Currency deflation, gold, and iTulip.com

[jtabeb]

Re: Currency deflation, gold, and iTulip.com

Now that gold is again closing in on US $1000, and getting the attention of the financial media [who love round numbers], the popular question of the day is "Will Gold Rally Last".

How predictable...:p

If you read a history of hyper-inflation in france, you learn that assets eventually go-up, unemployment always goes up, food goes up, wages never go up (in real terms).

I don't see a damn bit of difference in concept. The details may differ (gov bonds vs Confiscated church property), but in terms of the mechanism, Identical.

[goadam1]

Re: Currency deflation, gold, and iTulip.com

Ej's and your perspective is the tent pole of itulip. But the regular crowd here makes it like a pleasant cocktail party of people who share interest in economics, politics and such. I hope the party continues.

But it's not forecasting I would expect. It would be analysis that at least seems correct. It's honest course correction to the events, not bending reality to fit a thesis that I hope to find here.

By now it should be obvious that this poll is tongue in cheek.

Of course iTulip.com readers noticed that we did not experience a crushing deflation in 2009 as deflation forecasters such as Mike Shedlock and Rick Ackerman forecast.

If we made that kind of mistake we'd put long hours into trying to figure out where we went wrong with our analysis to explain it to our readers, to try to learn from it as we have from the errors we have made over the years, such as in 2001 when we underestimated the Fed's willingness and ability to inflate a housing bubble. Took us until August 2002 to acknowledge that in fact the Fed was perusing a mad policy of national housing price inflation.

Nor did not offer a bizarre, self-contradictory analysis as some did of general price deflation, falling commodity prices, and rising gold prices.

Our forecast was for asset price deflation and commodity price inflation resulting from government efforts to re-inflate asset prices.

The vast majority of you said that it we were as wrong as the deflationists have been, you'd leave iTulip.com. We think that's fair.

Now I'll close the poll. Thanks for your feedback.

[Jay]

Re: Currency deflation, gold, and iTulip.com

The only way gold goes to 200$ is if we invent the next printing press or internet and the world economy grows gangbusters: teleportation?

If we get a deflation spiral, that means unemployment is likely well over 20% and there is civil unrest to such an extent that the premium on gold as a hedge for instability is well above 200$. There would be fires in the streets.

The spiral is not happening, inflation is too politically tasty. Aren't we all enjoying our transient cash-for-clunkers bump? Ummm green shoots good. The hangover sucks though, just ask France in the 1780's. Inefficient use of capital is a bitch when the economy is in freefall.

[Finster]

Re: Currency deflation, gold, and iTulip.com

Would you still be here if iTulip.com was wrong and, after the credit collapse of 2008, monetary and general price deflation set in and gold fell to $200 as the deflation forecasters predicted?

Trick question!

Gold will never, ever trade with a 2-handle again.

Not unless it has three digits after it...