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Strategies & Market Trends : Asia Forum
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To: Henry Volquardsen who wrote (6548)9/21/1998 4:13:00 PM
From: Jay Scott  Read Replies (1) of 9980
 
Henry, as I understand it, gold can have two functions, both as a predictive value and as a currency backing.

I agree that its predictive value is less than perfect. But one can argue that is has in fact foretold a recently deflationary PPI number (and presage the same for the CPI?).

You are the currency expert....my question is, isn't a massive devaluation of one's local currency a de facto inflation? In both cases, a unit of your currency buys a helluva lot less of a given commodity. And have not holders of dollars enjoyed an increased purchasing power over most--if not all--commodities? Deflation?

I'm not arguing that AG's policies have been deflationary for the emerging economies, just the U.S. The emerging markets indeed may have to resort to hyperinflation, just as the Russians are making noises about "printing money" to pay off debts.

Some have may the argument that the only way for the Russians to stave off further ruble devaluations is to go to a gold standard. Makes sense. They have plenty of it.

JS
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