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Minyan Mailbag: The Beginning of Hyper-Inflation?


There is no free lunch Ben.

Prof Succo-

Could it be we are seeing the beginning of hyper-inflation? How nutty can the CRB go on a Fed pause? Things can and may get out of hand real quick. Anyway, the scenario that is "developing" to me (?) is a Fed pause in May leading to a parabolic blow off in the metals, oil and particularly Gold causing the Fed to react with more tightening they clearly do not want, then we may get the "cleanse" we (the country) need in the form of a large scale "event."

In any case it seems the Fed is screwed and so are a lot of folks. Inside, many can
"feel it" (and many more will as time goes on) as Prof Reamer reminded us a couple weeks ago...

Minyan Steve


It certainly looks that way doesn't it?

Bullion Ben has implicitly stated that he will hyper-inflate before he will allow asset prices to deflate. As my grandfather used to tell me, "Be careful what you wish for."

I would like to thank Minyan Neil for beating it into my head about gold. I was in gold early both personally and professionally, but sold a portion of my position personally. That still makes sense to me from a risk perspective.

But professionally we have used long gold volatility and delta to protect our portfolio from its overall bearish (bearish in the sense of long volatility) stance on financials. Minyan Neil's gentle but constant reminders helped me to realize that if Ben were to hyper-inflate, this may prop up stock prices in the traditional categories, but would make the commodity stocks rip up.

They have done that, so we have been able to actually sell deltas in gold and other commodity stocks on the way up and maintain a long vol and delta exposure in a controlled way.

There is no free lunch Ben. If you insist on doing the wrong thing in the long run (hyper-inflate) because you don't have the strength to do the right thing (let the debt bubble correct), you will still wind this country up in the same place: debt burdened and broke.
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