THE NOTION THAT WE ARE IN A "GREAT DEFLATION" IS BEING USED TO JUSTIFY THE BIZARRE MONETARY VOODOO AT THE FED...
BUT THERE IS ONE VERY GOOD ARGUMENT FOR WHY THE DEFLATION SCENARIO IS BULLSHIT...
FIRST AND FOREMOST....GAS AND OIL PRICES THIS SUMMER!!!
IF THAT WAS NOT INFLATION WHAT WAS...? AND LOOK A FOOD PRICES AT THE SUPERMARKET...!
THE SEPTEMBER/OCTOBER CHART OF THE DECLINE IN OIL PRICES WAS UNREAL... FUTURE HISTORIANS WILL SEE THAT CHART AS AN ANOMALY CAUSED BY ONE OF THE WORST "LIQUIDIATION PANICS" SINCE THE SOUTH SEAS BUBBLE!!
OF COURSE IN THE OLD DAZE WE HAD SOUND MONEY AND THE GOLD STANDARD...SO THE RUSH OUT OF PAPER WOULD HAVE BEEN "SETTLED" IN GOLD...NOT US PAPER MONEY.
BUT WHAT HAS THE MASSIVE FED "LIQUIDITY PUMP" REALLY ACCOMPLISHED...SINCE THE SEPTEMBER COLLAPSE...?
OK...IT PROBABLY MITIGATED THE SHORTAGE OF DOLLARS...CONSIDERABLY!
BUT THE QUESTION IS WHAT HAPPENS AFTER THE BOTTOM IS REACHED?
AND MONEY BECOMES DISSATISFIED WITH ZERO PERCENT RATES CURRENTLY PAID ON US BONDS...?
I THINK THE GOLD MARKET TODAY IS SCREAMING THE ANSWER AT US RIGHT NOW....
FORTUNATELY THE OIL MARKET WAS "WELL BEHAVED" TODAY...PROBABLY MANAGED BY THE FED SHILLS...
SO, HERE'S THE PROBLEM:
JUST AS OIL PLUNGED...SO TOO OIL COULD REBOUND VERY VERY FAST...
AND THERE IS PLENTY OF NEW FED MONEY ON THE SIDELINES TO TURBOCHARGE THAT REBOUND...
