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History Books


Sour puss!


One way or another I'm gonna find ya
I'm gonna getcha getcha getcha getcha
One way or another I'm gonna win ya
I'm gonna getcha getcha getcha getcha


There's been a lot of debate recently regarding the state of our -ation and I wanted to pen some quick vibes. As old school Minyans know, I was in the deflation camp for the better part of 2002 and 2003 and felt that money would become scarce and scarcer (and a dollar saved would increase in relative purchasing power value). During last year's lift, as Elmer flipped the spigot and flooded the market with liquidity, I hopped the fence and pitched tent in the stagflation nation.

The recent banter in the 'Ville has gotten me thinking of our path of future frustration. Stagflationary tendencies have clearly emerged. There's been sluggish growth (4% with negative real rates), inflation (oil) and a trend towards higher unemployment (jobless claims). This has evolved, in my view, despite lotsa fiddlin' by the Bureau of Labor Statistics and substantial "influence" by the Fed.

The truth of the matter is that our ultimate course is still unfolding. If Elmer weans us off the uber-reflationary course we've been on, there will likely be a period of "un-reflation" or, put another way, deflation. If he continues with his easy money "don't worry about it, our kids and grandkids will deal with it" policy, the stagflationary elements will become more pronounced and troublesome. Rock and a hard place? Yeah, something like that.

As Collins and I review my Crested Butte presentation, we started talking about the evolution of the markets and the dynamic nature of our business (the topic was the identification of cycles, trends, phases and nuances but it's applicable in many ways). The script is still being written and, as such, there's no way to know with certainty which way the cookie will crumble. All we can do is assign probabilities to potential outcomes and posture ourselves accordingly. The scary part of our current juncture is that most paths lead to the same place.


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