Trade

Bought 45 (5%) DIG (Ultra Oil) at $26.65. Why? Because Bernanke announced yesterday that he sees no inflation. Which means, in my opinion, that the trend of rising oil will continue. If the economy doesn't recover quickly, he will print more money.

Mish was wondering what Bernanke would devalue the dollar against now that it's not backed by gold, as in the 30's. My answer is Treasuries. There's a big difference between the U.S. and Japan, regarding government borrowing and the inflation/deflation scenario. Japan financed their debt domestically. We have financed it internationally. That's why Bernanke will continue to devalue the dollar against Treasuries.

Therefore, I predict that the inflation/deflation debate will continue to rage, because imported goods will rise with dollar devaluation, while domestic goods and wages fall in price.

I also see gold as a good investment. If I buy more, it will probably be through FCX.


In other news, California announced that they will have to start issuing IOU's (again) starting July 2. The state legislature is gridlocked as they are unable to pass $8.6 billion in cuts. I'm not surprised. Democrats are afraid to cut and piss off their constituents. Republicans won't raise taxes. So neither side does anything. They only keep trumpeting what they WON'T do.

Another sign of dollar devaluation backfiring: ECB money printing and China's export restrictions. Both of these can be viewed as competitive devaluations.