GOLD 0.51% $1,391.7 gold futures

third view on deflation vs inflation argumen, page-2

  1. BH!
    2,521 Posts.
    Grovulent,

    And quite right it is, too. The "Ka" was Bernanke's attempted "soft landing" via monetary policy tools. Didn't work, because the problem is solvency, not liqudity. The Fed can deal with liquidity, but not solvency.

    Now that we're effectively (if not formally) zero bound, it's the government's turn, with fiscal stimulation - "Poom" coming right up. Only fiscal policy can deal with solvency, but it can only do so at the expense of the currency. So, in effect, you can save individuals' and corporations' solvency temporarily, but you do so at the long-term expense of the country's solvency (via currency debasement). But, then, the USA succumbed to that Faustian bargain a long time ago.


 
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