Posted by Frugal on 31st October 2007
The recent article “LARRY LINDSEY LAYS IT ON THE LINE” from Ed Steer is simply SCARY. In fact, I had to email Ed to confirm again that what he transcribed from Lindsey’s words are true. He emailed me back and told me that those words from Lindsey are verbatim.
If you have not read that article, I encourage you to do so. Lawrence Lindsey is the previous economic adviser for President Bush. His words (if all true from that article) are a good indicator on how US economy will unfold going forward. To summarize, $US will be going down probably by at least 20% to 30%, and obviously gold and commodity will soar most likely. US fiscal deficit will probably keep increasing without any end of sight, especially due to an ongoing war in Middle East. All the strong dollar policy is certainly just words, not actions. And Fed will be cutting interest rates down to 3.5% by mid-2008.
I still have a little doubt on the authenticity of the article, simply because the messages in the article is simply too scary. I did a little due diligence and confirmed that Lindsey did speak at the New Orleans Investment Conference. Besides that, I can’t find anything else on the internet, possibly because the conference event is quite recent.
In any case, the message should be very loud and clear to anyone: US dollar is trash, load up gold/silver. Be prepared for high inflation. As I have said before the housing market crash unfolds, the only way for US to save the crazy housing market bubble is to create real inflation. (In the comment section of the linked post) I was expecting real inflation of 7% for 6 years, plus a 25% fall in nominal housing price. If US government tries to engineer a smaller magnitude of housing price fall, then real inflation needs to be even higher and stay longer.
By the way, welcome to the year #1 of the 6 years (or longer) of high inflation. Gold is close to breaking $800 if not already.