a bit hysteria-prone, so take it with a grain of salt. The author makes the case for gold, but in the process, he lays out a very reasonable scenario for what's coming as the government won't stop spending and the Fed is stuck with funding the borrowing binge or fighting inflation.

Fiscal conservatives have been throwing around the term "hyperinflation," but we're not there yet. As far as I can tell, inflation is around 7% for non-investment items and considerably higher for stocks and real estate. I would bet we have about a year to go before we get to the 10% or more mark. I could be wrong on that.

Anyway, here's the link and here's a snippet:

It is in this context that a deeper examination of the relationship between assets and the accelerated rate of issuance of state currencies is pertinent. That the rate of monetary expansion has accelerated is no secret; but so far, the probable effects on the purchasing power of the dollar, and also for other currencies aligned with it, have been ignored by investors. Central bankers have been coy on the subject, and by fiddling with the price inflation averages statisticians have buried the evidence. The suppression of the evidence on prices has been an important factor in what is effectively a concerted campaign of disinformation about inflation.

While these conditions have built up for decades, so far, non-fixed interest asset values have still afforded protection for investors’ capital. For the middle classes, the values of their homes, often geared through mortgage borrowing, have risen substantially. The values of their portfolios and pension plans have also benefited hugely. For them, these conditions have been extremely beneficial, which is why central banks have latched onto the wealth effect and are now directing new money into stock markets at unprecedented rates through quantitative easing.

The current state of play for both financial and non-financial assets has led not only to rising asset values but is now fundamental to the economic confidence upon which central bank policies entirely depend. But the problem with confidence as a policy is that it assumes that the crowd must be permanently bullish and that reality must never intervene. Policies backed on little more than perpetual hope must fail.