Code Red: How to Protect Your Savings From the Coming
Crisis
Popular Highlights
1. By far the best real-time predictor of
economic activity is the yield curve.
2. Let us be very clear. Japan is about to unleash the most significant
currency war the world has ever seen.
3. Inflation will eat away at savings, government bonds will be destroyed
as a supposedly safe asset class, and assets that benefit from inflation and
money printing will do well.
4. Central bankers hope that unconventional policies will do the trick. If everything goes as planned, inflation will quietly eat away at debt, stock
markets will go up, house prices will go up, everyone will feel wealthier and
spend the newfound wealth, banks will earn lots of money and become solvent,
and government debts will shrink as taxes rise and deficits evaporate. And
after all is well again, central banks can go back to the good old days of
conventional policies. There is no guarantee that will happen, but that’s the
game plan.
5. Bernanke understands that the world has far too much debt that it can’t
pay back. Sadly, debt can go away via only: (1) defaults (and there are so many
ways to default without having to actually use the word!), (2) paying down debt
through economic growth, or (3) eroding the burden of debt through inflation or
currency devaluations.
