SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
From: sciAticA errAticA2/20/2006 2:42:34 PM
  Read Replies (2) of 110194
 
Too Late For Paul Volcker

financialsense.com

<snip>

The situation with the US dollar is much more precarious now than it was in 1980, when the price of gold rose to $850, and silver to $50 per ounce. Paul Volcker was brought in as Fed chairman in 1979 to deal with the last real dollar crisis, when the US economy was still strong. Exports were vigorous, there was full employment, and the consumer was flush with savings. However, inflation was out of control. Volcker rolled up his sleeves to manage the money spigots while letting the interest rates rise north of 20%. He later expressed regret that he did not control the price of gold.

Could Ben Bernanke do the same today? Not without collapsing the system. There is too much debt in the US now. The economy is far more fragile. Employment is not as strong, the consumer has negative savings, and the yield curve is about to invert. Gold has been sold short, loaned, swapped, and heaped on a mountain of derivatives that threaten to unwind if hit with so much as a strong breeze. It is far too late for Volcker’s strategies.

Given the fundamentals of the US dollar today, who would want to trade precious metals for this paper? Apparently, even the most ardent “gold-is-real-money” advocate would do just that. It is also one reason why so many are so willing to invest in the various forms of “paper gold”, and to take their profits in paper. This implies a return of confidence to fiat money. Is someone expecting the dollar to turn around and become strong? Too much liquidity has flowed under the bridge for that outcome.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News