Still No Inventory Reduction at GLD

This is strange. It's been eight business days and $100 lower for the price of gold bullion, but still no inventory reduction at the SPDR Gold Shares ETF (GLD).

It's clear to see all the prior occasions over the last year when a big drop in price occurred around the same time as a big reduction in inventory, late July and early August are good examples.

The two have always gone together up until just the last two weeks - apparently, holders of GLD haven't been net sellers lately.

As a result of lower prices and stable inventory, the inventory-to-gold price ratio shown below hit another new all-time high Friday at 0.84.
One possibility is that most of the wild-eyed hedge fund managers have already liquidated their positions in GLD to buy financial stocks (or is it biotech this week?), and now, what's left are ordinary Joes like you and me.

The GLD ETF may start to serve as a useful proxy for investment demand.

Full Disclosure: Long GLD at time of writing.

Comments

[CLH:]

You seem to be grasping at straws. This is almost like the last days of the real estate market. These two investments are related. Both are tied to inflation. As inflation moderates both gold and real estate tank.

Remember if you can touch it. Sell it!!!! The markets have turned but few have noticed.

The elimination of debt is disinflation. Watch as the dollar soars.

2008 Aug 17 06:32 AM

[Stephanie:]

I think you're very wrong, CLH. This is not like the real estate market. Not at all.

You have to take into account inflation. Gold at $850 in 1980 would have to be something like $1,600-$2,500 in 2008 dollars, depending on who you ask. It's cheap, inflation-wise. AND, so far you do not have average people talking to each other about gold and silver all day long. Son, the day that your neighbor, any neighbor, and his/her dog can quote you the price of gold on a given day is the time to get out, not before. You had that happening in the real estate market. They ran out of the greater fools to sell their houses to. In this growth-oriented mindset of business, market saturation is a fatal flaw. You're always going to run out of customers at some point, so you have to come up with something else to sell along with a compelling reason for buying the product. Growth, growth, growth, jeez!

I studied the housing market from the time it was starting to run up, and this was a classic case study that I would recommend to college students of economics to understand the effects of fiat currency and how it destroys a nation effectively.

Also, notice that the media makes little mention of gold prices on upswings, forget silver, and yet mentions gold when it takes a hard hit. Also note that bull markets always NEVER go straight up. There are ups and downs as markets overheat and back off a bit to blow the steam off, and then recover again and keep going. It happens to shake off the weak, speculative hands to restore the foundation to a more sensible level. Blowing the froth off, as it were. And bear markets NEVER go straight down, either. The US stock market has been experiencing bear traps, especially when you take in consideration inflation.

Now, I will add that the deflation argument has some weight. I was just thinking about it the other day last week. "Deflation... Deflation... How would that happen?" Well, I realized that it's taken decades for the total markets to build up to well over $500 trillion (including the derivatives markets). You have hundreds of thousands, okay, maybe millions of people (or parties) involved in these transactions. How many employees do the Feds, FDIC, Freddie Mac, Fannie Mae, Ginnie Mae, HUD, etc. have altogether? Maybe a few thousand. How many of those people are the actual decision makers that will get the wheels moving to bail out all these defaulted parties? One person can't move fast enough to cover the activities of 1,000 other people. Heck, I can't keep with anything more than 5-8 people in the clothing department's fitting rooms! It's a matter of velocity. Which number is moving faster? The rate of money creation to bail out people, or the rate of debt collapse? I'd bet on the debt collapse at this point.

If you have money (credit) supply collapsing like this, then prices on most services and goods at some point will drop, I mean drop way down. HOWEVER, this is what you have to watch out for. People will at some point scramble for gold and silver because it will be the only thing they can trust (after seeing their bank accounts wiped out, their retirement accounts gutted, ad nauseum). If you have, say $900 gold and $0.94 gallons of water, and things deflate to say, $250 gold and $0.20 gallons of water, then gold still has more purchasing power at $250 than it did at $900, only assuming that it will indeed happen like this and prices drop uniformly across the price index. It's not done once the price collapse occurs. The demand for gold and silver would take off, and prices would have to adjust to account for this.

Know this - no single fiat currency has survived intact in human history. Not the Ancient Roman debased currency, not China's first fiat experiment, not the French Assignat, the US Continental Dollar, the Union Greenbacks, etc. Read up on how the public responded with a flight back into gold/silver. Gold/silver has a history of being money for several THOUSANDS of years.

And I'm going to throw in that at a coin shop last week, I saw $12,000 worth of silver being bought by TWO people, and that's in Houston, an area not strong in gold/silver ownership. I have one former coworker who has silver, ONLY because he was given silver as an anniversary gift by his father-in-law. NOBODY else talks about it there. Only two or three out of 120 people in my life talk about it or are even curious about it. On the other hand, I had about 3-4 people at work alone with any money talk about real estate, how great it was, and that it always goes up, and that was in 2005-2006. I had already seen the writing on the wall by mid-2005 when I noticed that dogs and cats became homeowners as well.

Good luck!

2008 Aug 17 08:08 AM

[goldilocks:]

Stephanie, your 'comment' would have made a great article in itself, would like to read more of your pearls of wisdom, on this site or elsewhere...like your style !

2008 Aug 17 08:38 AM

[DIGGER:]

Stephanie's purview is interesting reading; however, for we poor shlubs without an MBA what does it all mean? Put another way: what pragmatic purview should one have after digesting her scenarios?

2008 Aug 17 09:45 AM

[Stephanie:]

Digger,

I do not have an MBA. I work in a camping store. Part-time. About all the skills I have aside from spending 30+ a week reading financial stuff at home.

The practical part of what I'm saying is that it IS better to put $30-50 a month into gold/silver in this stage rather than in the bank because of inflation and the bull/bear market cycle mark. Even with the price slide this week, I still have a 48% return on my silver if I were to sell out tomorrow. Having less than $5,000 a year to spend after all bills and needs are done, I don't have the money to do stock markets, thusly there is just about nothing out there that can earn me the kind of return I would have gotten had I decided to sell out several months ago when silver hit $20+. That would have been a 100% return. But I didn't because I have a long-term plan in place. I don't time tops and bottoms, except to go in and buy on the dips and hold. Take a page from savers in India.

2008 Aug 17 10:18 AM

[Stephanie:]

Oh darn it! I forgot. Go to Kitco's web site and see this for yourself.

IMPORTANT NEW NOTICE: Due to market volatility and higher demand in the entire industry, we are anticipating delays in supply of all bullion products. Please note that you can continue to place orders and prices will be guaranteed; however, cancellation fees will still be applicable regardless of the length of the delay. Consequently once inventory is received there may also be delays in processing and shipping by our vaults.

kitco.com

2008 Aug 17 10:19 AM

[leh:]

Watch CDE here as a possible leading indicator for silver and gold stocks--and possibly for the price of silver itself. Looks like it could be putting in a double bottom this week. If it bounces off $1.70 or thereabouts and starts to head higher, we may be close to the end of this correction.
I have been nibbling here below $2.

2008 Aug 17 10:24 AM

[Stephanie:]

There is also the seasonality of the gold markets. The Indian holidays started with Rakhi, or Raksha Bandhan on Saturday. JUST prior to that, after gold hit way down (under 12.000 rupees per 10 grams), demand for gold went way up, causing the shops to run out and say that they would have to wait 'til August 20th to get more in from overseas sources.

This is what I'm saying. Gold has its ups and downs during the year. India is the world's largest market for gold because of its population size AND its gold culture that is part and parcel of an Indian's personal life, whether it's holidays, religion, savings, or gifting in general. Don't forget weddings! The father will have been saving for his daughter's dowry, or stridhan, which can be added to by the mother, brother, or in-laws (at the time of the wedding), from the time she was born. Same thing happens when a boy is born, only for his future wife. The holidays there start right about the time the farmers harvest their crops (mid-August thereabouts), and because these are agriculture profits, they are not taxed. Farmers, living as they have for thousands of years with experience with corruption and failed currencies, will get rid of their rupees for gold. Most of these people are "unbanked" and don't have access to different ways of saving. Even if they did, they couldn't trust the banks to not lose their savings for them.

Their connection with gold goes so far as to have women with gold comment that when they lose a mate of a pair of earrings, they stash away the remaining mate as part of their holdings.

Because Indian women have been relatively uneducated and more or less run things in India on the social level and not on the economic level, they are given gold, and only they can decide what happens with the gold (that is protected by law). They have the gold in the event they lose their husband or family and have to survive on their own.

With that, Indians are very price-sensitive, and when they see price drops like this, especially around holidays, they inhale it big time! And you can also see that if their gold were to be confiscated, you would be dealing with a billion angry Indians!

2008 Aug 17 10:59 AM

[David Lentz:]

Stephanie -- let me see if I understand you correctly -- you state that gold and real estate are nothing at all alike, in part because if gold were to achieve the same valuation as it did in 1980, taking inflation into account, it would be between 1600 and 2500 in 2008 dollars? Seems to me that makes it an incredibly lousy investment, especially when inflation protection is considered.

Will one of the noisy gold bugs please explain to me how an "inflation-proof" asset can decline in real terms by 50%-70% amid an expanding global market for it? There are a LOT more Chinese, Indians, Russians, Latin Americans, etc, etc -- not to mention a lot more Europeans and I would hope (but not expect) Americans that have more disposable income/investment income with which to buy gold, so the market has expanded since 1980.

Inflation has not gone away, and has become a more significant factor over the past decade of neocon mischief, so one would expect gold to have been soaring up, up and away for at least a decade, as the US dollar has plummeted. Yet it has not. Instead it has languished for much of the past 28 years, unwanted and unloved.

And as to that old canard about "gold is money" -- what a pile! How many of you have EVER walked up to the counter at your local cash station and tried to buy a tank of gas for some gold dust or coins? How about the grocery store? Liquor store? If you can't buy goods with it, IT'S NOT MONEY. QED.

Clearly, gold is not the be-all and end-all that gold bugs see it as.

I do have a theory, however. It revolves about the 17-year cycle of cicadas, or at least something like them. I don't know if you have ever heard cicadas during one of their periods of emergence, but the noise they make is something to be heard. You can be in your car, stuck in traffic on the interstate near Cincinnati in August, with the windows up and A/C roaring away, and STILL hear their drone buzzing away.

My theory is that gold bugs are a branch of the cicada family, emerging every 25-26 years to rant nonstop about gold being the best thing since the rapture. When that happens, gold gets bid up by the gold bugs, and more than a few of the sheeple, who are suckers for a repeated message (just ask the advertising industry). However, eventually gold peaks and begins to fall, its bubble being blown for this cycle. The sheeple are eventually scared out of gold, and the selling deepens. Finally, gold hunkers down at some representation of its commercial value and awaits the next cycle of goldbug emergence.

In this cycle, ginormous amounts of credit have been vaporized, and unlike gold, CREDIT IS MONEY. I can walk into any store and buy real assets with it -- things like groceries, gas, liquor, even gold. When the Fed creates money, it does so by creating debt. When you vaporize trillions of dollars of money, what you get is deflation.

In deflation, MONEY becomes increasingly important (and scarce), as everyone scrambles to replace their debt-based money with non-debt-based money. They eventually sell everything that is not money in order to obtain money, and gold is sold during deflationary periods just like anything else.

But I am not projecting a deflationary collapse, as the Fed is doing its best to print new debt to replace the old. I do expect some monetary inflation to occur, as their goal is to overshoot the amount of vaporized debt, just to be sure that deflation is dead and because inflation is a lot easier to cure than deflation. Just stop printing money and raise rates.

But if gold were really any sort of protection against inflation, with all the anxiety and concern about the economy and the Fed's willy-nilly propping up of anyone with a large enough negative balance sheet, it would have LONG AGO exceeded the inflation-adjusted 1600-2500 mark to surpass the run-up in 1980. Yet it has not, and is even now continuing to fall. I do not know whether it will test its recent highs, but I seriously doubt that it will exceed them, at least not for another 25 years or so. That leaves us with gold as an investment that has underperformed inflation 90% of the time, hardly what I would describe as an "inflation hedge".

Goldbugs, please don't rant at me. Instead, show me the data.
Respond with a table showing, year-by-year, the inflation protection afforded by owning gold. If gold beats inflation more than 2/3 of the time on an annual basis, I'll shut up. Otherwise, ...

2008 Aug 17 12:17 PM

[searcher:]

Every market hits an air pocket. Unfortunately, this one is over a mountain peak.

2008 Aug 17 12:27 PM

[wchanofalberta:]

David. So by the US economy tanking the US currency suddenly becomes something precious? This deflation argument really doesn't make a lot of sense to me. When the Stock market collapsed in 2000, we did not see deflation because the fed stepped in with cuts. When do you think the fed will allow deflation to take place? BTW gold was around $250 when the market collapsed in 2000. Wealth was destroyed but the metal keeps going up. This "collapse" of gold is temporary. It is tied to oil's fall. Unless you are betting on oil to continue to fall, don't bet against gold. China is IMO a really significant factor in all this, not because it is a big market for gold like India but because it is a big energy consumer. China's continued rise will guaranteed oil prices and that in turn supports gold.

2008 Aug 17 12:57 PM

[David Lentz:]

I repeat, SHOW ME THE DATA that demonstrates gold to be an effective hedge against inflation.

Year-by-year performance against inflation, if you please. Any fool can pick and choose their range to make their arguments, but an annual accounting will illuminate the truth.

2008 Aug 17 01:02 PM

[Stephanie:]

Wchanofalberta's comment - See? $250 versus $786 today. You STILL made 3 times your money in return if you sold out today. How about March? 4 times! Base metals and some commodities gave and still give you MULTIPLES of that.

Here's the evidence - www.kitco.com/charts/l... - the ten-year chart tells it all. And compare the dow numbers with gold in the same time frame, and you'll see that the dow/gold ratio had dropped to as low as something like 12-14 this past year. Even now, with the current dow of 11,660 and gold price of $786, the ratio is only as high as 14.8.

The key is that you have to know where are you in the bull/bear market cycle. You want to buy in when it's bottomed out and starting to go up, hold through the intermediate period, and sell out near the top and move your money into something else that is currently undervalued or unappreciated. Everything made and sold under the sun by humans have a bear/bull market cycle. You can't just go by numbers. You have to look at everything around you.

2008 Aug 17 01:17 PM

[Stephanie:]

goldmoney.com/en/comme... - go here and look for the article at the top, "A Fabrication Bottleneck or Something More" You may have to scroll down to archives and find it there if you read this message a few months from now.

I want to add here that you are not to trust what I say, but do the research yourself. You'll be glad you did.

2008 Aug 17 01:29 PM

[David Lentz:]

Here are some long-term charts -- not carefully selected intervals -- don't ask me how they purport to arrive at "inflation-adjusted" numbers going back 650 years ...
sharelynx.com/chartsfi...

But if gold were any kind of inflation hedge at all, a chart of gold in "constant-dollar" terms (again, don't ask me how they figure this for hundreds of years before dollars even existed) should show gold as staying within a fairly narrow band. The more variation, the poorer a hedge against inflation. The only way the real price of gold should go up is if there were increasing commercial uses for it. Jewelry remains the largest commercial use, I believe.

From the chart above the average "real" price of gold from 1801-1998 was $627 in 1998 dollars. Adjusting for the inflation since 1998, (using the data from inflationdata.com/Infl..., the first site that popped up when I googled "inflation table" -- they have substantial tables of inflation data amenable to copying and pasting into spreadsheets), I bumped that price by dividing by 75% (the amount the dollar has declined between 1998 and 2007), and go a "true" price of $836. Which maybe DOES make for some sort of proof that gold is fairly priced right where it is, and knocks all the talk of 1600-2500 gold into the ditch. However, the range of variation in the "real" price of gold between 1801-1998 goes from 198 to 1568 (again, in 1998 dollars), making gold a fairly lousy thing to use to protect oneself from inflation.

In particular, note the collapse in gold following wars. It makes for a far better argument that gold is an emotional support mechanism that sheeple flee into when uncertainty abounds and the existence of their paper currencies is called into question. When those questions go away, so does the value of gold. It has nothing to do with inflation, save when inflation threatens the very existence of a currency (Zimbabwe, for example).

But none of this, not all of the simple-minded charts in the world provide what I asked for -- a year-by-year demonstration of any sort of proof that gold is an effective hedge against inflation. If it holds a constant average real value over centuries that's fine, but if it also wildly fluctuates as well during that time, it's of little value as a hedge against inflation. But possibly an excellent commodity trading vehicle, with a number that measures how over/under-valued it is at any point in time.

Here is a table of the inflation-adjusted price of gold, on a year-by year basis, from 1914 to present. I took the inflation data from the source listed above, and my gold prices from this document from the Kitco site - nma.org/pdf/gold/his_g...

Note that for most of the time, the price of the dollar was supposedly hard-wired to gold. Note that inflation did not stop during that time.

I'll post it in the comment following this one, as it's a fair amount of data.
I'm posting it in csv format, so you can copy & paste it into the spreadsheet of your choosing and play with the numbers.

2008 Aug 17 03:22 PM

[David Lentz:]

gold data from nma.org/pdf/gold/his_g...
inflation data from inflationdata.com/Infl...

"year","inflation rate","gold price","gold priced to adjust for inflation"
1914,1.35%,18.99,19.25
1915,0.92%,18.99,19.43
1916,7.64%,18.99,21.04
1917,17.80%,18.99,25.5...
1918,17.26%,18.99,30.9...
1919,15.31%,19.95,36.5...
1920,15.90%,20.68,43.4...
1921,-10.85%,20.58,39....
1922,-6.10%,20.66,36.9...
1923,1.80%,21.32,37.6
1924,0.45%,20.69,37.77
1925,2.44%,20.64,38.71
1926,0.94%,20.63,39.08
1927,-1.92%,20.64,38.3...
1928,-1.15%,20.66,37.9...
1929,0.00%,20.63,37.91
1930,-2.66%,20.65,36.9...
1931,-8.94%,17.06,33.9
1932,-10.30%,20.69,30....
1933,-5.09%,26.33,29.2...
1934,3.51%,34.69,30.31
1935,2.56%,34.84,31.1
1936,1.04%,34.87,31.43
1937,3.73%,34.79,32.65
1938,-2.01%,34.85,32
1939,-1.30%,34.42,31.5...
1940,0.73%,33.85,31.83
1941,5.11%,33.85,33.54
1942,10.97%,33.85,37.6...
1943,6.00%,33.85,40.08
1944,1.64%,33.85,40.74
1945,2.27%,34.71,41.69
1946,8.43%,34.71,45.53
1947,14.65%,34.71,53.3...
1948,7.74%,34.71,57.82
1949,-0.95%,31.69,57.2...
1950,1.09%,34.72,57.91
1951,7.88%,34.72,62.86
1952,2.29%,34.6,64.33
1953,0.82%,34.84,64.87
1954,0.32%,35.04,65.07
1955,-0.28%,35.03,64.8...
1956,1.52%,34.99,65.89
1957,3.34%,34.95,68.17
1958,2.73%,35.1,70.08
1959,1.01%,35.1,70.8
1960,1.46%,35.27,71.85
1961,1.07%,35.25,72.62
1962,1.20%,35.23,73.51
1963,1.24%,35.09,74.43
1964,1.28%,35.1,75.39
1965,1.59%,35.12,76.61
1966,3.01%,35.13,78.99
1967,2.78%,34.95,81.25
1968,4.27%,39.31,84.87
1969,5.46%,41.28,89.78
1970,5.84%,36.02,95.34
1971,4.30%,40.62,99.63
1972,3.27%,58.42,103
1973,6.16%,97.39,109.7...
1974,11.03%,154,123.36
1975,9.20%,160.86,135....
1976,5.75%,124.74,144....
1977,6.50%,147.84,154....
1978,7.62%,193.4,166.8...
1979,11.22%,306,187.98
1980,13.58%,615,217.52
1981,10.35%,460,242.63
1982,6.16%,376,258.56
1983,3.22%,424,267.16
1984,4.30%,361,279.17
1985,3.55%,317,289.44
1986,1.91%,368,295.08
1987,3.66%,447,306.29
1988,4.08%,437,319.32
1989,4.83%,381,335.52
1990,5.39%,383.51,354....
1991,4.25%,362.11,370....
1992,3.03%,343.82,381....
1993,2.96%,359.77,393....
1994,2.61%,384,404.15
1995,2.81%,383.79,415....
1996,2.93%,387.81,428....
1997,2.34%,331.02,438....
1998,1.55%,294.24,445....
1999,2.19%,278.98,455....
2000,3.38%,279.11,471....
2001,2.83%,271.04,485....
2002,1.59%,309.73,493....
2003,2.27%,363.38,504....
2004,2.68%,409.72,518....
2005,3.39%,444.74,536....
2006,3.24%,603.46,554....
2007,2.85%,695.39,570....

2008 Aug 17 03:22 PM

[David Lentz:]

The second column heading is supposed to be "inflation rate" but the conversion to html goobered it up a bit.

As you can see, there's not much of any sort of constancy in the "inflation-adjusted" price of gold, with a supposed "inflation-adjusted true value" being $571 in 2007. So if gold were to home in on an inflation-adjusted constant value, it is way overpriced at the moment.

All this assumes that the dollar-gold valuation at the start of this run is accurate, and it almost certainly is not (what does "accurate" mean in this context? What is the "true" price of gold?). But the year-to-year fluctuations demonstrate beyond question that it is NOT a hedge against inflation, and is unlikely to soar higher than it has in recent months. Assuming that the inflation rate does not go totally bonkers and put the scare of dollar loss into the sheeple, that is.

Remember that all money, ANY money, ever is/was/will be is simply a vehicle to permit the exchange of things of value. That's all.

When we have too much of the exchange medium, we get inflation.

When we have too little, we have deflation.

Going back to that chart with a 650 year history, look at what happened to the price of gold when the Spanish looted the Inca stores and flooded the European markets with oodles of "new" gold. Gold WAS money back then, you could buy things with it, and they flooded the markets with it.

Today, we use credit as money. The Fed creates credit when it creates money. We have had a huge expansion in fake money via bad debt created over the past 25 years, and most of it has imploded over the past couple of years. That's why there is all this fear of deflation, and why the Fed is churning out new credit to replace the old, bad credit as fast as it can.

Also, we are seeing some (not enough) firms riddled with smoke and no substance (IndyMac, Bear Stearns) implode, taking their shareholders with them. More of this needs to happen so that shareholders will pay attention to obscured or obviously bogus balance sheets. And more of it will.

Perhaps (but I'm not holding my breath here) we will learn from this and put back in place some of the regulatory functions that were removed over the past 8 years allowing this mess to occur, or better still, implement more effective regulatory watchdogs than we had before.

But a gold-based economy will not solve anything. If America was still on the gold standard, would it have stopped Dubya and the Congress from spending more than we had? Nosiree. And if you want to implement a balanced budget amendment, that would work as well with a fiat currency as it will with a gold standard.

However, I know that true gold bugs will not be swayed by any logic that deviates from their perceived Truth.

Ah well, in another few months their losses will (probably, nothing is certain) begin to take their toll and there will be blessed silence from the gold bugs for another 20+ year cycle.

Until then, adieu.

2008 Aug 17 03:44 PM

[Stephanie:]

Okay, David! You're on! I have this page bookmarked so I can go back here from time to time.

2008 Aug 17 04:03 PM

[Muzie:]

I will also add the comment that Stephanie should start a website of our own so we can all benefit from her interesting insights without digging through the comment section.

This is an interesting exchange, I think both David and Stephanie's arguments have merit and am enjoying the debate.

Let me offer a third viewpoint, that is actually described in great detail on Mish's global economic analysis blog:
globaleconomicanalysis...

The point being that gold would actually be a:
- deflation edge
- a hedge in panic to safety situations

2008 Aug 17 06:06 PM

[Kelly Liebe...:]

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It will be very interesting to see how this plays out in the media as finally the truth of this credit mess gets reported...
Will you be hedging your bets this week with metals at relative record lows or will you be in line at your bank as the public experiences it's wake-up call?

2008 Aug 17 07:37 PM

[lonie:]

Charts be damned . They can say almost anything . Remember the 80s when we were supposed to do it like the Japanese did . Damned good thing there were a few ' doubting thomases ' .

About gold. At some point about 75 years ago you could buy an ounce of gold for 35 dollars . Today about 780 dollars.
Gold to me is a constant and it takes more or less of any fiat currency to buy it and it will probably be a 'cold day in hell 'when you can but an ounce with 35 dollars again.
Us see , 35 divided by 780 = 22.28 times as many dollars to buy the same thing today as it did some 75 years ago.

2008 Aug 17 11:50 PM

[JBP:]

Stephanie,

I love hearing these comments from investors like David and CHL. We need negative sentiment and nobody talking about gold/commodities around the water cooler. These guys are short term traders and you are not. They probably are waiting for the first bounce to drop DZZ and come back to gold. They want you to sell and others on this board who are actually convinced by their arguments. Why even try to lead these horses to water? Just listen to both sides and make your own judgement which I think is pretty sound.

2008 Aug 18 12:37 AM

[halbhh:]

Serious deflation = economic depression. Bernanke is an expert on this, it was his field of study.

Connect the dots.

We will not get serious deflation, because money will be printed eventually in order to reverse any serious deflation.

...

2008 Aug 23 06:42 PM