I thought Friday was “deflation will get us” day of the week.
It’s not a matter of if the crash is coming. Extreme deficit spending is simply unsustainable.
I almost feel bad for all of the people dumping money into the stock market right now; it’s going to be hit just as bad as everything else when the bubble pops.
The problem(s): There are only two real uses for gold in the world, i.e. jewelry and electrical connectors, and the amount of the stuff stashed at Ft. Knox has to be billions of times what the human race will ever need for jewelry and electrical connectors.
Moreover there is no shortage of the stuff outside of Ft. Knox. Every ounce of the stuff which has ever been mined since Adam and Eve and Alley Oop is still around, minus wear and tear.
In theory there actually is a third use for gold, i.e. it would be the most perfect metal possible for waterfowl shot, half again denser than lead, soft, and totally inert; don't hold your breath waiting to read about anybody doing that with it.
In other words, the value of gold is 100% related to psychology and psychiatry, and zero percent related to physics or economics. That's always kept me from wanting to own the stuff.
The problem with this theory is that while M1 is massive right now, most is in the hands of the financial institutions.
These financial institutions are not lending. That is why we do not see inflation. The money is not getting out to the spenders.
If the money gets out into the population, we should see a massive economic upturn while inflation ratchets up.
That is when the genie is out of the bottle....when the money gets out.
This is what Bernanke and Geitner are talking about when they say the timing is critical. If they stop too soon, the financial institutions will still have oodles of bad debt on their books and the economy will still be crap.
If they stop too late, the inflation train will have left the station.