Quote from: chodpaba on October 11, 2013, 04:30:22 PM

Quote from: adamstgBit on October 11, 2013, 03:55:26 PM

Quote from: chodpaba on October 11, 2013, 03:48:54 PM

Quote from: adamstgBit on October 11, 2013, 03:25:39 PM

Quote from: NewLiberty on October 11, 2013, 03:11:57 PM

Quote from: Blitz on March 13, 2012, 08:57:05 PM

Quote from: evoorhees on March 13, 2012, 08:48:56 PM

Gold is not going up. It's the dollar that's losing value.

If anything in the marketplace should be the yardstick of value, it is gold, not USD. So you should price USD in terms of gold and you will see a very different picture. Don't let the "upward run" of gold deceive you. Gold isn't changing, the dollars are.

Are you kidding me? The gains in Gold the last 10 yrs or so reflect much more than just the inflation, its a speculative bubble.

Maybe there is some speculation, but the price collapse is not a bubble popping so much as it is an engineered event.

I have to agree with Blitz on this one.

their no doubt that gold has been victim of speculation.
If the dollar has lost so much value, why is it virtually all other commodities have not skyrocketed like gold?
sure everything has gotten more expensive in the past ten years, but nothing like gold.
gold price shooting up should be viewed as people predicting/speculating the dollar will fall in value.
gold was hyped to no end.... look around you see buy gold buy gold everywhere.
gold has priced in the next 10 years worth of inflation.

It appears that gold is pricing in anticipated deflation. Which would be inevitable in the event of a reversal in the trend of U.S. borrowing.

the FED will keep up QE to keep interest rates low, forever, this has nothing to do with government spending

deflation is not an option.

gold ~~corrected~~ is correcting a bubble

just wait till gold starts to price in BITCOIN! Grin

Remember, the Fed is not just the Fed.

Through liquidity swaps their tendrils extend throughout the global banking systems. In the event the U.S. debt loads become insufficient to ensure the growth of the balance sheets the CBs will have to find another sink for that debt load if they want to stay in control. Most likely this will be for development projects in Sub-Saharan Africa.

And it will probably take some wars to get those deals done.

I agree with chodpaba and would like to add:

The Fed thinks that they have control, but they are just looking at some statistics without reasoning. This is how deflation could pan out: The market prices the treasury bonds partly on inflation expectation and partly on risk. When the market perceives a higher risk, the interest rate on bonds will go up, and so will the general interest rate in the economy. The response to that will be reduced demand for credit. Since credit is part of the money supply (the main part), this is effectively a reduction of the money supply (money deflation) and will utltimately lead to price deflation of goods and services.

Loss of credit was the essence of the 2008 financial crisis, which was met with grand credit creation. Next time, this may not work. Why? Because currently the Fed buys most of the bonds, and the may have to buy them all next time.

At that point, they will start the physical dollar presses. But the pace of physical dollar printing can not match the current credit creation. New, larger bills will have to be created and produced. In the mean time we will have deflation. I don't doubt that they will manage to print enough in the end.

Of course, we have politician and central banker individuals in the mix, ant they might decide to to a u-turn, define a new backed currency or whatever. But deflation is certainly a possibility.