Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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.

Gold/Mining/Energy : Newmont Mining(NEM) & Newmont Gold(NGC) -- Ignore unavailable to you. Want to Upgrade?

To: tshane who wrote (335)	9/3/1999 12:35:00 PM
From: ahhaha	Read Replies (2) \| Respond to of 587

As long as the public continues to conceptualize economic phenomena in mythical inventions, there will be no understanding of why anything occurs. The quantity of currency in circulation is irrelevant, Y2K is irrelevant. The level of debt is irrelevant. You are doubly confused in your statement that more currency drives up interest rates. More money in the form of currency would cause the price of money, interest rates, to fall, ceteris paribus. It's a merely a matter of more supply than demand. If you claim that more supply leads to demand which is a form of Say's Law, there is that intermedium, economy, in between which doesn't necessarily take the money and convert it to output. The medium may convert it into stock market multiple expansion. Further, you can have a rapid increase in all forms of money, a declining GNP, and thus a declining demand. The FED is converting a good chunk of money into currency to insure a smooth transition through Y2K in case there is an extraordinary demand for currency due to an unanticipated system glitch. The probability of that occurring is vanishingly small. In January of 2000 Y2K will be completely forgotten because absolutely nothing will occur, but the FED feels they have to prepare. They sure don't feel that way about the disaster they are letting develop by interfering in the market's determination of the price of money. All this noise about the Y2K non-event and not a word about the FED's disastrous price fixing. The second level of your confusion comes from an academic kind of misunderstanding. It is that more money leads to more demand which leads to inflation. More demand, the level of activity, has nothing to do with inflation. This is similar to the Phillip's Curve argument of the '70s relating marginal employment and inflation. Here we are, 25 years later, and Wall Street still responds to this error. Specifically the short sellers covered this morning because they think that others will read the employment report and reach this conclusion: "Perhaps the most heartening aspect of the report for the financial markets was a very subdued 0.2 percent increase in August average hourly earnings, a direct measure of inflationary pressures." Notice the assumption that hourly earnings is connected to inflation? There is no connection between the two. It astounds the rational mind where these clowns get this swill. Of course, this was ignored in the commentary: "Napm U.S. Non-mfg Prices Index 59.5 in Aug Vs 57.5 in July." Elliot 5th counts are usually put in by such lunacy just before the trap door opens to let the garbage fall. But the proverbial straw is that you somehow can find a conspiracy somewhere by reaching some absurd conclusion that central banks and others are involved in some crazy scheme to depress the price of gold so that they can corner the market and then conduct a price rise based on Y2K fears. The central banks would like to see gold rise, not fall, because they know that a healthy gold market with good prices to encourage more supply is beneficial to economies and money stability. To assume otherwise means to assert that central banks trust one another and could conduct such a silent collusion. That isn't naive, it's just stupid. The depression in the price of gold is a natural market occurrence which came about because the industry was riddled with inefficient gold producers and needed to be made lean and hungry. In contrast, the FED is not letting interest rates weed out the inefficient in areas like technology, so you know that bear market has a long ways to go. Similarly, you know the bear market in gold is over, because the Schumpeteran price mechanism was allowed to eliminate the excesses which built up during the last cycle of the '50s, '60s, and '70s. I'm sure you can't believe that because it goes against your TV education. You haven't even gotten to kindergarten and you are making these connections just like the fools at the university who connect dots for a living and much like the fools at the FED who connect dots to take everyone's living away. If you don't want to learn these things, there's no point in being involved with all of this. You're just going to find a way to shoot yourself in the foot, but I admit that our society rewards those who do that. It happened in gold and it is happening in tech, so you might well get your gun.