Tag Archive for: inflation

The Demand to Hoard, Report 13 May 2018

Since 1981, interest rates have been in a falling trend. Last week, we said this trend will continue, and the present blip up in rates is just a correction. We did not argue technical analysis, nor quantity of dollars, nor the general price level. Instead, we asked a question: …It seems obvious that if one […]

Milking the Savers, Report 8 Apr 2018

Do you want to lend your hard-earned money to the US government? In exchange for the high, high interest rate of 2.8%? It’s a most generous deal, even though the Federal Reserve is committed to dollar devaluation at the rate of 2% per annum. So you are getting 0.8% per year, assuming that the Fed […]

The Bitcoin Effect, Gold and Silver Report 24 Dec 2017

Merry Christmas to our American friends. Happy Christmas to the rest of the Anglosphere. Felicem natalem Christi to our Latin-speaking audience, and góðr jól to those who are reviving Old Norse as a great language! Let’s address two themes about the gold price trend that are increasingly in popularity the past few months—as the price […]

Bitcoin Hyper-Deflation, Gold and Silver Report 10 Dec 2017

A meme we have seen in the bitcoin community seems to be gaining traction. Bitcoin is deflationary. That is prices of things, measured in bitcoin, are falling. For example, in spring 2011, gasoline was Ƀ1.00. This week, that same gallon had fallen to Ƀ0.0001875. Gas has gone down by 99.98 percent! We don’t think that […]

The Hyperinflation That Was Not, Report 26 Nov 2017

Last week, we made a very controversial statement. We are happy to write the truth, and let the chips fall where they may (e.g. our thoughtful disagreement with Ted Butler about price manipulation). We can accept the flak that we get for this, so long as our position is understood. Some criticized our approach as […]

Inflation and Counterfeit Credit, Report 19 Nov 2017

Let’s take a look at an often-repeated idea that is popular in the gold and alternative investing communities. The government possesses a printing press. Therefore, it will never default. It will just inflate its way out of the debt. It will devalue the dollar. The government does not set the value of the dollar. And […]

What Is the Gold Fundamental? Report 25 June, 2017

Steve Saville wrote a post this week, in which he proposed a model that indicates the fundamentals of gold. According to him, these are: (1) the real interest rate, (2) the yield curve, (3) credit spreads, (4) the relative strength of the banking sector, (5) the US dollar’s exchange rate, (6) commodity prices, and (7) […]

Should the Gold Price Keep Up with Inflation?

The popular belief is that gold is a good hedge against inflation. Owning gold will protect you from rising prices. Is that true? Most people define inflation as rising prices. Economists will quibble and say technically it’s the increase in the quantity of money, however Milton Friedman expressed the popular belief well. He said, “Inflation […]

Yield Purchasing Power: $100M Today Matches $100K in 1979

I wrote a story about poor Clarence who retired in 1979, and even poorer Larry who retired last year. I created these characters to challenge the notion of calculating a real interest rate by subtracting inflation. The idea is that the decline of a currency can be measured by the rate of price increases. This […]

There’s Your Hyperinflation

Hyperinflation is commonly defined as rapidly rising prices which get out of control. For example, the Wikipedia entry begins, “In economics, hyperinflation occurs when a country experiences very high and usually accelerating rates of inflation, rapidly eroding the real value of the local currency…” Let’s restate this in terms of purchasing power. In hyperinflation, the […]