It is intriguing that economics is so little understood nowadays. Start reading popular economics journals and you will find the way through all the technical terms really difficult. On the stock market commentary you will be swamped with lot of numbers and phrases like “the bulls beat the bears today, but the 200 DMA is still pointing the other way”. On the economic commentary pages you will see the talk of the most recent Fed announcement and the “open market operations” or “quantitative easing” that has been done. You will also find out that the number of foreclosures has fallen or risen recently, the talk of how important it is not to let the banks fail, because the money supply would crash down and deflation would kill us all…

If you wonder how is all that possible then you are not alone – economics is made difficult nowadays.

I am back from my holiday. Alive and well. But it was close. When diving one day I was attacked by a titan triggerfish . Basically the beast looks like on the attached picture. It was not so safe, because we were at a safety stop at 5 meters when I felt I hit something with my fin. I looked back and saw just a relatively small fish swimming away very quickly. But when I looked forward I felt again that my fin hit something. I looked back again and I saw this little colorful fish holding the fin with its teeth. I started fighting back and trying to kick it. The vicious little thing would not let go and was swimming extremely fast back and forth biting my fins. In the fight I moved up to 3 meters, which wasn't that safe since the safety stop just started and we were supposed to stay at 5 meters there for 3 minutes. Fortunately my dive master came to the rescure using her spare air supply to spray bubbles of air at the little devil. The trigger fish swam away and I survived...

Now it is time to go back to real life. I still can't get used to the regular office life. I feel like if I had so much less time than on holidays. It is incredible what a short 2-week holiday can do with people. I think holidays should be banned.

The site will not be updated for some time (2 weeks) because I leave on vacation. I will spend 2 weeks in Borneo, Malaysia, diving 

To give you the taste of what I will see look at this video:

The markets are again crazy and unpredictable and I am working now (after work and on the weekends) on day-trading tool in excel. I will publish it here once it is ready, so please keep coming back ;)
I just looked at my Amazon wish list and shopping list of books and I wonder when I will have time to read it all.

Anyway – I keep reading zerohedge every day and I just can’t believe how good that blogger is. I mean – if in the US there are such good bloggers, then no wonder that they have the best journalists and the best news media in the world. OK – CNBC is a piece of *** but they also did show Peter Schiff there. Besides – TV is really mostly for show, while the best analysis is in the newspapers. Oh how I wish we had something of the kind of Wall Street Journal in Poland!

I have written on this site already about inflation vs. deflation. This issue is of critical importance to all, as it determines where you should hold your wealth. If we will have inflation, then you should get rid of cash and buy assets (primarily gold and shares). Most importantly in case of inflation don’t lend your money for the promise of repayment – don’t buy bonds. If we will have deflation, then the opposite is true. Hold cash or buy bonds, and get out of stocks and precious metals.

In my article I have tried to highlight the academic difference between inflation and price increase on the one hand and deflation and price decrease on the other. According to those definitions currently we have a price decrease, but since the decrease is smaller than it would normally have been, I call the current situation an inflation. In other words the nominal price drop is smaller than the real value drop.

That we have witch hunting spectacle in the US and in fact everywhere else should be no surprise to anybody. When there are problems people even subconsciously look for the guilty. But this does not mean that it is right to accuse those who are not guilty.

I have been already saying here (in Polish) that banks, bankers, all kinds of financial institutions are not responsible for this crisis. The entities that are responsible are:

• the central banks around the world, most notably the Fed – for making money too cheap and allowing unprofitable investments to occur and for misallocation of resources to happen
• the US government for letting it’s country go too deep in debt
• the Chinese and Japanese governments for financing US debt with the ill aim of preventing their currencies from appreciating too much against the dollar

This is nothing yet – a shareholder quarrel and a few journalists and attorneys sniffing around. But this could become big if Bernanke is accused of illegal actions. This would at least damage his image and perhaps in this way would save this recession. Perhaps there still is a chance that the bad policies will be unwound and the free market will have it’s chance.