"... see if you can determine [time frame] it was said..."
By Jay Taylor,
J. Taylor's Gold & Technology Stocks
Posted Monday, June 18, 2001
tfc.com
... May 2001 issue of "The Long Wave Analyst",
Ian Gordon's reported the following quotes
from John Kenneth Galbraith and Richard Russell
that sets the stage for the news of a rapidly
deteriorating global economy now in progress.....
... As you read this quote, see if you can determine
whether it was said in the 1929 - 1932 period
or in the 1998 - 2001 time frame.
"Central banks, and particularly the US Federal Reserve,
are deploying their heavy artillery in the battle against
a systemic collapse. This has been their primary concern
for at least seven years. Their immediate objectives
are to prevent the private sector bond market
from closing its doors to new or refinancing borrowers
and to forestall a technical break in the Dow Jones Industrials.
Keeping the bond markets open is absolutely vital
at a time when corporate profitability is on the ropes.
Keeping the index on an even keel is essential
to protect the wealth of the household sector
and to maintain the expectation of future gains.
For as long as these objectives can be achieved,
the value of the US dollar can also be stabilized
in relation to other currencies, despite the extraordinary
imbalances in external trade."
... comments with respect to the bond market
you may have correctly gathered that this comment
was made in the **** - **** time frame.
... the amount of paper money printed with which
to buy gold was extremely small during the 1970's
compared to 2001. For example in 1971 when Nixon
debased the dollar by closing the gold window,
M-3 measured just $744 Billion vs. $7.558 TRILLION
as reported in this weeks "Barron's" when gold
was selling at $42.65. As the American banking industry
tried to inflate its way out of recession in the 1970's,
M-3 Grew to $1.8 Trillion by 1980 when gold exploded
to $850 per ounce. Today, confidence in the dollar
remains high, but as that changes how high
might the price of gold rise?
Nothing is ever the same in economics, but to the extent
the price of gold is driven by the amount of paper printed
as confidence in paper is lost, a ratio of M-3 to Gold
as it existed at gold's 1980 high would put the yellow metal
at $3,531 based on the latest M-3 numbers.
As the Fed tries to print our way out of trouble,
M-3 may well grow to much higher levels.
Actually, the calculation of $3,500 gold during the coming
Kondratieff winter is not inconsistent with the views
of Ian Gordon who has come upwith a similar value.
And as Ian has illustrated, it is during the deflationary winter..... |
