Thursday, Jun 26, 2008
Inflating away the debt crisis
MoneyWeek: Buy gold now, before they ban it
The good news for Ben Bernanke is he doesn’t have to do anything as obvious as cut interest rates. Rising inflation does the job for him.
Interest rates are already essentially negative – in other words, people are being penalised for holding onto their money. Inflation erodes the value of the US consuemrs' debt.
Inflation might be bad in the West, but it’s absolutely rampant in emerging markets. Vietnam has recently withdrawn licenses for further gold imports, after its citizens began to lose faith in the Vietnamese currency due to red hot inflation.
The US confiscated gold in 1933. Vietnam is interfering with the market now. How high would inflation have to get in this country before we saw something similar?
Posted by little professor @ 10:33 AM (385 views) Add Comment
4 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. flintster1994 said...
S2R1,
What's happening to gold today? It's flying!
2. notaneconomicsguru said...
I can't help chortle when I hear about a currency called "The Dong". Sounds more like the title of a very bad porno flick.
The really pernicious thing with this inflationary cycle to date - I'm talking UK now as I don't know what is happening elsewhere and teh article seems to imply without clarifying that something is different in the US - is that they have managed to brainwash the workforce in to not demanding big wage increases to compensate for rapidly rising prices. In the 70s and 80s not only did prices go up, but wages went up bigtime too. The amount of mortgage debt and intereste repatements remained the same numerically - but your wage rapidly became higher - so effectively the house was paid for by inflationary 10% per annum wage increases which in turn were paid for by sterling devaluation. At the moment the mortgage debt is getting harder and harder to service because the price increase of everything else is leaving less and less to pay it with and your wage increases by a tiny amount if at all.
Wages now simply have to go up and fast - no matter what the BoE wants I think that's just what's folks are going to demand more and more. I suspect that a large proprtion of mortgees are on fixed rates now, so I think the BoE's threats are likely to be relatively idle to the employee - at least for the next few years, but not so to the business owner who simply has to have credit periodically to service cash flow and is therefore very sensitive to higher rates. With employment very high, the employee very definitely has the upper hand right now and when they finally realise that the BoE will have to capitulate or drive the economy into recession. I think inflation and wage-price spirals are now inevitable for the foreseeable future.
Anyone know how to get a company pension scheme invested in gold?
3. sold 2 rent 1 said...
Things are happening now.
The Battle of the Bulge is over.
Gold up $27
Stocks plunging
Oil still hanging on, but for how long?
WW2 mapped VE Day is on Tuesday 1 July 2008
Expect carnage then
4. sold 2 rent 1 said...
notaneconomicsguru,
No pensions will ever de drawn after 2011. Deal with it.
Life is about to change
http://video.google.com/videoplay?docid=-4951448613711060908