Yankee Running Dog

Deflation Changes the Rules

If we are headed for deflation, all bets are off... Capitalism does not work well in deflation, no place to feed the greed...

Gold is an interesting question in deflation. We cannot learn from the history of the depression as currencies were unwinding from the gold standard then and then the US government confiscated all the gold in the USA. I have heard several sources that sell gold saying that their sources have dried up in the last week, bullion is hard to get. With supply drying up, the price should be going through the roof, but is not.. Something unusual is going on here...

I would say there are current technical factors as to why the dollar is going up, like European Banks having to raise dollar reserves to cover their dollar denominated mortgage securities (can anyone spell lumps of shi*). The Libor rate is through the roof so they have to go out on the market to buy dollars. How long this will last is anyone’s guess, but eventually the Fed pumping billions and now trillions a day out its window will have to lead to some kind of dilution of Uncle Buck.

Will inflation or deflation win? All of the dollars pumping would say inflation; people quit buying things, losing their jobs and no credit for anything would say deflation. No wonder we all getting whipsawed everyday as deflation and inflation tear each other to pieces. Who ever wins may not leave many of us standing.