Liars Poker – Devaluing Our Way To Prosperity, Hosted By Bernanke

Liar's Poker

Liar's Poker (Photo credit: marklarson)

He did it.

Put the ball right back on the court of the rest of the world in GCW III (Global Currency War III). Playing the dangerous game of Liars Poker and calling the bluff of the rest of the world because either way, he will probably win; the US is the only economy on recovery mode and thus, if they hit back, US will probably be the global safe haven.

Headlines are starting to buzz with Deleveraging/Delevering, Debasing, Devaluing, Deflating the USD. And they were losing the battle.

Just check out the balance sheets below (Source :

All is not lost. While central banks bloat, corporates and banks slim down. Nomura says that Japan corporate balance sheets have never been healthier. See  link below.

That is great. How about a billion dollars for that Cezanne ? [**most expensive painting sold in the world so far – Qatar bought it]

At this rate, yes sure. Why not ?


I do not normally read what Bill Gross of PIMCO has to say. (It is important to differentiate now because I follow the other Bill Gross, technopreneur, who is big on Twitter and great fun to read.)

But I must say this is my favorite headline after Bob Janguah’s  (Bob Janjuah: ‘Markets are so rigged by policymakers that I have no meaningful insights to offer’ )  last month.

Bill Gross: “The Game As We All Have Known It Appears To Be Over”

 it is your duty to try to escape today’s repression. Your living conditions are OK for now – the food and in this case the returns are good – but they aren’t enough to get you what you need to cover liabilities. You need to think of an escape route that gets you back home yet at the same time doesn’t get you killed in the process. You need a Great Escape to deliver in this financial repressive world.”

Wow. That is how I feel these days.

“Is a systemic implosion still possible in 2012 as opposed to 2008? It is, but we will likely face much more monetary and credit inflation before the balloon pops. Until then, you should budget for “safe carry” to help pay your bills.

I just bought some little 1 gram gold bars (wouldn’t call them bars to be exact). No carry there but just in case, we encounter Black Swan Taleb’s suggestion of hyperinflation.

More here.
and this one …

The legend speaks ! There is some stirringly sincere about his exasperation on the subject that is close to my heart. There is a movement out there, of people who are aware of the pitfalls of these record bailouts that will swirl back and hit us like a boomerang maybe sooner than later.

Unlike Bob Janguah, Bill Gross has some advice to offer.

In summary, what has the potential to deliver the most return with the least amount of risk and highest information ratios? Logically, (1) Real as opposed to financial assets – commodities, land, buildings, machines, and knowledge inherent in an educated labor force. (2) Financial assets with shorter spread and interest rate durations because they are more defensive. (3) Financial assets for entities with relatively strong balance sheets that are exposed to higher real growth, for which developing vs. developed nations should dominate. (4) Financial or real assets that benefit from favorable policy thrusts from both monetary and fiscal authorities. (5) Financial or real assets which are not burdened by excessive debt and subject to future haircuts.

I take option 1 and, 2 is the most I will go.

Option 3 I don’t agree because I think this currency war will drag.

Option 4 could be UST if QE3 goes through.

Option 5 means Don’t buy GREECE, SPAIN, PORTUGAL or IRELAND…. anymore to suggest ?

The main gist of this is for us not to rush and buy up a 2 year supply of rice or gold bars.

Slowly but surely people are calling Bernanke’s bluff.

But I don’t hate him at all. He has, afterall, made me a millionaire….. next article coming up on Prosperity.