Posted on 06/07/2011 4:22:14 AM PDT by SeekAndFind
Six weeks ago this column observed that with the price of gold having passed $1,500, the U.S. economy was already in the midst of a downturn, and that it would be foolhardy to wait for always backward looking and unreliable government statistics to reveal what gold already had. Though unemployment figures are as unreliable as the rest, Friday's anemic report points to a slowdown in economic activity that the dollar's fall in concert with gold's spike foretold.
The reason why is very basic. Contrary to the popular view among economists that currency devaluation is necessary during periods of economic hardship, debasement works against the very investment that drives company formation and job creation given the tautological reality that any returns on investment will come back in cheapened money.
Gold, the most stable constant of value known to mankind (hence its use as a money measure for thousands of years), doesn't rise or fall as much as it rises when the dollar in which it's priced declines in value, and it falls when the dollar in which it's priced increases in value. If you devalue the dollar you drive investment into hard, commoditized assets that already exist, and that are least vulnerable to devaluation.
Conversely, when currency values are maintained with stability in value paramount, investment flows into stocks and bonds of companies set to create that which doesn't yet exist. Devaluation is the proverbial blast to the past, while currency stability and strength are forward looking, and this explains why countries have never devalued their way to prosperity.
If we then look back to the most substantial economic contraction of the 20th century in 1920-21, the fact that the gold standard was unshaken amid this unsettling decline in economic activity tells why the economy rebounded so quickly.
(Excerpt) Read more at realclearmarkets.com ...
Do not expect anyone to say we are in a double-dip.
This is all just unexpected and Bush’s fault.
It’s amazing. These idiots are still blaming bush. It’s in their DNA.
RE: This is all just unexpected and Bush’s fault.
Obama is going to continue saying that he inherited a bad economy until the end of his first (and hopefully last) term.
Of course he ignores how he quardupled the country’s spending and imposed burdensome regulation on businesses like Obamacare resulting in a hiring STRIKE.
“Bush’s fault” will be his rallying cry till doomsday.
Obama’s fault.
That's the slowdown that's been continuous since around 2008 and the Democrat takeover of Congress? We've known about this for a long time--why is this news now?
” We’ve known about this for a long time—why is this news now? “
Because, for the vast majority of ‘economists’, MSM flacks, Obama lickspittles, and sheeple, this *is* ‘news’....
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