JasonC

Gold: War of Attrition

"In economics 101."

If you made it to the next class, they explained to you that the demand for money is not a constant. If you paid attention even in Econ 101, you noticed that all assets have 2 curves determining their price, not one.

"in the end will result in high, if not hyper, inflation"

Um, where do you think the real estate crisis came from? It consisted in everyone making that bet together until the prices were ridiculous. Being short a nominal mortgage and long a real house was the inflation bet everyone was making. And it crashed.

Right now if you believe in future inflation and don't want to take risks, you can buy a 20 year TIP for a 3% real return. If you believe in future inflation and are willing to take risks, you can buy property REITs yielding I kid you not 33% (some hit 67% yields at last week's lows) and PEs of 3 or 4. Their prices have fallen 95% from the highs and no one will look at them, because they carry real estate (aaaaggghh not real estate! ) with debt (aggggh, not debt), sometimes as significant levels of leverage (aggggh, not leverage).

If your inflation thesis is true, one none of those would have crashed in the first place, and two at current smashed to heck prices all of those would return 10-50 times what bullion can ever promise to return.

It is a deflation. Look it up.