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Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: SliderOnTheBlack who wrote (10805)	7/17/2008 12:53:37 PM
From: jim_p	Read Replies (2) \| Respond to of 50099

On the issue of inflation vs. deflation the one item that stands out for the bear case on gold/inflation is the fact that the main driver for the increase in M3 was the historic expansion of credit over the last several years to levels that were unimaginable. The de-leveraging of the financial system that is now in full swing, and will most likely takes years to accomplish, will result in credit contraction and M3 should contract over this extended time period unless the fed prints money to counter the credit contraction? My guess is the fed will try to avoid deflation by trying to inflate the economy, but the forces of de-leveraging from the two largest bubbles in history will be very difficult to overcome and thus should be bearish for gold. Jim