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Hugh Hendry Channels Irony And Paradox In His Latest Financial Outlook
Submitted by Brett of Contrary Investing
Hugh Hendry Channels Irony and Paradox in His Latest Financial Outlook
Yesterday I had the great honor and opportunity to sit courtside for a live one-hour presentation from our favorite contrarian, irreverent hedge fund manager – Hugh Hendry himself. What a thrill!
Hendry, as you may know, is partner and Chief Investment Officer at Eclectica Asset Management. While his claims to fame are numerous, his two most notable (for those getting to know him for the first time) are:
- A 31.2% *positive* return in 2008
- Some truly hysterical TV clips (See: Hugh Hendry’s Greatest Hits for four minutes of financial bliss)
Hendry is a big favorite of ours at ContraryInvesting.com. I also just learned that he was “The Plasticine Macro Chapter” interviewed (at the time) anonymously by Steven Drobny in his excellent recent book Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money – which profiles a select group of hedge fund managers (all “off the record”) that made money in 2008. I went back and re-read this chapter the night before Hendry’s preso, to re-familiarize myself with his investing/trading philosophy.
Hendry electrifies his Sacramento audience.
The Power of Irony and Paradox
Rather than trying to compete pure “intellect-for-intellect” with the likes of George Soros, Julian Robertson, and the other great minds of the hedge fund world, Henry instead relies upon what he calls “the power of irony and paradox” to foil the logically minded and deliver his superior returns.
In other words, he bets on strange events happening – those not anticipated by the mainstream.
This strategy paid off in a big way in 2008, when his out-of-the-money options hit big, and his fund returned 31.2%. It has tended to underperform, though, when (to paraphrase Hendry) “bad stuff doesn’t happen.” Fortunately for Eclectica investors, he sees a bad moon rising once again.
Why China is Not 19th Century America
While many economic observers have drawn an analogy between China's ongoing industrialization and that of America’s, Hendry sees a critical difference.
In the US, he says, capital has always been allocated where it could achieve the highest return. In the 19th century, when America was the economic upstart on the block, it was also on the gold standard. Which is very important, according to Hendry, because it allotted entrepreneurs one – and only one – chance to succeed. It was not a time of bailouts and multiple bankruptcies!
China is different, he believes, because it is industrializing with a fiat currency. Thus they fall into the trap of misallocating capital – building bridges to nowhere, towers for nobody, and so on. China’s goal is similar to that of 1980’s Japan in his opinion – full employment, rather than maximizing return on capital. A critical, and even fatal, difference, in his mind.
The New Model for the Global Economy
You know the old drill – China and Asia produce, the US consumes. They cycle their greenbacks back over this way, finance our debt, we buy more of their stuff, and the beat goes on.
This model officially stopped with the launch of QE2, Hendry says, as the US officially started rejecting the globalization that had made the global economy hum (perhaps largely at the expense of US employment and manufacturing). With QE2, dollars were printed and exported – along with inflation – to Asia.
This led to the countries in Asia – and Europe, too – raising rates to combat inflation. The result, he says, is that global economic growth has essentially ground to a halt.
So what’s next?
A crash, of course.
Europe’s Debt Spiraling Out of Control
Hendry then pulled up a chart of US and Europe non-financial debt to GDP, illustrating that Europe’s debt has been spiraling out of control ever since the formation of the European Union.
Participant nations, he puts it, received initial “ALT-A” rates – nice low German interest rates – for signing on. But the fixed exchange rate that the euro imposes on the peripheral nations started the time bomb ticking.
Hendry, in fact, is very down on fixed exchange rates, and believes the euro and the dollar/renminbi peg are at the heart of global economic insecurity today.
He believes the recent referendum in Greece could be a very significant event, likening it to a 1931 mutiny in England that forced the Brits off the gold standard. He things the Greek referendum could be the trigger to disengage from their fixed exchanged rate (and cited everyone’s lack of anticipation for the referendum as a classic example of irony in finance).
Stage Not Yet Set for Hyperinflation and Gold $3000
The high CPI numbers being reported in the UK and other Western nations are “meaningless”, Hendry says, because in today’s economic environment, it does not translate into wage growth. (In the 1970’s, it did).
Because wage labor is approximately 70% of total business costs, he does not see meaningful inflation without wage inflation.
He’s also down on gold because it is not a contrarian investment today as it was 10 years ago (he had a nice year in 2003 buying gold and gold stocks when nobody wanted them).
The widespread belief among the greatest financial minds today that hyperinflation is inevitable greatly disturbs him.
In the Western world, he sees hyperinflation as a political choice – one that requires the will of the populous. (Forget Zimbabwe, he says – that might as well be Timbuktu. It’s not our culture.)
He sees society’s current mood as “dark” (Tea Party, Occupy Wall Street, and social unrest in Europe to name a few), and believes this makes bailouts and money printing very hard. The only environment that makes hyperinflation possible is “the mother of all depressions” he says.
In keeping with his anticipation of paradox, he quipped that if you believe in hyperinflation, then you should be levered up long on 10 and 30-year Treasuries…because in order for hyperinflation to become a political reality, deflation must arrive first.
2012 Economic Outlook and Investment Positions
Of the many places Hendry doesn’t want to be long, China is near or at the top of the list. He thinks China could be subject to a 25% (!) decline in GDP over the next five years.
How is that possible?
He draws an interesting analogy: “UK GDP fell 8% in the Great Depression, while US GDP fell 25%.” Inferring, of course, that today’s China is the upstart US to our current “UK peak empire” role.
In what he calls “the great unwinding”, the strongest economies in the world are also – ironically – the most vulnerable.
But that doesn’t mean he’s bullish on the developed world, either. He has an aversion to just about everything.
“It’s checkmate. Everywhere it’s checkmate.”
He believes Italy is insolvent, citing their huge borrowing binge over the last ten years that has only achieved 0% growth.
He loves Japan – as a culture and place to visit – but is especially bearish on several Japanese sectors. He’s long credit default swaps with respect to cyclical, leveraged Japanese businesses. He’s also bearish on Japanese utilities, which have issued tremendous amounts of debt since the Fukushima disaster.
Hendry’s favorite sacred belief – which he’s betting against, of course – is the fact that no one believes the ECB will ever cut rates below 1%.
He’s made bets that he says will deliver a 40-to-1 return if the ECB cuts rates below 1% next year.
Big thanks to the CFA Society of Sacramento for hosting the event, and to my pal Jonathan Lederer for landing Hugh and letting me crash the event as his guest!
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I'm curious to know how he's got 40-1 on ECB rates falling below 1%.
"he bets on strange events happening – those not anticipated by the mainstream."
More worship BS.
Sorry, this is more "didn't see it coming" (while pulling the parachute behind the scenes after robbing folks blind- e.g. GS) excusing. The "mainstream" does know about all this stuff, they DO anticipate it, it's just that they won't talk about it. It does not, however, mean that they can always CONTROL It.
Also, I don't see any of this as necessarily strange. Strange would be that this shit WILL continue, which it won't (that which cannot continue forever, won't).
HH is correct in the the Emperor has no clothes, but, we shouldn't confuse him (HH) as being fully clothed when he (HH) is only wearing a pair of socks. Yeah, the best dressed one in the room...
you have to love hendry metaphorically punching jeffrey sachs in the mouth. what a joker that guy is.
7:45AM GMT 07 Jan 2009
Russia has cut off all Europe's gas supplies
Russia to Chancellor Merkel: Are you happy to see me or are you cold? Chancellor Merkel, your titty fucking gimmicks no longer stimulate us for your payment in arrears. Seems as though Greece has you pinned in your own titty twist. We will extend you 30 days, yet we expect you to catch up in full payment. Failure to do so, will be repeated in a brisk winter.
BBrrrrrrrrrrrrrrrrrrrr Chancellor Merkel.
Dear gentlemen,
Short period of deflation followed by hyperinflation is what Tyler has been telling for a long time, if I am not mistaken.
And many times, it has been said that, in that period of deflation fortunes will be made.
Mr. Hugh has just been reading ZeroHedge, and has the gut to follow his intellect.
I'm just trying to understand the meaning of the timing of the Hugh's public speech. (Please have in mind that both deflation/ hyperinflation will cause wealth transfer, and this never happens before political and security mechanisms are in place.)
Kind Regards,
When? How? What? will the masses tolerate or be ignorant of? I wont have the resources to play the game but I'd like to know how to tread water during the wave. yes I know, gold, but they'll just tax it or people will steal it from you the second they know you have it.
When I hear argument that "Because wage labor is approximately 70% of total business costs, he does not see meaningful inflation without wage inflation." at once I want to puke. In his economy of hairdressers, nailpolishers and masseurs maybe it's true , because you can always lower wages as demand is going down. The real economy is in manufacturing and natural resources extraction where wages where at about of 10% of costs and going up very fast pressuring prices of everything starting from food to planes. If his economy is economy of services for some time he maybe right but all those services need real things to function and earlier or later reality will catch up with him.
I can smell the exhaust from Israeli fighter/bombers warming up on the tarmac.........
what is money?
And the most crazy article on CNBC yet :
Dow Could Reach 100,000 in 20 Years: Authorhttp://www.cnbc.com/id/45144259
Did they happen to say what the dollar would be worth when the Dow reached 100,000? Thought not. (Same problem Glassman had w/Dow 36,000)
Where to start. Love the guy's ideas, but Hendry is in the business of exploiting mispriced tail risks.
Look at gold spot.
Then look at the long bond.
You have to seriously consider that tail risk is totally overpriced and the world isn't going to fall apart.
Real tails are found precisely in things like Japanese equities. Everyone is bearish on Japan. If you really want to play the unexpected, consider Japanese corporates. Locked into indredibly cheap long term financing and a currency that allows them to go on a global shopping spree.
Hello Robo, II.
This is a boo-boo bear site. We sell, panic, worry, and complain.
The bears you can handle it's the fossickers which drain all the mental energy
deleted by poster; point already made.
I always enjoy it when fear and panic dominate.
wiki, by the way, assange is trying to save the people who are prosecuting him. they are that
ignorant or compromised. ironic.
Julian Assange: from hero to zero
A year ago we Swedes hailed Assange as a James Bond of the net. Now he's seen as a pitiable, paranoid figure
http://www.guardian.co.uk/commentisfree/2011/nov/02/assange-hero-zero-sw...
.
Irony
From Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/Irony
"Ironic" redirects here. For the song, see Ironic (song). For other uses, see irony (disambiguation).
One proposed method for indicating irony in punctuation is the irony (punctuation) mark.
Irony (from the Ancient Greek ???????? eir?neía, meaning dissimulation or feigned ignorance)[1] is a rhetorical device, literary technique, or situation in which there is a sharp incongruity or discordance that goes beyond the simple and evident intention of words or actions.
Ironic statements (verbal irony) typically imply a meaning in opposition to their literal meaning. A situation is often said to be ironic (situational irony) if the actions taken have an effect exactly opposite from what was intended. The discordance of verbal irony may be deliberately created as a means of communication (as in art or rhetoric). Descriptions or depictions of situational ironies, whether in fiction or in non-fiction, serve a communicative function of sharpening or highlighting certain discordant features of reality. Verbal and situational irony are often used for emphasis in the assertion of a truth. The ironic form of simile, used in sarcasm, and some forms of litotes emphasize one's meaning by the deliberate use of language which states the opposite of the truth — or drastically and obviously understates a factual connection.
In dramatic irony, the author causes a character to speak or act erroneously, out of ignorance of some portion of the truth of which the audience is aware. In other words, the audience knows the character is making a mistake, even as the character is making it. This technique highlights the importance of a particular truth by portraying a person who is strikingly unaware of it.
Good luck to Hugh Hendry. He is a financial media star now.
Hugh Hendry's Agriculture Fund is investing in Monsanto? Fail.
He is comparing his Agriculture Funds performace with MSCI instead of comparing e.g. with RICI (Jim Rogers Commodity Index). Fail.
From his report: "Amidst the market turmoil of August, the Fund outperformed the MSCI World, falling 4.5% compared with the index loss of 6.1%." Fail.
Paradox
From Wikipedia, the free encyclopedia
For other uses, see Paradox (disambiguation).
Further information: List of paradoxes
A paradox is a seemingly true statement or group of statements that lead to a contradiction or a situation which seems to defy logic or intuition. Typically, however, quoted paradoxical statements do not imply a real contradiction and the puzzling results can be rectified by demonstrating that one or more of the premises themselves are not really true, a play on words, faulty and/or cannot all be true together. But many paradoxes, such as Curry's paradox, do not yet have universally accepted resolutions. The word paradox is often used interchangeably with contradiction. Literary and other artistic uses of paradoxes imply no contradiction and may be used to describe situations that are ironic.[1] Sometimes the term paradox is used for situations that are merely surprising. An example of a paradox is "This statement is false.", and is explained below.
The logician Willard V. O. Quine distinguishes:
Falsidical paradoxes, which are seemingly valid, logical demonstrations of absurdities, from
Veridical paradoxes, such as the birthday paradox, which are seeming absurdities that are nevertheless true because they are perfectly logical.[2]
Paradoxes in economics tend to be the veridical type, typically counterintuitive outcomes of economic theory, such as Simpson's paradox. In literature a paradox can be any contradictory or obviously untrue statement, which resolves itself upon later inspection.
I would be surprised if anybody but Hendry mentioned the Mutiny - its not talked about in polite company.
pan·de·mo·ni·um is a Greek word:
Greek pan-, pan- + Late Latin daemonium, demon (from Greek daimonion, from daimn, lesser god, demon; see demon
http://www.thefreedictionary.com/pandemonium
there are no paradoxes or ironies, only words and
their colours.
apologies where needed. ?
"He should be worried" ref: dumb ass academics. Oh f*ck the more i watch this footage...good stuff!
Essentially Hugh is betting against maniacal governments underwriting the world. He will get the bet. A massive collapse is coming. Markets always win
Gold is sell about to hit the 682 handle
http://www.bbc.co.uk/news/business-15567822
""There is a broad view among G20 there does need to be additional financing," said Australian Prime Minister Julia Gillard. "We will be working on it overnight and tomorrow." However, a White House spokesman said that the US would not be providing additional funds."
The OWS is a bunch of Acorn fucks. The Free Shit Army lives!
Die you fucking thieves.
He said interest rapes and I thought hell yeah it does, it rapes the fuck out of your ass just like the communist fucks in this stupid retard nation of idiots.
Put an axe in a commies head. Die you fucking assholes.
Straight fucking hate
"Because wage labor is approximately 70% of total business costs, he does not see meaningful inflation without wage inflation."
That is a very gross generalization, to say the least. It does not apply to the mining industry nor to most manufacturing industries. I doubt it applies to retailers. It might apply to the building maintenance and some other service industries. Do you think McDonald's has a 70% labor cost???? Our large scale ag does not have anywhere near that % for labor....some produce items such as strawberries and lettuce, but not the biggest ag sectors.
Further, we are not going to be seeing cost push inflation nor are w going to see demand pull inflation. In fact do not call it "inflation"...what is going to happen will be a loss of faith in paper money.
I would also doubt that Ben is going to permit a depression before he really cranks up the presses. He knows that deflation can spiral out of control and leave the Fed powerless...and that is exactly where he does not want to be.
Inflation is raging in foods http://www.ritholtz.com/blog/wp-content/uploads/2011/11/meat.jpg , US citizens being squeezed by wage deflation, skipping paying mortgages to make up for it. Anyone relaying on Government Support is being slowly starved (Social Security, foodstamps, disability ala welfare). The future is much higher crime, violent and property, police state to protect the 1%, pretty much anyone in the bottom 90% will be labeled a domestic terriorist. Hopefully states can take control like Utah did with competing currencies, breaking free of the Federal Reserve notes is mandatory.
Here is Mike Pento today talking about inflation/deflation
http://finance.yahoo.com/blogs/daily-ticker/hell-fed-says-inflation-already-mike-pento-152636826.html
Any inflation above 5% / year (http://www.shadowstats.com/alternate_data/inflation-charts) is hyperinflation to the bottom 50% of the population, Hugh may be talking about lack of inflation for billionaires.
A REAL Journalist Tells the Truth about Libya
http://www.youtube.com/watch?v=J3SU9qUAkSg
as soon as they tie up a few loose ends, they will come here.............and if you resist, you will be hunted down, you will be bombed from the air with planes, and drones...........etc etc etc.......and many american troops will participate and say it is good based upon a false patriotism and lies.........americans have many guns. so did the libyans...........
thanks for the link, I agree with the comment to watch "Lizzie Phelan's @ 16:48." Rt.com has the best commentary on Libya.
from the video I learned about Al Jazeera - CIA link:
DOHA: Al Jazeera’s top executive, Wadah Khanfar, resigned yesterday after eight years as the head of the satellite news channel, the station announced on its website.
The move has been linked to Wikileaks revelations of meetings with CIA officers.
His resignation came amidst a leaked US government cable suggesting that the Al Jazeera executive agreed to alter the content of the channel’s website after a US request to do so.
It said Khanfar agreed to “tone down” objectionable content on the station’s website and promised to “remove it over the subsequent two or three days.”
http://manamapress.net/?p=3506
Hendry is awesome. "Champagne Socialists" Hahaha.
there is no money, by design. who needs money when
you can exercise power and control without it?
everything else is a pancake breakfast with hot beverage
and it is not funny but is filling.
http://www.offgridminds.com/blog/2011/11/3/operation-vocalize-we-are-99....
He believes the ECB will print enough money to manipulate interest rates below 1%, yet he's bearish on gold and believes the fed won't print more money because their is no political appetite? This is absolute gibberish. The fed will be forced to print if the ECB does. The fed already has the legal authority to print all it wants. Politics has little to do with it.
This guy sold his gold in 2003, and like most people, he is upset that he missed the rally so he is insisting it isn't real.
Buy gold. THAT is the contrarian bet. Fewer than 1 in 500 Americans own even a single ounce of gold bullion.
This guy is a moron.
just think if american pension funds had hedged with gold and silver bullion , held in their possession. they would not be in the predicament they are in now. it was a simple move and the trouble with this simple move is that it leaves out the stock market adviser fees and they of course do not like that so they don't like real money and never have. they are weined on paper and they want everyone else to be too. it is their job and they are not interested in the precious metal bull. just take a look at cnbc for instance. all that can be said is that some hate it more than others. and that is putting it mildly. just think about the oracle of omaha and all of that silver he had in 1998 and he sold it......idiots........
KILL THE KING http://www.youtube.com/watch?v=LkSHHK7WlAw
STUDIO http://www.youtube.com/watch?v=Z3ZfrCPKEqM
Everything but the kitchen sink is being thrown at you.
Call it a hail mary approach to false democracy.
This arose as a quotation by John Emerich Edward Dalberg Acton, first Baron Acton (1834–1902). The historian and moralist, who was otherwise known simply as Lord Acton, expressed this opinion in a letter to Bishop Mandell Creighton in 1887:
"Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."
Another English politician with no shortage of names - William Pitt, the Elder, The Earl of Chatham and British Prime Minister from 1766 to 1778, is sometimes wrongly attributed as the source. He did say something similar, in a speech to the UK House of Lords in 1770:
"Unlimited power is apt to corrupt the minds of those who possess it"
Lord Acton
(1834-1902)
"It is easier to find people fit to govern
themselves than people to govern others.
Every man is the best, the most responsible,
judge of his own advantage."
http://www.blupete.com/Literature/Biographies/Philosophy/Acton.htm
Lord Acton – “… the issue which has swept down the centuries and will have to be fought sooner or later is THE PEOPLE VERSUS THE BANKS.”
Flip through the pages of history and see why all the repeated chaos is failing in the blogosphere.
In keeping with his anticipation of paradox, he quipped that if you believe in hyperinflation, then you should be levered up long on 10 and 30-year Treasuries…because in order for hyperinflation to become a political reality, deflation must arrive first.
While HH may have made some money for his clients, and displays contrarian views TD and others here appear to love (and worship), he displays incredible lack of understanding of monetary theory, cap-stoned by his gross misuse of "inflation" and "deflation" to describe rising and falling prices.
No, there does NOT have to be falling prices (demand collapse depression) before hyperinflation. It didn't happen in Weimar Germany. It didn't happen in Argentina nor Zimbabwe. It didn't happen ANYWHERE.
No, there does NOT have to be economic depression to motivate Bernanke to run the freikin printing presses and debase the dollar. His beloved TBTF banks crying for help to avoid bankruptcy is quite enough. Tiny Timmy Geither crying for someone to buy his treasury bonds is quite enough. Some fucking bank half way around the damn world crying for help to avoid bankruptcy is quite enough.
But rest assured his insane currency printing WILL CAUSE an economic depression.
hendry is right qe is the end of globalization; ben has 1 mandate & 1 mandate only devalue the dollar; that means the next qe is big it also means it is the last one; then zh's it all changes dollar up gold commodities & equities down
Hugh Hendry is a very smart man. Maybe too smart, history tells us that unsustainable debt burden invariably results in printing and hyperinflation. Inflation does not come necessarily in a 70s style with wage inflation. One should remember the other type of multiplier acceleration that happens when the population is scraping the bottom. Richard Koo explains well how a population needs to keep feeling comfortable. If the population is comfortable, the money is spent evenly during the month, leaving a balance as deposit in the bank. When the income of the population lags behind cost of living, the population spends the paycheck not evenly during the month but faster and faster and using borrowing to make ends meet. That is why you have the credit data indicating borrowing, while real income is negative. That is why you see very low consumer confidence at the same time as you see savings rate declining. The credit card rates kept going up and up, with report of people using the credit card at the end of the month just to fill the tank not for discretionary spending. Recently it seems that teh situation is easing a bit on credit card rates... His argument is about timing, it seems. However if China hits the wall (which makes total sense), then what will Germany sell? China hitting the wall soon is a sufficient shock probably to have monetization, interestingly in the March 15th WSJ, it showed that cross country banking toward BRIC was the highest since the 70s, with China as the biggest counterparty....
new Glasgow Gary
Actually, Hugh has been wrong on a bunch of issues. And his bad behavior on TV--which even he now acknowledges--didn't help. To put it mildly. He has not had a good record the past two years, and continues to trumpet hsi 2008 performance. Worse, he completely missed the gold run, and totally whiffed in his early 2009 call that there was "nothing central bankers could do." Yeah, right
************
Hendry missed Gold because he missed the Hyper-inflation of the credit supply-
imo-Hendry is somewhat out of sync with events-
We had Hyper-Inflation-if you understand that Credit is a part of the money supply-it is in fact the largest part by a wide margin of the money supply-
60 trillion in credit vs only 3 trillion of printed money-
Credit is in contraction while cash supply is not even close to replacing the unwind/destruction of Credit-
This is Deflation-
There is probably no Gold in Ft. Knox simply because Ft. Knox is vulnerable to nuclear contamination as Goldfinger showed us ! If there still is a National hoard....I would hope it would be dispersed in deep, under mountain redoubts that could survive a first strike ? Plausible ? Monedas 2011 Comedy Jihad Super Secrets
you're my favorite
if you think he's saying something new with alittle wry humor, your probably right,... or wrong?
china ain't going anywhere - in fact they're right on target, as far as timing is concerned to implement the next, 'five-year-plan',... which by the way coincides with precision of the past 'five-year-plan', hand-off -
http://en.wikipedia.org/wiki/Five-year_plans_of_the_People's_Republic_of_China
just an observation - america has had deflation in wages * {[labor ~ 70% of business cost?/ perhaps 50-60 years ago][machines cad/cam, and robotics have reduced the amount of manual labor exponentially YoY from the beginning of post-wwii, right up too present]} - whereas stagflation was an anomaly in the carter/early reagan administrations.
guess what? it wasn't no-growth in the economy coupled with high inflation, but our hunger for imports, and not balancing it out with exports that got us in the mess - does anyone here remember the oil embargo, or the timing of the 'nixon-shock'? it takes a long while for events such as those two examples to find/leech their way through the system [in fact many years, till it rears it's ugly head,... sound familiar?], and paradoxically we've had a oxymoron curse for the last 40-50 years monkey on our backs! look at what enablers we've be hamstrung with from our leaders to cement our current path in economic paralysis - NAFTA, CAFTA, GATT, WTO, N.Korea/Columbia/Panama, and a litany more of free give-aways to come. so,... exactly what is it about deflation having to come first before inflation?
today's weak dollar, yen, yuan, and now a weak euro,... big deal - we've been fighting a race to the bottom, all, with unparalleled [?] currency manipulation, and look where its gotten all [?],... especially the united states - all the world's economies want to be 'Exporter's Today"! we can't do it,... and this push for a NWO is eating us all alive!
As far as physical gold, and silver are concerned - i'd rather have a pocket full of 1oz. gold coins than a dump-truck full of fiat! jmo
Great read Tyler,... and sorry bout the long comment
so,... exactly what is it about deflation having to come first before inflation?
******************
It can be said both ways-
Deflation before Inflation or Inflation before Deflation-simply because of the four seasons of the economic cycle-
Spring-Summer-Autumn and Winter-
http://photos1.blogger.com/img/101/3984/480/cycleofdeflation1.jpg
"Born in 1969 in Glasgow, Scotland, Hendry graduated from Strathclyde University in 1990 with a BA in economics and finance."
He, like the majority of you out there in the Populist Movement Circa 2011, is far too young to adequately understand that this is a cultural cycle in gold bullion. He was ten years old when the last uber-econo-power (the U.S.) decided that they liked gold. Here we are thirty-two years later and a brand new demo/ethnographic is discovering the value of bullion. They don't speak English and they don't watch Monday Night Football. They work 80 hours per week and pray for a new washing machine.
They buy gold as a means of passing wealth down to their grandchildren, as their grandparents did for them.
Hendry thinks of gold as a "trade", which typifies the mentality of today's Gen-X'er stupidity.
Sweeping generalization. You must be a baby boom [fuck all].
And what's all this cultural cycle psychoanalysis bullshit? Gold is a store of wealth. OWS is a pack of Acorn fucking thieving jackals, Hugh Hendry is a paper chaser, economists are UFologists, Soros is a chupacabra and a "trade" is a bullet for property rights.
stalemate
Inflation is not just about the supply of the currency, it is about the confidence in it as well which feeds velocity. When the confidence game becomes evident to the masses the fun really begins. We have a long way to go, but it is coming. Wages Smages. Just paid 13 bucks for something at home depot that cost 8 bucks four years ago. It aint just groceries. By the way, hired a plumber lately?
Never forget the following Hendry Quote because it will prove to be the potential words on his tombstone for all when he was screaming into the wind.
" I recommend you panic"
Oh that Hugh sounds soooo smaaaaart with that tony accent, ooohhhh, clever like my bum.
He doesn't understand inflation, hyperinflation and gold, obviously.
He must have been reeding James Dines.
"Paradox is one of the deepest and most important secrets of life, and ... irony is the punishment for not having understood that."
-James Dines, How Investors Can Make Money
It was extremely irritating when he referred to himself as an "entrepreneur" and "risk-taker".
The man is a paper/money shuffler and professional speculator. I mean, if and when I trade, I don't have delusions of grandeur and start referring to myself as an "entrepreneur." The fact is that people like Hendry do not produce anything, create virtually no jobs, and do very little of value for society.
If he started a factory or invented a new product, sure. But how the flying F*CK does buying CDS make you an "entrepreneur"?! Very very irritating indeed.
Just call a spade a spade.
Chapter about Hugh Hendry from 'Invisible Hands':
http://ifile.it/k40wl2t