fgmr.com
>>>...I think we are witnessing a popular delusion. There is a widespread mystical belief in a non-existent deflation, but this erroneous thinking can be explained. I have a unique view as to what is happening.
In the NAFTA debates Ross Perot used to talk about the "great sucking sound". The sucking sound you hear today is of a different nature, emanating from a different source. It is coming from the stock market. The stock market is sucking up liquidity from every possible source available ? from every corner of the earth. It needs to. The stock market is requiring greater and greater volumes of cold, hard cash to keep this stock bubble up in the air. Every penny of available liquidity is heading one-way ? into stocks. This phenomenon goes a long way toward explaining why price rises in consumer goods, real estate, and other tangible assets have been mild, or non-existent.
The contrast to the 1970's couldn't be greater. Excess money was being created back then by the Federal Reserve and the nation's banking system (they are together the monetary agents that create Dollar currency) and that excess money was going into real assets ? houses, farm land, collectibles and of course, Gold.
Today excess liquidity is again being created by the Federal Reserve and the banks, but it is headed in a different direction. It isn't going into any of the 1970's favorites; it isn't going into bonds. It is going straight into the stock market. There is a 'great sucking sound' of liquidity being gobbled up by a stock market that is requiring ever greater amounts of liquidity to keep the game alive. As a result, there is no deflation. The mild price rises at the consumer level are occurring because the excess liquidity being created by the monetary agents is going into stocks, not the prices of goods and services.
With Dollars, you never get more in the long-run, only less. For sixty years it has been the federal government's policy to debase the Dollar. ...<<< |
