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Soros Says Fed in a Bind: Beware Stagflation, Bursting of Bond Bubble

Posted Apr 07, 2009 11:27am EDT by Aaron Task in Investing, Newsmakers
After the financial market collapsed last fall, the Fed responded with a massive injection of liquidity and expansion of the monetary base.

Eventually, Ben Bernanke & Co. will face the challenge of having to remove that liquidity from the system. "That's a big and difficult task and probably the authorities will not be able to do it well," says legendary financier George Soros, chairman of Soros Fund Management. "That's the fear that drives people into gold."

Soros wouldn't say whether he's actively trading gold but certainly implied it's a good bet; more explicitly, he agreed with the view there's a "bubble" in Treasuries that's likely to burst sooner rather than later.

"The moment this fear of deflation turns into a fear of inflation, you'll find interest rates rise in the long end which is going to choke off the recovery," he says. "If we are successful [in reviving the economy] we are heading from the prospect of deflation to stagflation."

Earlier

  • Soros: Dollar's Strength a Measure of System's "Sickness"; Euro Will Remain Viable 
  • Soros: "Danger of Collapse Has Passed," But Stock Rally Not Sustainable 

 

 


 

102 Comments

Yahoo! Finance User
Yahoo! Finance User - Tuesday April 07, 2009 11:39AM EDT

BOO....did I scare you....DOOM and GLOOMERS make no sense!!! Why spew negativity?

BFD
BFD - Tuesday April 07, 2009 11:40AM EDT

Soorryos actually got this one right!

Pteradactyl
Pteradactyl - Tuesday April 07, 2009 11:40AM EDT

My God, these guys will throw anything against the wall to see what sticks. If you tout every possiblity, you have to right about something. Clowns.

Richard
Richard - Tuesday April 07, 2009 11:42AM EDT

This man speaks the truth on fundamentals, which is where analysis should start. Why are the DC Politicians not putting him on the advisory boards helping the Government out of this mess they enabled and promoted with their bungled policy decisions over the last decades? Because they do not like to hear the truth?

truyen l
truyen l - Tuesday April 07, 2009 11:49AM EDT

another worthless commentary, only whine and cry but no actual constructive suggestions.

GARY
GARY - Tuesday April 07, 2009 11:50AM EDT

Soros for Treasury Secretary......

toby
toby - Tuesday April 07, 2009 11:50AM EDT

Mr Soros is promoting his new book, todays segments are an authors interview for a book promotion tour. That being said, he certainly is not a wild eyed optimist. He has, however, in his past been a wild man speculator. He has had spectacular wins, but he has danced on the razors edge. It is not surprising that he isn't going to recommend investment choices when the tenor of his comments point to a long term economic malaise.

William
William - Tuesday April 07, 2009 11:53AM EDT

I think he's right on this one.

smurfintp
smurfintp - Tuesday April 07, 2009 11:55AM EDT

"Doom and gloomers", or "smart people" as they are sometimes called, have predicted every major event in the American economy over the last 20 years. Look at forecaster Gerald Celente's record. This recession is nowhere near over, we have not even entered the real depressionary stages. Chance favors the prepared mind!

Yahoo! Finance User
Yahoo! Finance User - Tuesday April 07, 2009 11:56AM EDT

Soros should know what's coming. He bought and paid for a President and Congress to make sure it does.

Donald
Donald - Tuesday April 07, 2009 11:58AM EDT

Soros rocks.

JustinT
JustinT - Tuesday April 07, 2009 11:59AM EDT

Soros is still BUYING GOLD, so he will not promote GOLD until he is ready to sell it, and selling opportunities will not occur until 2011 and 2012 ------- So, BUY GOLD now on lows ------- Read btwn the lines, the Fed will have more difficulty mopping up the spill of its printing press

Yahoo! Finance User
Yahoo! Finance User - Tuesday April 07, 2009 11:59AM EDT

Yes, we have dual tasks, and Fed is most likely to F both them up, just watch...

John
John - Tuesday April 07, 2009 12:00PM EDT

"Soros for Treasury Secretary......" Good idea, replace the tax cheat with the thief.

__A_YAHOO_USER__
__A_YAHOO_USER__ - Tuesday April 07, 2009 12:01PM EDT

why yahoo wont post my comment? because I said that the Fed are private Banks and they have the power to raise interests, print money from nothing, loan money to the U.S. and take OUR money as Federal Taxes so, that our goverment can pay the interest to this private Banks!!! Get Informed do some research about the FEd!!

charles
charles - Tuesday April 07, 2009 12:01PM EDT

Soros is a hedge fund manager. The politicians hate these guys. But he is now the Democrat's spokesman isn't he?

Michael
Michael - Tuesday April 07, 2009 12:04PM EDT

Soros wants America's head on his wall and he has enough money to buy politicians and make it happen. When congress crashes the dollar, wealth will be reset for most of us. A fresh start when we're all poor. The left, including Soros, will finally get what they've always wanted.

Yahoo! Finance User
Yahoo! Finance User - Tuesday April 07, 2009 12:11PM EDT

Sorros and the like make there money off of suckers like you listening to what they say - he's not saying what he's saying for your benefit. He didn't come out of retirement because he wanted you to feel safe - think about it!!

vidya
vidya - Tuesday April 07, 2009 12:16PM EDT

It is very apparent that nobody really knows how to fix this mess even Soros. It is a sad editorial on our financial geniuses who created this mess in the first place and they are the ones that get the government bailouts. And apparently it has done nothing to solve the problem except line the pockets of these banksters. If the banks are not willing to lend and open up the credit spigot why does the government give them more money just to fill their coffers? It does not make sense. It is all smoke and mirrors. We have a long and rough ride ahead of us and no one really knows what's at the end.

clifford
clifford - Tuesday April 07, 2009 12:19PM EDT

wat he said is the truth. fundamentals will be seen eventually

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