[Kudsman]

Transitory.

Time for a new buzz word?

[MMusson]

Inflation hides a lot of sins. Monetary transactions increase in dollar terms to hide the fact they are decreasing in real value.

[lurk]

Creating more and more government apparatus and printing more and more dollars.

Either the Feds are ignorant, or they are intentional.

[Zhang Fei]

[(As I wrote yesterday, it will be the Fed’s mismanagement of its fiat money that does the dollar in, not some rising-star competitor. That will most likely happen because the Fed loses trust, but there won’t be some other currency that has risen to take its place. More likely a move toward gold and silver.)]

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Until long bonds pay more, maybe substantially more, many will just stay in Treasury bills, which pay 4.5%. The 4.25% that 10-years currently pay is way optimistic about future inflation. Precious metals markets involve way too many other variables, and aren’t really big enough to provide the liquidity money managers demand. Without that liquidity, they will lose significant amounts just buying or selling.

For retail investors buying and selling gold coins, it’s even worse. If you buy a Krugerrand today and sell it tomorrow, without any price change, you will lose 5% of its value, because that’s the gap between what dealers will buy and sell at. Whereas any given money market mutual fund will cost you nothing to get in and out of. The value going in and coming out is the same: $1. And unlike gold, money market funds (Invesco, Fidelity, et al) will pay you at least the current T-bill rate, about 4.5%.

[griswold3]

Ebbing in rising tide of inflation
Going to the beach. Let’s see who’s swimming naked! Who will The Fed give life jackets?