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.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (242872)	5/28/2003 3:36:41 PM
From: ild	Read Replies (3) \| Respond to of 436258

Date: Wed May 28 2003 12:48 trotsky (kapex) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved "The dollar is toast and will cause a hyperinflation to be unleashed." you casually throw out these assertions as if they were uncontestable facts...not even giving a nod to the realities on the ground like e.g. recent 50 year lows in interest rates which indicate that deflation is the problem, not inflation. as i've mentioned before, a falling dollar is NOT an automatic guarantee for a rise in price inflation...not with the world awash in industrial overcapacities and the currency of China ( which is responsible for the bulk of the trade deficit ) pegged to the dollar. meanwhile, the coming implosion of the mortgage credit bubble will no doubt be a hugely deflationary event. deflation has become globally synchronized...and the US currency area won't escape it imo, Mr. Bernanke's ideas notwithstanding. Date: Wed May 28 2003 14:17 trotsky (Bizarro) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved unless the central banks commit suicide by throwing money from helicopters, deflation will be our fate. deflation is the corollary to the liquidation of the malinvestments that were the result of money and credit created out of thin air during the boom. the BoJ's failed attempts to 'reflate' go to show how traditional CB methods fail in a deflationary era ( i.e., increasing free reserves in the banking system ) due to potential borrowers unwillingness to go deeper into debt. note in this context that the Friedman myth that the Fed was 'too tight' in the early 30's is just that - a myth. on the contrary, it created liquidity at a furious pace - and still couldn't stop the deflation from unfolding. there's no reason to believe it will do better this century than last. and we should actually be grateful for that, since the liquidation period is needed to lay the foundations for a future recovery. unfortunately we still have to go through the demise of the mortgage credit bubble. that's the next big thing on the agenda imo. trotsky (Egoli) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved there are good reasons to believe that gold will do well in a deflationary era. in terms of its purchasing power it has in fact outperformed every other financial assets in every single deflation since a.d. 1300. this is due to its role as the ultimate asset of last resort - money incarnate if you will. this does not necessarily mean that it will go through the roof in nominal terms, although it may well ( due to the huge liquidity sloshing about in the markets these days ) . the profit margins of the gold miners should eventually outshine everybody else's in this scenario.