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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 382.87-0.8%Nov 13 4:00 PM EST

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To: Maurice Winn who wrote (100362)4/24/2013 9:19:30 PM
From: carranza21 Recommendation  Read Replies (2) of 217752
 
--- Wouldn't that mean that the price of gold in that deflating currency would fall rather than rise? ---

That is certainly the conventional wisdom.

Whether it will happen, I don't know.

I like the idea of lower prices. But when velocity picks up, as no doubt it will, there will be an easing of deflationary pressures.

We have learned a valuable lesson: QE does not lead to higher measures of money in play, higher velocity of money or GDP growth. Because it has been so ineffective, it is possible that the fears of what may happen when it ends or is curtailed may well be highly exaggerated.

There is a huge pile of money held by banks as excess reserves. It is doing nothing. It will enter the economy at some point. We'll certainly see inflation then.

research.stlouisfed.org
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