This is Mr Lincoln Augustus, first second cousin of Holymagiman
On 9th January, Holymagiman wrote the following:
Nows wen de poor ol' Holymagimon be drimmin dat de wost be passeded, eberybuddy be sayin dat de deth an destrctions be comin, an tings be gettin baddier an de baddier eberydays.
De Benakkemon be printin de moneytings, de Btitishmon be printin de moneytings, de Muggbemon be printin de moneytings.
Sos wat yo be tinkin be happenin to de assettings, bro, wat yo tink?
De moneytings be soons losin de valu an be buyin de less an de less, an dat be de fak. Dat be meanin dat de pric ob de assettings be goin uppys, wedder yo be likin it or nots."
When Holymagiman first expounded this idea to a group of his economist friends over a Jamaica Numba One and a jug of the Red Stripe at the Jamaica Palace Hotel, they all felt that he had now really gone beyond the limit. Respectable countries like USA and Great Britain and Zimbabwe do not print money without good reason, they said.
And it was unheard of for the USA and Britain to print money....they would use sound economic policies!! What sound economic policies, Holymagiman inquired, could have led to what has happened.
So, if the economists did not know the answers, and the Reserve Boards did not know the answers, and if the interest rates everywhere are trawling the bottom, and all confidence is lost, and asset devaluation is looming in the foreground like a gigantic spectre that will never vanish away, then the only way for these countries to try and extricate themselves from the mess and to avoid deflation was to print money. They had to, and they have.
Well, it is now quite clear that both England and the United States have started to print money big time. Unthinkable previously, a fact now, and on retrospection, a totally obvious course of action.
And yes, we feel that the bottom has been reached. We feel so and we hear so.
Even though there are many others like the Monocle from Ohama who still have their telescopes stuck to their blind eye. The Monocle is upset that he stuffed up, but he is in good company, so the sooner he gets over it, the better. Calling a long deep recession is not going to make him appear any cleverer when the market keeps going up.
So here is the scenario that we are envisaging for now
1 Bernanke and the various Reserve Banks are locked away in the past, with old economic models, thinking old economic thoughts.
2 Above ladies and gentlemen stuff up economies big time
3. Interest rates cut in desperation as credit dries up
5 Measures fail. Credit squeeze worsens, interest rates almost zero.
6 More bad news, Ponzi schemes etc
7 Chinese and Indians economies slow down as expected internal consumption peters out. less demand for resources, global economies hit harder.
8 More job losses
9 Johannes Gutenberg's great great great (etc)grandson meets Bernanke and Brown at a cocktail party and tells them about Mr gutenberg's invention.
10 Brown and Bernanke go home and play around with thew printing presses and discover that Presto, they can make money appear magically.
11 Brown and Bernanke print out billions and trillions of currency units.
So that is where we are up to now.
12. Printing of excess money ensures inflationary pressures. What that implies is that solid assets will only have one way to go....up, to counteract the falling value of monetary units.
13. Britain's inflation figures out today were unexpectedly high. China is getting worried for its 2 trillion dollar investment in US bonds.
14. Now that Britain and the US have got the hang of printing money, it is ensured that they will print more. that is their only way out.
15. When people realise the implications of these measures on their savings, there is going to be a flight out of money (earning low interest, more being printed)into quality undervalued assets. Guess what happens next..the markets go up
16 The unemployment rates rise, and will keep rising. It has perhaps been understood that employment and the state of the economy go habnd in hand. As unemployment goes up, the economy declines and asset values fall. We feel that this is the past and the present is slightly different.
17,Asset values have detached themself from the unemployment rate because of the spectre of looming inflation. so we could well have a rising market going hand in hand with rising unsmployment.
18 Just as economists totally overestimated the strength of internal Chinese consumption previously, they have now gone the other way and totally underestimated it.
19 The Chinese will of course cut back on their spending. But at a higher base level from before, because, just like the westerners, they have been seduced by the luxuries of life. So Chinese spending is not going to drop over a cliff, and that will keep China chugging along for the moment.
20. This is not the Great Depression and this is not the 1920s. The world's population has grown exponentially and the population's idea of their "basis" needs has also grown exponentially. That is why Bernanke is not the man to save the world, because he his mired in a Depression that occurred in a different time and in different circumstances.
21 So, to be totally simplistic, the interest rates have hit the bottom, the banking folly has near hit the bottom, the presses are up and working and therefore, inflationary expectations will push the markets along.
22 The family....we have felt that coalbed methane and the banks are rather interesting and we hope our forty three shares do perform as expected.
