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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: macavity who wrote (40997)11/6/2003 2:39:20 PM
From: AC Flyer  Read Replies (2) of 74559
 
>>One of the reasons that we are not experiencing a 'classical' deflation is that we are not on a gold/commodity standard.
If we were, I believe that we would have seen a 1932 type crash. (Where Price in an non-expanding currency goes down to Earnings).
Instead we will see a Japan type bear market.
(Where Earnings catch up with price in an expanding currency).<<

And this is bad? Or somehow an argument for gold?

I don't think so.

One of the bedrock arguments of the gold bugs is that, because fiat currencies are being "debased", the price of gold, as measured in those debased fiat currencies, will inevitably rise. I suggest that this is economic nonsense, as what is really important is the value of gold measured in its exchangeability for items of true objective value - i.e. goods and services. Thus, in a period of unprecedented increase in the global supply of goods and services, the goldbugs should kneel and worship the great Uncle Al for running the printing presses to support the fiat price of gold.
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