Interesting:
Date: Thu Oct 02 2003 11:49
trotsky (frustrated @ 'Willie CB) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
this is the one point on which i continue to disagree vehemently with most Austrian economists, and those who are more or less re-iterating their views and concepts ( verbose Willie being one of those ) . they can't conceive of deflation in a fiat system it seems. and yet, that is precisely where we are headed. the next inflationary K-summer is at least 30 years away, i.e. 'stagflation' shouldn't reasonably be expected to take hold before the 2030's.
of course the deflationary winter ( which will likely last until 2010-14 ) won't be an exact replica of the 1930's, the deflationary effects should be comparably 'mild' ( i.e., -2% CPI deflation annualized at the worst, very similar to Japan's experience ) . but there sure won't be any inflation - which i note remains extraordinarily subdued even in this current cyclical 'reflation' phase, in spite of soaring energy input costs and rising commodity prices in general. how anyone can expect inflation considering the vast industrial overcapacities all over the world is truly beyond me. there simply is no pricing power, neither corporations nor labor have any in fact. as Japan has demonstrated for anyone who cared to look, it doesn't matter if the central bank prints money like there's no tomorrow in a deflationary era -it still can't stop the underlying forces, it can merely delay or temporarily soften their impact. Japan btw. demonstrates how enormous even the effects of 'mild' deflation can be over time. imagine the prices for fish, beer, rents, houses, etc. falling between 50-90% over a decade - that is what has happened there.
the deflationary era marches on...you probably won't believe the extent and pervasiveness of deflationary psychology when it reaches its peak moments. we ain't seen nothing yet.
Date: Thu Oct 02 2003 11:34
trotsky (stock market & gold stocks) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
both the broad market and the gold sector continue to act well imo...i see no compelling reason yet to sell/short either here.
w.r.t. yesterday's rally in the broader market, it seems to be meeting with continued disbelief, as today's equity only put/call ratios are moderately high, and actually very high considering the market trades slightly to the upside. gold stocks may still be in a corrective phase, but it appears as if there's great reluctance on the part of current holders to sell. one must conclude that the recent shake-out represented a combo of profit taking ( day 1 ) and losing the 'weak hands' ( day 2 ) . note that the gold stocks are bravely withstanding an onslaught of broker downgrades and newsletter writer sell recommendations over the past week.
AI
