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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (65959)	6/8/2007 12:56:10 AM
From: John McCarthy	Read Replies (3) \| Respond to of 116555

Mish I always thought it was this simple: When long rates and short rates diverge - with long rates accelerating northward - that was the sweetest sweet spot for gold. Didn't that happen in the late 70's and 80's? Has there ever been a case where rates divereged as described above and gold went south? regards, John McCarthy

To: mishedlo who wrote (65959)	6/8/2007 5:37:33 AM
From: westpacific	Respond to of 116555

This about nails the deflation argument. ""Before I forget, I want to clear up one misunderstood area. I hear a lot of analysts talking about super-inflation, hyper-inflation -- a coming horrendous spate of inflation possibly comparable to what happened in Germany prior to WW I. Folks, it can't happen here. And the reason it can't happen here is that we have something called a bond market. Sure we can have a certain degree of rising inflation, but we can't have anything like what happened in Germany. If inflation starts to run wild, the bond market will fall like a lead sinker, and interest rates will go through the roof. If interest rates surge to 7%, 8% 10%, 15%, the stock market will collapse, business will fall apart, and inflation will disappear faster than you can say, "Help, everything I own is deflating." There is more - get a subscription, Richard is worth every dime. ww2.dowtheoryletters.com And guess what, we will have a massive deflationary collapse, no other way out of this mess. It will not happen overnight, it is going to take years ahead to work out. West