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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Jim Willie CB who wrote (915)	9/21/2003 2:53:34 PM
From: David W. Taylor	Read Replies (5) of 110194

Jim, You really have missed the entire point of my argument. We are going into a Deflationary cycle right now and not an Inflationary one. (Not stagflation or inflation. Deflation.) You are facing EXACTLY the wrong way. Take a look at Gary Shilling's book "Deflation" (ISBN: 0-9618562-4-6). In chapter 27 "Investment strategy for Deflation- 13 elements", element 9 "Commodities will remain weak", he addresses gold specifically. It is a great book to remind yourself of other aspects of basic economics as well. It was published in 1998 so it has already been proven correct in quite a few areas. As far as I can see two things are delaying the public's realization that Deflation is the real problem: Bush's crazy deficit spending and the Chinese Yuan. As soon as Bush loses his bid for re-election and/or the Chinese allow the Yuan to float, the real power of deflation will take hold. The Yuan will LOSE value to almost everyone's horror. All of Bush's current team are telling him the opposite will happen, which makes no sense to me. Your gold will lose value and people holding cash, real cash, will be in the best place to reap a true yield. As prices of items decrease, the funds tied up in T-Bills at 3%, as mine are, will now be able to buy more goods. Everyone who has lost or is about to lose money on stocks and gold will have less cash to bid for goods. Basic stuff really. David

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