You Can't Fool Gold (Mish) - This is IMPORTANT
 

Next thing you know Karl will be advising people to buy gold.

http://globaleconomicanalysis.blogsp...fool-gold.html

Gold has been on a tear lately. Indeed, gold was the only commodity that did not break its long term trendline during the massive commodities correction starting summer of 2008.
......more

Gold is making new all time highs in nearly every currency except the Yen and the US dollar. Moreover, and as shown above, gold has recently been moving in tandem with a falling Euro and rising dollar. This is not a sign of hyperinflation or indeed any kind of inflation. This is a sign of extreme credit stress, in nearly every country in the world.

You Can't Fool Gold.

Mike "Mish" Shedlock

....with a great link to an article by Axel Merk

http://www.321gold.com/editorials/merk/merk120208.html

Monetizing the Debt
Axel Merk
Merk Hard Currency Fund
Dec 2, 2008

Deflation won't happen here; at least not if Federal Reserve (Fed) Chairman's Ben Bernanke's plan pans out. Deflation is considered a persistent decline in prices of goods and services; in a speech in 2002, Bernanke outlined the steps he would take if the U.S. ever faced the threat of deflation. Deflation is suffocating anyone holding debt as the debt burden becomes more difficult to finance with shrinking income; in contrast, inflation bails out those who have a lot of debt. In our assessment, fighting deflation is the Fed's top priority now; the latest minutes from the Fed's Open Market Committee (FOMC) meeting state: Indeed, some [FOMC members] saw a risk that over time inflation could fall below levels consistent with the Federal Reserve's dual objectives of price stability and maximum employment. [..] the limited scope for reducing the [Federal Funds] target further were reasons for a more aggressive policy adjustment; [..] more aggressive easing should reduce the odds of a deflationary outcome.

Re: You Can't Fool Gold (Mish) - This is IMPORTANT
 

Jawohl, ser gut !

Re: You Can't Fool Gold (Mish) - This is IMPORTANT
 

Deflation is a reduction of the money supply. The decline in prices is a symptom of deflation. I would expect anybody who calls himself a financial adviser to know that. Since this twit doesn't, his opinions don't count. He is just one of the tools parroting the drivel he hears.

Check Howard Katz's blog every Monday. He will keep you informed about this flood of misinformation.
http://thegoldbugnet.blogspot.com/

Re: You Can't Fool Gold (Mish) - This is IMPORTANT
 

Thanks Saul.

Re: You Can't Fool Gold (Mish) - This is IMPORTANT
 

Very true, but what is felt is the symptom, not the cause. What percentage of the population do you suppose understand the concepts of money supply? But everyone can understand falling prices and most consider that to be the real meaning of deflation (and its inverse, inflation) since this is what the people tangibly feel as a result. So if writing an article for a general audience, one might state what you quoted.

Also, the method of artificially lowering treasury yields, while devaluing the dollar would, in fact, be an excellent way for the government to amortize its enormous debt load.

Also, anyone interested should check out http://www.shadowstats.com/. It is a site where a former consultant breaks down the government reported statistics and recalculates them on a more accurate basis. It is a paid subscription, but some o the contnt is available to the public. Very informative in general.

Re: You Can't Fool Gold (Mish) - This is IMPORTANT
 

Lenin was certainly right. There is no subtler, no surer means of over-turning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.



That figure has got to be around one in 8 million now.


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