Will President Obamas plan work?

Will President Obamas plan work?



It depends on how you measure success.
If you want to re inflate the bubbles, then yes it might possibly. The amount of money we are looking at is truly mind wrenching. This has never been done before. At least on this scale. But what are the longer term ramifications?
Ken Gerbino writes an excellent article, that lays out the details but his overall conclusions are very plausible. While the collective wisdom is that, this is the collapse that all the gold bugs have been waiting for, Ken believes that there is one more recovery before that happens.
I have been pondering this for some time.

This is how I see it panning out;

As this year unravels there will be ups and downs in the market at various levels of volatility. essentially a sideways market. Strangely, times of violent sideways action.
As the "stimulus" money works it's way into the market and these new funds are monetised and ultimately "realised" by the economy. There will be some measure of recovery. This is when I believe inflation will begin. The stock markets will recover much of their losses, but commodities will begin to soar as the supply pendulum swings from over supply to under supply as a direct result of this current climate of demand destruction (people and companies belt tightening). As money floods the system and economic activity returns, companies will rush to ramp up production and the supply will be strained. We still have China and India to deal with. They have had a taste of a higher quality of life and it would be naive to think they are going to give this up.

Here is where my cracked crystal ball, begins to distort the image of the future and it all hinges on time. How long and how far will the recovery go?
Who knows. But I do believe that commodities will soar and the dollar will suffer hugely.

What is the ultimate end game?

Whatever it is, it'll be one for the history books.
And most likely it will be something no one expects, including myself.
But if you stock up on tangible assets now while they are incredibly cheap, you will be in a position to take the best advantage of the situation when the direction becomes clear.

Take a look at MOO, it's a play on Agri-business. And again this is a long term buy and hold.



Good luck and Godspeed



JT

Legal disclaimer: This post is for informational purposes only and is solely the opinion of the writer. Nothing in this post should be considered investment advice. Before investing in anything, the reader is encouraged to do his or her own research and consult with a certified financial advisor, which John Tompkins makes no claim to be. John Tompkins and Toro Creek Investments accept no liability for financial losses or damages incurred by the reader because of this post.