Waterford, Ireland

Our faith is weakening. That is, our faith that the government will be able to cause inflation, sooner or later. Let’s review our own narrative: deflation now, inflation later.

It’s very simple. Maybe too simple. After a half a century of credit expansion, we now have a credit contraction. In this sense, everything is happening as it should.

There was a crash and credit crunch at the end of last year. Then, the feds panicked. They fought back with monetary and fiscal stimulus. Rates were cut to nearly zero. The Fed flooded the system with cash and easy credit – buying up Wall Street’s bad investments…propping up bad banks…and guaranteeing trillions worth of bad debt. And the federal government passed a stimulus program that authorized more than $700 billion in spending.

Beginning on March 9th, we also got a big bounce in the world’s stock markets – just as we

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By the time you read this column, Goldman Sachs will have probably reported a dazzling result for the second quarter. The rumors preceding this celebrated event sparked a stupendous 185-point rally on Wall Street yesterday.

But the trading day was not all about mere rumors. It was also about hearsay, hype and giddy optimism…

Meredith Whitney, “The Woman Who Called Wall Street’s Meltdown,” according to the Fortune Magazine cover of August 18, 2008, upgraded the shares of Goldman Sachs to a “Buy,” and predicted the stock would rise 30% from current levels. “Goldman has all the benefits of the capital markets in general,” said Whitney, “Without the ‘junk in the trunk’ as I like to call it.” Goldman shares jumped 5.3%.

Based on Whitney’s upgrade, and the subsequent market action, gullible investors could have deduced that the credit crisis has ended. The rest of us could have deduced that the

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Notes from the Investment Underground

Thursday, April 23, 2009

Palermo Viejo, Buenos Aires, Argentina

The greatest economic disaster in recorded history (and how to profit from it)… Your market ”script”… Lessons on guerrilla investing… Banks switch sides… The best communications company in the world… 3 sectors you should own now… Your key to “permanent wealth”… A massive glitch in the administration’s matrix… Notes subscribers beat up on your editor… 1,159% gains as stocks go bust… And more!

*** “The current administration’s economic strategy could create the greatest economic disaster in recorded history,” says Porter Stansberry in today’s DailyWealth.

Not only is the administration planning on enormous deficit spending this year, but the current plan calls for increasing deficit spending for the next decade – spending that will more than double ...