Comments on: Inflation is Our Future http://dailyreckoning.com/inflation-is-our-future/ Economic News, Markets Commentary, Gold, Oil and Investing Strategies. Sat, 26 May 2012 18:05:48 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: UNLCE WALT http://dailyreckoning.com/inflation-is-our-future/#comment-40153 UNLCE WALT Sat, 21 Nov 2009 21:19:11 +0000 http://dailyreckoning.com/?p=18642#comment-40153 $3,400 AN OUNCE GOLD. GET OUT OF THE DOLLAR WHILE IT IS STILL WORTH FOUR CENTS. $3,400 AN OUNCE GOLD. GET OUT OF THE DOLLAR WHILE IT IS STILL WORTH FOUR CENTS.

]]> By: D http://dailyreckoning.com/inflation-is-our-future/#comment-29448 D Wed, 30 Sep 2009 21:59:07 +0000 http://dailyreckoning.com/?p=18642#comment-29448 and "debt in foreign currency" (not foreign debt) and “debt in foreign currency” (not foreign debt)

]]> By: D http://dailyreckoning.com/inflation-is-our-future/#comment-29447 D Wed, 30 Sep 2009 21:57:50 +0000 http://dailyreckoning.com/?p=18642#comment-29447 I meant debt sales, of course (not purchases). I meant debt sales, of course (not purchases).

]]> By: D http://dailyreckoning.com/inflation-is-our-future/#comment-29446 D Wed, 30 Sep 2009 21:56:56 +0000 http://dailyreckoning.com/?p=18642#comment-29446 To my knowledge, foreign debt purchases by the German government are always hedged against currency "risk". All they want is the dollar's low low interest rate, and that's all they'll get, too. No dollar carry trade here. To my knowledge, foreign debt purchases by the German government are always hedged against currency “risk”. All they want is the dollar’s low low interest rate, and that’s all they’ll get, too. No dollar carry trade here.

]]> By: dimwit http://dailyreckoning.com/inflation-is-our-future/#comment-29411 dimwit Wed, 30 Sep 2009 17:57:57 +0000 http://dailyreckoning.com/?p=18642#comment-29411 lets make it simple. we have a lighted-fart economy. lets make it simple. we have a lighted-fart economy.

]]> By: Robert http://dailyreckoning.com/inflation-is-our-future/#comment-29378 Robert Wed, 30 Sep 2009 13:03:06 +0000 http://dailyreckoning.com/?p=18642#comment-29378 In Response to Bill. Increasing interest rates causes deflation. The Federal Reserve controls interest rates through the sale and purchase of bonds. To inflate the currency they buy bonds, To deflate the currency they sell bonds. The price of a bond is the opposite of the interest rate. A $1000 bond paying 10% gives you $100. If the price falls to $500 you get 20%. If the price rises to $2000 you get 5% To deflate the currency they sell bonds, this lowers the price and increases the interest rate. They take the currency from the sale and put it back into the black hole from where it came. In Response to Bill. Increasing interest rates causes deflation. The Federal Reserve controls interest rates through the sale and purchase of bonds. To inflate the currency they buy bonds, To deflate the currency they sell bonds. The price of a bond is the opposite of the interest rate. A $1000 bond paying 10% gives you $100. If the price falls to $500 you get 20%. If the price rises to $2000 you get 5% To deflate the currency they sell bonds, this lowers the price and increases the interest rate. They take the currency from the sale and put it back into the black hole from where it came.

]]> By: Boom & Doom http://dailyreckoning.com/inflation-is-our-future/#comment-29376 Boom & Doom Wed, 30 Sep 2009 12:58:17 +0000 http://dailyreckoning.com/?p=18642#comment-29376 ( So, if we do not see inflation over, say, the next year, will we all agree that the Quantity Theory of Money has been completely and totally discredited? ) Hardly! The "beauty" of the current situation can be seen in the conversion of that purveyor of derivatives ( Goldman Sachs ) to a correspondent bank of the FED. Now the FED pumps liquidity directly into the $700+ Trillion derivatives market! And if you consider derivatives to be a Ponzi scheme, then the purveyors have found the last and best "greater fool" to keep the show going... for now. However, not everyone is thrilled to see this... starting with certain other central banks. They have either stopped selling gold, or are serious buyers of gold. Anyone know where the 403 tons of IMF gold went? You know that when central banks start taking physical delivery, prices there aren't going to fall... but supply sure will! There have been rumblings of 50-75 basis point rises in interest rates, around the world, on a MONTHLY(!) basis if gold goes past about $1200-1400 and same for every $100 that gold rises after that. Can we see 30% interest rates here??? There is a huge danger that gold begins to underpin currencies again. That would easily put gold over $32K/oz! The problem is that would discount the entire first world economy by far more than the typical 90% drop one sees in a recession... Think about it... ( So, if we do not see inflation over, say, the next year, will we all agree that the Quantity Theory of Money has been completely and totally discredited? )

Hardly! The “beauty” of the current situation can be seen in the conversion of that purveyor of derivatives ( Goldman Sachs ) to a correspondent bank of the FED. Now the FED pumps liquidity directly into the $700+ Trillion derivatives market!

And if you consider derivatives to be a Ponzi scheme, then the purveyors have found the last and best “greater fool” to keep the show going… for now.

However, not everyone is thrilled to see this… starting with certain other central banks. They have either stopped selling gold, or are serious buyers of gold. Anyone know where the 403 tons of IMF gold went? You know that when central banks start taking physical delivery, prices there aren’t going to fall… but supply sure will!

There have been rumblings of 50-75 basis point rises in interest rates, around the world, on a MONTHLY(!) basis if gold goes past about $1200-1400 and same for every $100 that gold rises after that.

Can we see 30% interest rates here???

There is a huge danger that gold begins to underpin currencies again. That would easily put gold over $32K/oz! The problem is that would discount the entire first world economy by far more than the typical 90% drop one sees in a recession…

Think about it…

]]> By: Snoop-Diggity-DANG-Dawg http://dailyreckoning.com/inflation-is-our-future/#comment-29369 Snoop-Diggity-DANG-Dawg Wed, 30 Sep 2009 12:17:49 +0000 http://dailyreckoning.com/?p=18642#comment-29369 "Inflation is a decrease in the “general” purchasing power of the currency." ...due to an increase in the supply of the fiat currency, facilitated by the Fed. This is called 'inflation'. "When we had the huge runup in the oil price in 2008, that was not inflationary since people had finite amounts of money." It WAS inflationary, because people were paying more for gas, big screen TVs and vacations with BORROWED MONEY encouraged by the Fed. The easy credit policies of the Fed forced an increase in the money supply. Sure it eventually ran out, but it HAD to. It COULDN'T go on indefinitely. “Inflation is a decrease in the “general” purchasing power of the currency.”

…due to an increase in the supply of the fiat currency, facilitated by the Fed. This is called ‘inflation’.

“When we had the huge runup in the oil price in 2008, that was not inflationary since people had finite amounts of money.”

It WAS inflationary, because people were paying more for gas, big screen TVs and vacations with BORROWED MONEY encouraged by the Fed. The easy credit policies of the Fed forced an increase in the money supply.

Sure it eventually ran out, but it HAD to. It COULDN’T go on indefinitely.

]]> By: Warren http://dailyreckoning.com/inflation-is-our-future/#comment-29264 Warren Tue, 29 Sep 2009 20:33:28 +0000 http://dailyreckoning.com/?p=18642#comment-29264 Inflation is a decrease in the "general" purchasing power of the currency. When we had the huge runup in the oil price in 2008, that was not inflationary since people had finite amounts of money--they spent more on fuel for the car and had to cut back somewhere else (causing the price of those items to go down). Only an increase in the money supply can cause inflation by definition. Inflation is a decrease in the “general” purchasing power of the currency. When we had the huge runup in the oil price in 2008, that was not inflationary since people had finite amounts of money–they spent more on fuel for the car and had to cut back somewhere else (causing the price of those items to go down). Only an increase in the money supply can cause inflation by definition.

]]> By: Warren http://dailyreckoning.com/inflation-is-our-future/#comment-29263 Warren Tue, 29 Sep 2009 20:28:52 +0000 http://dailyreckoning.com/?p=18642#comment-29263 Increasing wage costs are one effect, not the cause of inflation. First, there is the increase in the supply of the fiat currency called inflation. As a result more dollars are chasing the same goods, services, and labor that exists, unless you get greater productivity from the labor. Prices then get bid up and you have the result of the inflation of the currency. Increasing wage costs are one effect, not the cause of inflation. First, there is the increase in the supply of the fiat currency called inflation. As a result more dollars are chasing the same goods, services, and labor that exists, unless you get greater productivity from the labor. Prices then get bid up and you have the result of the inflation of the currency.

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