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Gold/Mining/Energy : Gold Price Monitor

GDXJ 98.59

-2.8%

Nov 13 4:00 PM EST

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To: philv who wrote (13275)	6/17/1998 3:07:00 AM
From: ahhaha	Read Replies (3) of 116762

The declining yen causes the current account deficit to widen, but the rate of the yen's decline introduces uncertainty and so the volume of trading activity starts to slow. Domestic manufacturers have to go to domestic suppliers at higher costs. In the goods sector intermediate goods price increases are resisted whereas final goods prices are relatively elastic. The effect is a slowing of core manufacturing like you find in sunset industries. How does America respond? Strikes. The steelworkers are already complaining. They don't like competition and they will make sure it is stopped. They will accomplish this by exporting more steel companies, i.e. shutting them down so that the demand for steel goes to foreign shores. Power corrupts especially in an ugly mob of slobs. The chances that the US will intentionally move to lower the dollar is zero. The Democratic Administration knows that inflation is poised to explode if the dollar starts down. That's why Rubin doesn't mind too much a falling yen. He wrings his hands about it. If inflation starts up which is a lock, you'll find the entire country out on strike to protect themselves from everyone else's non-negotiable demands. To save Asia Japan must apply monetary policy. The immediate effect is rise of the yen. Because Japan is the second largest economy in the world, a rising yen guarantees a falling dollar. The dollar must fall and the US will get a blast of inflation just when we need it the least. Thank you, FED. The money supply here is growing far too fast to print money. If Japan prints, we have to draw our own supply down. FED has to raise interest rates. Doesn't matter if they do or not because the free market will and the FED will have to chase the rate so they don't look like they aren't in control. Most believe the FED sets rates. Well, if that is true I submit we don't have a free market in money and therefore we are vulnerable to the pretense to knowledge by these great wise men. The market lets them be in control nominally for comfort purposes. However, if you suddenly got the conviction that our 3% inflation rate would double would you lend your money out at a negative implied real rate? You wouldn't do it and others wouldn't so the FED would have to supply reserves in order to keep rates from rising. As more and more people go out on strike does that sound like costs will be falling in the future? Since we are wealthy the corporations will initially be able to pass those costs on to final demand. We swallow the rising prices which embeds the rising prices. Our entire society has written all kinds of laws making sure everyone is protected against rising inflation. The protection is called indexing. With everything rising you have exponentially rising prices. FED has to bust that even if it means FED has to throw the US into depression. The alternative is to have hyper-inflation and the complete loss of control by the FED. The money is going into securities, bonds and stocks. Why else would the stock market get into a precarious position. Americans don't believe in it enough to bid it up like it has been. This is the action of mindless fear. Some of the flow has gone into American factories of foreign manufacturers. They have to be propped up because the only reason why they exist was to appease 30 years of American labor anger from having been competed into non-existence. The point at which the flow reverses is the point of no confidence. That point occurs when the markets perceive rising inflation. There then starts the wholesale exit from the dollar. You'll hear everyone then complaining about the weak dollar. Asia and the yen will be forgotten. Do you wonder what professors are teaching their econ students at the university. Why is everyone so incredibly illiterate about all this stuff? The problem is that the professors are still prejudiced to 19th century socialism and the battle between the gods and the slobs. They are slobs and they are going to get the gods and you are going to pay. PS. How could we have 3% inflation if the world is presumably going into a deflationary spiral and the effect has been to cancel American inflation? What would inflation be without all that foreign trouble? How could today's CPI be up .3%? What? Yellin says inflation is totally under control. What?

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