Jim,
We are clearly experiencing deflation, as bad debt and derivatives unwind. At the same time there appears to be massive inflation by the Fed, or else where did the three Trillion for Iraq come from?
The only “X factor” now is the money multiplier. Reserve requirements are now [effectively] zero. A good video (Flash required). But now eliminate the reserve component, [and its] Zimbabwe dollars ahoy.
Here is some scary stuff, directly from the Fed.
And here is an explanation similar to what I had wanted to write about the “Its the Economy Stupid” with Clinton and Greenspan – David in Israel
Dear Jim:
Your piece “Are Simultaneous Inflation and Deflation Possible?” was a great posting on the economic/financial storm brewing. As the “perfect storm” is just getting rolling, this is a good time for those who have not read much Austrian economics to get an understanding of what is likely to hit and why. I feel sorry for folks who have not been given the opportunity to get up to speed on Austrian economics – they are flying blind into the storm (and will get hurt, badly).
2. A super one page distillation of the current problems.
3. After being a paid subscriber to to Gary North for many years, reading him is mandatory, in my opinion. He was very wrong on Y2K, but since then has called the top of the stock market mania (to the month!), begged subscribers to buy gold at $300, and gave years of advance warning of the housing bubble.
Get a fee subscription his Reality Check newsletter. I hope that will convince you to sign on for the full web site subscription. OBTW, I have no $ interest here – just a paid subscriber with a meager hope that if a critical mass of folks get exposed to more moral and economic sense it might help to turn this country around after the crash.
Gary North is a long term bull on gold and also wise enough to look at contrary information. For example, “Helicopter Ben” Bernanke has actually kept a lid on M1 monetary inflation, (even as he lowers interest rates). So just possibly, we’ll see a tight money recession and lower gold prices in the short run, before the (almost) inevitable long term inflation.3. For a real comprehensive education, see the Mises Institute. Here is a sample reading list. Regards, – OSOM