Sunday, 7 December 2008

More light reading

Deflation virus is moving the policy test beyond the 1930s extremes

Another fatuous article by the same journalist as the previous posting. The interesting part - as always - are the comments. So good in fact that i thought i would cut n paste a few:

What planet is this Ambrose guy on? I keep having this nightmare that I have been transported to a parallel universe where everybody in power has gone mad and is trying to destroy the world. I am running around trying to find someone with any sense who isnt obsessed with lowering interest rates. And then I wake up and - wait a minute - oh my God it wasnt a nightmare. This is really happening!

This thought has crossed my mind too - why are the mainstream media running all these scare stories?

So this is what all sensible people should do: (1) wait for the value of a �1,000,000 house to fall to,say, �600,000 borrow �600,000 to buy it and then 2) wait for the arrival of hyperinflation to wipe out the real value of the loan. Brilliant!

Nice idea - just be careful you don't loose your job or you will end up with nothing.

Deflation is a symptom not a cause surely. The causes are many of course. I would say a main cause to be the fractional reserve system with money creation through debt. Last and not least the people have been blinded and fleeced equity cannot flourish.

There we are again - the fractional reserve system and money as debt - fiat money has no 'real' value.

Note also that for the first time in history in December 2008 gold prices went into backwardation. Anyone who has actual gold won't sell at any price denominated in worthless paper. I don't know what will happen, but the greatest probability is that whatever happens isn't going to be pretty. Gordon Mugabrown should remember we savers have votes as well.

For more info on gold backwardation read this article. Maybe i should start 'gold/silver bullion run watch' cos by the time the banks start failing there wont be any 'real' money left to buy with your cash.

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