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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (39780)	10/19/2003 3:20:41 AM
From: Maurice Winn	Read Replies (1) \| Respond to of 74559

<"They are lined up with their gold, hoping for dramatic inflation. It's time to punish them and chase them out". Pretty small group to buid monetary policy around> Good point. For ages I have asserted that the amount of gold is so tiny that it can't be used to form the basis for a money supply. Such an attempt would divert huge resources into digging for gold instead of doing useful things. So I can't have my gold and eat it too. It would be fun to see the Aztecs [Jay et al] scramble as the dollar zoomed relative to gold, back to $230 to the ounce instead of $370. But apart from such silly ideas, the spenders seem to me to have had a good run for nearly three years of low interest rates while the imploded Biotelecosmictechdot.com markets cleared, which they have. Apart from gold, people have been buying, and borrowing to do so, houses, SUVs, all sorts of other stuff, and hoping for inflation and continued monetary proliferation to justify their decisions and reward them financially as well as by the enjoyment of the things they've bought. Meanwhile, we poor, unrewarded US$ holders are earning a derisory 1% or less on our Tonka Truckloads of cash. We will gradually abandon the US$ unless things pick up. Which of course was the original plan when interest rates were slashed and the pixelation process for new US$ accelerated to a petapixel production rate. Sure enough, the $ became too hot to hold and people went shopping and selling it, causing house prices to soar, gold to zoom, the NZ$ to rise 50% against the US$, SUVs to sell faster than Big Macs, the euro and yen to rise. But hot money needs to cool off again or it turns to inflationary chaos as borrowing and spending gets out of kilter with long term earning and saving power. Gold is a good indicator of how hot money has become. It's running pretty hot at the moment, though the gold bugs expect $2000 an ounce as the debt spiral into a black hole raises the temperature to infinity and the US$ disappears from sight beyond the event horizon. I hope Uncle Al is managing the dollar orbit well away from the event horizon. A few orbital glitches and we might accidentally slip out of sight. I'd like to see an interest rate turbo boost to keep us well clear, but that would cause orbital glitches in its own right, so I hope Uncle Al is a good pilot and can judge the situation well. So far, so good. Mqurice