Goldtent TA Paradise

Inflation To Drive Gold Bull ?

1. pedro_deleon says:

   October 4, 2018 - 2:33 pm at 2:33 pm

   Inflation is always and everywhere a MONETARY phenomena. (Friedman)
   It is not how that manifests as prices, and the media have used that term as a price metric to keep attention away from central banks that are at the root of the problem — official sector counterfeiting of fiat.

   Rates going up ARE NOT (anytime soon) a reflection of growing inflation (credit creation). Quite the contrary.

   Liquidity Crisis Looms As Global Bond Curve Nears “The Rubicon” Level
   https://t.co/cAkXMihGFv

   • Northstar says:

     October 4, 2018 - 3:05 pm at 3:05 pm

     If your mortgage rate rises from 2% to 6% it feels like inflation. If your car loan rises by a few percent it feels like inflation. If prices rise at the fuel pumps and superstore checkout it feels like inflation.

     • pedro_deleon says:

       October 4, 2018 - 5:16 pm at 5:16 pm

       Inflation is not the rise in prices if you care about causation and analytics.
       Read Steve Saville (who also covers miners) for Monetary 101.

       Anyone who refers to inflation as a rise in prices — and I don’t care what the general public believes — hasn’t left grade school in terms of having achieved any kind of understanding of our economic reality and the proper diagnosis of the world’s problems. Its among the most basic of issues — confusing cause and effect.

       And that’s a HUGE DEAL given the problems we have.

       • Northstar says:

         October 5, 2018 - 3:27 am at 3:27 am

         I think you mis-understood me Pedro. I said it ‘feels like inflation’. All I’m referring to is the ordinary stuff ghat we all have to buy, rising in cost at an increasing rate. Cause and effect are something I understand well, I have a professional degree in it (the natural variety as opposed to financial). The consumer and retail price index has been very muted recently, with rapid price growth focussed in things like housing and the stock market. With rates rising against the background of massive government debt, at this stage in the economic cycle, that is about to change dramatically (in my view). I’m no fan of Peter Schiff, but I agree with this basic point – too much complacency. Here in the UK our Prime Minister declared yesterday that the age of austerity is over, implying everything is fine again, and that the problems of the 2008 financial crisis are all fixed now. Erm, the debt is much bigger now, and we are paying more and more of our taxes to service that debt. The problem isn’t fixed – it’s a lot worse.

         • pedro_deleon says:

           October 5, 2018 - 8:45 am at 8:45 am

           “I think you mis-understood me Pedro. I said it ‘feels like inflation’.”

           I don’t think I did. Because you inferred from your “feelings” that it would “drive the gold bull” per your post title.

           So we’re clearly back to centering on the key point of causation.
           So if your “feelings” of inflation are inciting your appetite for PMs, then we’re back to my point of broken analytics. PMs are a monetary canary, and they’ve been following the script ever since 2011 when they got an early read on what was ahead for the monetary/debt/credit cycle.

         • Curly Top says:

           October 5, 2018 - 9:19 am at 9:19 am

           ” PMs are a monetary canary, and they’ve been following the script ever since 2011 when they got an early read on what was ahead for the monetary/debt/credit cycle.”

           Even for those who believe that the US dollar and economy is headed for collapse because the piper hasn’t yet been paid for the 2008 debt crisis, and that Pm’s and commodities are ready for a cyclical upswing, it’s very helpful to be presented with an alternative theory which at the very least explains why PM prices have done what they have since 2011. So thanks to you and Plunger and Fully for presenting it here. I know now more than I did a few weeks ago, however what I’ve come to learn is that I know less than I thought. I certainly will pay more attention to what gold is telling me than focus on what other things can tell me about gold.

   • Curly Top says:

     October 4, 2018 - 3:39 pm at 3:39 pm

     Will we see inflation(growth in MS), higher interest rates, and rising prices concurrently? Probably. I think it will be called the dollar crisis.

     • pedro_deleon says:

       October 4, 2018 - 5:21 pm at 5:21 pm

       “the dollar crisis”

       Its underway. As in a rising dollar. So we will see rising rates (a respite is dead ahead though), and falling commodity prices (ie, more and for longer). And probably the implosion of asset bubbles everywhere. Growth in money supply is EQUIVALENT to (by definition) the growth in borrowing. If you expect MS to grow, you expect banks to lend more. Not a lot of borrowing capacity left, ESPECIALLY at rising rates. And not with inverting yield curves either. And those who plan to ROLL OVER their loans are going to have a cash flow problem. Plunger is onto this …. maybe you ought to subscribe to his work.

   • red label says:

     October 5, 2018 - 8:43 pm at 8:43 pm

     Excuse my ignorance Pedro but what is the increase in commodity prices via demand if it is not inflation?

     It was my understanding there is more than one form of inflation. The other form being the dilution of the value of FIAT money by an increase in money supply by the CB’s?

     Thanks

     • pedro_deleon says:

       October 6, 2018 - 1:42 pm at 1:42 pm

       “Excuse my ignorance Pedro but what is the increase in commodity prices via demand if it is not inflation?”

       That is called … price discovery. And as I noted above, its caused by rising INCOME or growth in population … ie, demand. (Or falling supply, which can have the same effect … ie, tampons in Venezuela.) That demand comes from rising rising account balances, which comes from either paychecks or loans. Or earnings if you’re a corp.

       There is ONLY one form of inflation (and that’s a banking VERB not MSM Headline Noun) … and that’s due to changes in the money supply. And if you follow Stanford’s Ron McKinnon .. it GLOBAL money supply that matters, not narrowly focused M1, M2 etc in just the US. If you see rising prices, you can call it inflation because others do, but realize its THE EFFECT of what central banks and private banks are doing TO YOU and TO US. And if you think this is quibbling, just pull up a chart of what the dollar bought in 1812, 1912 (pre Fed) and now. More or less, eggs cost the same in 1912 as in 1812.

   • Music Man says:

     October 6, 2018 - 6:10 pm at 6:10 pm

     Inflation, an increase in the supply of “money”, eventually causes price inflation. The public doesn’t mind the price inflation since their houses, collectibles,etc., as determined by the Antiques Roadshow are “increasing in value” so they are content to think of their fiat as money, whilst, in reality, the only real money, according to J. Pierpont Morgan, is gold, everything other than gold is a derivative of gold and is not money. The price of gold is depressed in terms of the “money” that has been printed against it. However, when our grandchildren venture forth to buy a house but can’t afford it and those who want to sell one and find no one who will be able to pay the price will quickly find out what money actually is. Until then, people will gladly pay more for their toilet paper,canned beans, Big Macs and all of today’s bling and other accoutrements of wealth . I am glad I won’t be around when it hits the fan.

2. Marcusjames says:

   October 4, 2018 - 2:45 pm at 2:45 pm

   Time for DRV.

3. Tbone says:

   October 4, 2018 - 7:47 pm at 7:47 pm

   Peter Schiff, talk about complacency. Anyone holding their money with him are going to get crushed, as if the last 5 years wasn’t enough. Even a stopped clock is right twice a day whereas schiff is wrong… always wrong.

4. Tbone says:

   October 4, 2018 - 7:50 pm at 7:50 pm

   Here’s a schiff special for you: http://schrts.co/WZXPHy
   He was very long nat gas before that was crushed too.

5. Jim says:

   October 5, 2018 - 8:59 am at 8:59 am

   Martin Armstrong apparently disagrees with Pedro and Friedman’s thesis regarding inflation:

   https://www.armstrongeconomics.com/armstrongeconomics101/economics/the-unsound-theory-of-inflation/

   • pedro_deleon says:

     October 5, 2018 - 7:01 pm at 7:01 pm

     And I call BS on M.A. He attributes inflation or hyperinflation to the loss of confidence. Fine. But what exactly undermines that confidence? He fails to ask THAT question. He points to VZ as an example. LOL. The spending got out of hand, then the printing went into overdrive, which drove off the confidence. In pre Civil War America, it was the proliferation of private bank notes (and bank runs).

     And yes, the mechanisms change with technology. Before Gutenberg, it was coin clipping.
     After Gutenberg, it was overlending by goldsmiths of gold certificates beyond what they could redeem. Who knows where the limits are with digital money? Where eurodollars can be created outside Fed jurisdictions. Money isn’t even money now, its IOUs the Fed issues (currencies), or digital proxies for it. Thing is, money and credit SPEND THE SAME. There are those who basically say its govt deficit spending that’s inflationary … govt’s spend off socialized credit. (Banks lending to politicians … well that’s what 1913 was all about … so they can wage wars. FU Wilson. (not the volleyball))

6. Northstar says:

   October 5, 2018 - 9:17 am at 9:17 am

   Pedro – the title of my post contained a question mark. That was very deliberate. It turns it from a statement of fact into a question. In other words it’s debatable. The only person you’re arguing with here is yourself https://goldtadise.com/?p=420488
   My posts are either intended to give information or aid healthy debate.

   • Fullgoldcrown says:

     October 5, 2018 - 1:29 pm at 1:29 pm

     Thank you Pedro for stirring this “debate”. Very “Interesting” (pun)

     Perhaps you would like to share your credentials as you have with me privately.

     I believe many would find them “interesting”

     You have insight into the system that very few have.

     • pedro_deleon says:

       October 5, 2018 - 2:51 pm at 2:51 pm

       Econ PhD program at the same university where loads of our Fed heads went, staff and higher ups.

       Pat Parkinson (PPT) was at Treasury; Eric R. (Pres at Fed Boston) was a drinking buddy. Oliner, Small, Paul Wood … all classmates. Half a dozen others whose names I can’t pull up ATM. Both Mark and Paul Gertler were around.

       They all studied macro, mostly. And I have the temerity to believe they all studied the wrong guys, like Keynes and Krugman. Instead of Fisher, Von Mises, Hayek, Rothbard, etc. Credit Cycle analysis instead of IS/LM. Sigh. Simple reason — Keynes encouraged deficit spending by govts. Ie, Socialism. The others were libertarians. So the centralization of power crowd has the reins. And you wonder how we got here, huh?

       • Fullgoldcrown says:

         October 5, 2018 - 6:21 pm at 6:21 pm

         🙂 ….pedro deleon you are our resident phd Austrian School Economist…

       • Tbone says:

         October 7, 2018 - 4:34 pm at 4:34 pm

         Pedro, I didn’t need to know you had a phd to know you are a smart guy. haha. 😉

7. Northstar says:

   October 5, 2018 - 3:35 pm at 3:35 pm

   Crony capitalism, greed, corruption, and a system that serves the few at the expense of the many – just a few of the reasons, but what fascinates me is our inability through any political system to create a fairer society. Divide and conquer seems to apply just as much now as hundreds of years ago. It’s very sad really.

   • pedro_deleon says:

     October 5, 2018 - 4:10 pm at 4:10 pm

     Switzerland’s Six Pointers Towards Hope For Western Civilization

     https://t.co/1oTpww8Y6p

     • Northstar says:

       October 5, 2018 - 5:09 pm at 5:09 pm

       I’m not an economist (my expertise is in naural systems and cycles), but that article is saying something I’ve believed for a long time. The bigger and more pervasive government gets, the worse it is for us all. Government should stick to governing and get the f*#k out of everything else. Hundreds of billions of OUR money is frittered away paying inflated wages to thousands of government employees who actually produce and achieve diddly squat. And don’t get me started on military spending and perpetual war – the biggest scam of all. They must think we’re stupid, creating an enemy for us to fear, year after year, decade after decade.