John wrote:Everything is in a bubble. Stocks have had historically high valuations since 1995. Real estate has been in a bubble internationally since 1995, and has only partially recovered. Gold's long-trend trend value is about $500/oz, but now it's in a bubble at three times its trend value.
Guest wrote:There are very few uses for which gold is necessary.
To top it all supply (through mining/production) could easily be increased.
John wrote:So you can't have a generational financial crisis that leads to inflation.
heavyrail wrote:MV=PQ, Economics 101. They don't even bother to print the money anymore, its just accounting entries on the books of the Federal Reserve and the "recipient." Once the banks and others start releasing the cash they are hoarding, the "V" or velocity varible in the equation will kick-in and guess what?..."Q" or quantity is not going to increase proportionally,...as fearless leader said "...prices will necessarily skyrocket."
I know this is a very simplistic view of the world, but I would like some one to show me an equation that explains the deflationary scenario,...where and how will the wealth flow? Will anything retain value or, will it all be relative? If everything is in a bubble and its all relative, why is gold in a bubble? If not, how will the differential adjustments in wealth take place?
What a philosophically theoretical mess. This is why someone who is as completely screwed up as Paul Krugman is can win the Nobel Prize.
vincecate wrote:> What about the US Revolutionary war crisis hyperinflation? What
> about the US Civil War hyperinflation? What about the inflation
> after getting off the gold standard in Great Depression? And if
> they had not outlawed gold ownership the paper money would have
> failed, making hyperinflation then too.
vincecate wrote:> You note that if people spend more on food and energy they spend
> less on other things as if this balances out the price
> level. However, if people spend a larger and larger fraction of
> their income on food and energy then a fair CPI would weight these
> more and more and other stuff less and less. So it does not really
> balance out. This effect will get more extreme as higher fractions
> of income are needed just for food and energy. In the extreme if
> people spend all their money on food and energy then the prices of
> nothing else should really be in the CPI. Then the food&energy
> inflation rate would be the CPI inflation rate.
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