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bacasper
Joined: 26 Mar 2007
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 Posted: Thu Feb 19, 2009 9:21 am Post subject: |
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| ontheway wrote: |
Deflation is good for the economy. Deflation consititues the clean up of the previous inflation. It is good to get prices back to the proper levels, to get money back to proper values and to get rid of inflation so that market particpants can make proper financial decisions.
Today's deflation is good for those who are debt free. It will reward them by allowing them to get busy investing and building the economy again. However, we need to let the deflation happen as quickly as possible. Let all prices crash as far as they will go - all the way back to 5 cent beers, 5 cent hamburgers, $20 per ounce gold and houses under $20,000, if possible. |
So why do I hear so many people now, including you, ontheway, advising to buy gold?
Is it because an ounce of gold costing 20 of tomorrow's "New Dollars" will be worth more than almost 1,000 of today's dollars? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Feb 19, 2009 11:19 am Post subject: |
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| bacasper wrote: |
| ontheway wrote: |
Deflation is good for the economy. Deflation consititues the clean up of the previous inflation. It is good to get prices back to the proper levels, to get money back to proper values and to get rid of inflation so that market particpants can make proper financial decisions.
Today's deflation is good for those who are debt free. It will reward them by allowing them to get busy investing and building the economy again. However, we need to let the deflation happen as quickly as possible. Let all prices crash as far as they will go - all the way back to 5 cent beers, 5 cent hamburgers, $20 per ounce gold and houses under $20,000, if possible. |
So why do I hear so many people now, including you, ontheway, advising to buy gold?
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There is a type of investor for whom gold is always a safe bet. Ontheway may be that type, and I have some common ground with him on that. However, the current rise in gold is strange (given the continuing strength of the US dollar). The Russian Central Bank is buying gold right now, as are large institutional investors and HNW individuals. I do not know how much of this new activity in gold is leverage, so I'm staying away. If I'm right and people/institutions are borrowing money to buy gold, then the price is unsustainable (like the housing bubble, then commodity bubble and the bond bubble etc etc). Gold pays no dividends and as such makes it much more difficult to cover borrowing costs. |
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