Securitization has changed debt into a form of money - it now functions as such.
at the peak of the 2008 bubble securitization fx'd almost like money but this has not been the case since the financial crisis. this is where inflationists miss the deflationary argument. they think these bad debts still represent liquid money and not debt. most of these securities have become illiquid b/c everyone knows they represent bad debt and not money; which is why the Fed had to buy most of these bad securities from primary dealers. but this monetization actually contributes to a deflationary spiral as they drive interest rates down to ZIRP thus disintermediating the interest rate function. John Hussman writes very well on this subject. all the Fed has done is replaced interest bearing securities with 0% cash and the banks make even less than they would have. they have no good investment options to put this cash into except maybe commodities since 2009. even this has now come to an end. NIM or net interest rate margins get crushed hurting the banks which borrow short and try to lend long. the Fed interventions further creates a deflationary spiral by encouraging speculators to pile into the debt mkts trying to front run the Feds actions that drive up the price of these bonds. they don't care about the yields. this steals productive capital from the private real economy and the lower interest rates perversely drive up the existing value of the fixed rate debt overhang of many corporations which they have to reflect on their balance sheets. these same speculators would rather own things like UST's which are guaranteed by the US govt and are highly liquid moreso than gold which is why you're seeing the TLT go up while gold struggles. these same speculators and banks won't lend this same money to consumers like you and me b/c they know we're toast; we have no good economic options available to us in aggregate going forward.
There is a difference between debt that is simply extended credit which can be withdrawn, and debt that is effectively monetized by market actions. The Fed's printing is really just a formality, so it doesn't matter whether it continues or not (although pressure will persist for it to proceed).
no idea what you're talking about here.
gold bulls are making a big deal about Operation Twist and how the extra liquidity is going to drive gold much much higher.
Cause and effect are reversed here. Again, the functional monetization has already taken place. Gold is not dependent upon the formality of the Fed introducing monetization to maintain liquidity; everything is already in place for gold's upward revaluation. The base monetary inflation is reactive and simply locks that fate in.
no its not if i understand you correctly here. you're claiming existing debt is equal to money. this is wrong. during the good times debt instruments were so liquid they were almost considered like cash; no more. the debt has become bad debt which is now defaulting and decreasing the virtual USD supply and thus the total amount of USD's in the system thus driving up its value.
The question has been posed before, but wasn't answered: if gov't has the power to permanently maintain a low price in gold, why did it rise at all? In fact, why do these crises even occur?
perhaps the Fed regarded this as a small price to pay to reinflate the markets. doesn't mean they are linear thinkers as well. at this point they see the danger in letting it ramp to $2000 or higher.
these crises are occurring b/c of constant Fed intervention causing boom bust cycles by suspending the business cycle.
Other than that, I agree with your and netrin's assessment. Also, gold will be sold - but with dollars unreliable as a store of wealth (again), that (massive amount of) capital will flow into gold.
deflation will prevent this from happening. we're seeing the start of this right now.
The
gold price analysis I'm describing has already been
explained in detail; cypherdoc, maybe you could post your most clearly explained analysis to make assessing the accuracy of differing methods easier to follow.
my OP and this entire thread has been clear where i stand. deflation, the end of the gold bull and a multi year rise in the USD.