They are going to print money everywhere, and with interest rates, essentially on short-term deposits, being zero, or below zero, inflation-adjusted, in other words, if inflationrates everywhere in the world are higher than the interest rates on short-term deposits, I- I think that you cannot make a very bullish case for stocks, but I think you can make amore bullish, or more positive, case for stocks than say, for U.S. government bonds,because the specifics in the U.S. will stay very high, and the quality of the banks willdiminish and the interest payments as a percent of tax revenues will go up, and so forth.and world growth, or if youbelieve in disaster, in either case you are probably better off in equities than in bonds.In terms of returns, I agree with you, I do not think that the returns will be fantastic, but if you print money it is very difficult to say what the returns will be, because it is not stocksthat adjust on the downside, but it is the currency that adjusts on the downside. So intheory, it is possible that the Dow could double if you print money, or it could even go up10 times, depending on how much money you print, and with Mr. Bernanke at the Fed, Ithink it is quite likely that a lot of money will be printed.
That is a critical observation, that what is happening is really a degradation of global currencies. Certainly we saw that in Germany in 1919-1923, when the Germanstock market went up nearly 14 times, yet in terms relative to gold, still diminishedsignificantly, so it was a better bet than buying German bonds, or sitting in Germanmarks, but on the other hand, it was still a relative loser, you could say.I guess one of the critical issues today, for investors, is existing in a world of negativereal rates of return, where you have both an increase in taxation that is a potential, but thereality of money-printing and inflation, which strip away any of your real returns. Withinto assets like gold and silver?rates of return otherwise?
An investor has the choice to invest in real estate, in equities, in bonds, incommodities, and I separate precious metals from commodities, from industrial andagricultural commodities, because I consider it money. Also we can buy art, and stamps,and other collectibles.I have a large subscriber base for my
Gloom, Boom and Doom Report
, and I asked eachone of them to let me know if they have the impression that the cost of living increases,in other words, the percentage of how much they pay every year, more, for their families,is less than 5%. So far I have not received a single email, so I think inflation is around5%. The return on deposits is essentially zero. And then people begin to worry, becausepaper money is no longer a store of value, and at the same time, it is a bad unit of accounts, because it is debased by the central bank.So people buy paintings, they buy real estate, they buy stocks, they buy, to some extent,bonds last year, we had large inflows into bond funds and they buy precious metals.The problem with all these easy monetary policies and artificially low interest rates, is