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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: regli who wrote (27843)3/4/2005 10:12:55 PM
From: Tommaso  Read Replies (4) of 110194
 
>>The fact is that the U.S. government made gold illegal to own because it was short on gold. <<,

That is a nonsensical statement. Or perhaps the statement is just carelessly using the phrase "it was short on." If you mean that the governnment feared excessive redemptions of paper notes for gold, it is correct. Actually from that time forward, after Roosevelt adjusted the price of gold, gold flowed into the United States in large quantities, continuing into the Second World War when the United States seemed a safe haven for European gold.

The idea that now, with no gold standard, the price of gold could actually fall as part of a deflationary contraction, betrays a total failure to grasp economic fundamentals. All world currencies are now fiat currencies--paper currencies or even electronic currencies.All currencies are detached from any material substance. Except for the anomaly of Japan, with its pathological addiction to excess saving, deflation is no longer possible.
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