mikebrah

Why Gold Is Losing Its Shine

How the hell is gold, silver, treasuries and stocks all booming on the same day?

MM

Why Gold Is Losing Its Shine

The thing that always discredits these deflation articles is that somewhere within the article the author inevitably concedes he is wrong. This one is no different, as the author says:

"Fortunately for most however, inflation on a big scale is a scenario consumers are unlikely to experience any time soon. In order to inflate prices, increasing money supply has to be playing catch-up with consumer demand. Right now, the opposite is true."

Yes, right now the opposite is true. And what happens when the opposite is no longer true? Or when the ignorant masses start to realize something fishy is going on with prices?

The thing about inflation is, it's not apparent until it's all TOO apparent. And then, say the deflationists, the Fed will just sop up the extra liquidity. Bing, bango, bongo.

But what happened the last time the Fed did this? Volcker had to trigger one of the nastier recessions of recent history to fix the problem. And the current situation is exponentially worse, I would argue.

So lets see...we inflate massively to avoid a painful recession only to have to then initiate a recession to fix the the inflation? Ahh, the central banking 'circle of life.'

Quite productive.

MM