Wednesday, April 06, 2011

Book review - The Great Super Cycle

The Great Super Cycle: Profit from the Coming Inflation Tidal Wave and Dollar Devaluation is a book in two parts. In the first part, author David Skarica makes the case for the current financial problems of many developed countries, in particular the United States, to play out with an inflationary end game. The inflationary case is supported by historical precedent and reference to regularly recurring economic cycles. While the former argument is persuasive, I was left with reservations about the cycle based argument. My doubts were not so much because I don't believe in economic cycles (I do), but because I struggle with the idea that such cycles are as regular and predictable as the author claims.

That said, I tend to agree with the conclusion that we should expect higher inflation going forward than we experienced in the last 10-20 years as cash strapped governments continue to print money to pay for expenses that they cannot afford.

The second part of the book consists of a review of various investments which the author expects to perform well during the expected period of inflation. The usual suspects of precious metals, emerging markets etc are covered. I took nothing new from this part of the book and material of that nature has, as one would expect, dated very quickly.

While the first half of the book was well worth reading, there were a few typos which detracted from my overall favourable impression.

For a contrasting view (that the deleveraging of public and private sectors will lead to deflation) Endgame: The End of the Debt SuperCycle and How it Changes Everything byJohn Mauldin and Jonathan Tepper is well worth a read.

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