by Lawrence Williams, MineWeb.com
Jay Taylor feels we are in the gold bull market of a lifetime – but found himself gagged by BNN in a recent videoed interview in not being allowed to make any mention of GATA..
Jay Taylor, well-respected publisher of the miningstocks.com website and associated newsletter, makes some excellent points on the likely performance of what he calls the real price of gold (as opposed to the nominal price) and on gold stocks – on both of which he is extremely bullish. In part his premise relates to gold’s history as a store of wealth which helps those who invest in it maintain their wealth in times of inflation or deflation, not necessarily to increase it hugely, except perhaps relative to those who put their faith in other investment options or just hold their wealth in cash.
What Taylor points out is that it is the maintenance of, or appreciation in, gold’s purchasing power when all about it is descending into the abyss which is most important – particularly in these times of global financial turmoil from which the exit may yet be many years ahead – which is the key, rather than the ultimate price of gold itself.
Read More @ MineWeb.com
As recently as 1985, workers at every income level could retire and
expect to get more in benefits than they paid in Social Security taxes,
though they didn’t do quite as well as their parents and
grandparents. Not anymore. A married couple retiring last year after
both spouses earned average lifetime wages paid about $598,000 in Social
Security taxes during their careers. They can expect to collect about
$556,000 in benefits, if the man lives to 82 and the woman lives to 85,
according to a 2011 study by the Urban Institute, a Washington think
tank. … The shift among middle-income workers is happening just as
millions of baby boomers are reaching retirement, leaving relatively
fewer workers behind to pay into the system. It’s coming at a critical
time for Social Security, the federal government’s largest program. – Reuters
Dominant Social Theme: If we work hard, government will take care of us.
Free-Market Analysis: Social Security is gradually fading away for most Baby Boomers. What the ’60s generation in both Europe and America doesn’t understand is that government isn’t here to help them. Modern regulatory democracy is supposed to give way to global governance. That’s obviously the plan.
Social Security started out well enough, of course. The first person to receive a check was Ida May Fuller who paid Social Security taxes for three years that came to a total of $24.75. Her very first monthly check in 1940 was for $22.54. And since she lived to be 100, she collected $22,888.92.
Read More @ TheDailyBell.com
Jay Taylor feels we are in the gold bull market of a lifetime – but found himself gagged by BNN in a recent videoed interview in not being allowed to make any mention of GATA..
Jay Taylor, well-respected publisher of the miningstocks.com website and associated newsletter, makes some excellent points on the likely performance of what he calls the real price of gold (as opposed to the nominal price) and on gold stocks – on both of which he is extremely bullish. In part his premise relates to gold’s history as a store of wealth which helps those who invest in it maintain their wealth in times of inflation or deflation, not necessarily to increase it hugely, except perhaps relative to those who put their faith in other investment options or just hold their wealth in cash.
What Taylor points out is that it is the maintenance of, or appreciation in, gold’s purchasing power when all about it is descending into the abyss which is most important – particularly in these times of global financial turmoil from which the exit may yet be many years ahead – which is the key, rather than the ultimate price of gold itself.
Read More @ MineWeb.com
from KingWorldNews:
Today John Embry told King World News, “I have been a long time proponent of the idea that we may very well be at peak gold production in the world.” He warned, “We may have seen the peak.” Embry also stated that he believes we are headed towards a, “… classic supply/demand squeeze.” This will send gold, “… to multiples of the current price.”
Embry, who is Chief Investment Strategist of the $10 billion strong Sprott Asset Management, discussed both gold and silver, but first, here is what Embry had to say about the ongoing crisis in Europe: “Over the weekend they accepted more collateral at the Greek Central Bank so they could make their payment to the ECB. So I think they will do what they have to, to keep this thing moving forward.”
“But the thing that’s the big problem, and question is, are the funders, Germany, Finland, the Netherlands, etc., do they have the balance sheets and the economic strength to bailout these peripherals in the South that are in horrific condition?
John Embry continues @ KingWorldNews.com
Today John Embry told King World News, “I have been a long time proponent of the idea that we may very well be at peak gold production in the world.” He warned, “We may have seen the peak.” Embry also stated that he believes we are headed towards a, “… classic supply/demand squeeze.” This will send gold, “… to multiples of the current price.”
Embry, who is Chief Investment Strategist of the $10 billion strong Sprott Asset Management, discussed both gold and silver, but first, here is what Embry had to say about the ongoing crisis in Europe: “Over the weekend they accepted more collateral at the Greek Central Bank so they could make their payment to the ECB. So I think they will do what they have to, to keep this thing moving forward.”
“But the thing that’s the big problem, and question is, are the funders, Germany, Finland, the Netherlands, etc., do they have the balance sheets and the economic strength to bailout these peripherals in the South that are in horrific condition?
John Embry continues @ KingWorldNews.com
from, The Daily Bell:
As recently as 1985, workers at every income level could retire and
expect to get more in benefits than they paid in Social Security taxes,
though they didn’t do quite as well as their parents and
grandparents. Not anymore. A married couple retiring last year after
both spouses earned average lifetime wages paid about $598,000 in Social
Security taxes during their careers. They can expect to collect about
$556,000 in benefits, if the man lives to 82 and the woman lives to 85,
according to a 2011 study by the Urban Institute, a Washington think
tank. … The shift among middle-income workers is happening just as
millions of baby boomers are reaching retirement, leaving relatively
fewer workers behind to pay into the system. It’s coming at a critical
time for Social Security, the federal government’s largest program. – ReutersDominant Social Theme: If we work hard, government will take care of us.
Free-Market Analysis: Social Security is gradually fading away for most Baby Boomers. What the ’60s generation in both Europe and America doesn’t understand is that government isn’t here to help them. Modern regulatory democracy is supposed to give way to global governance. That’s obviously the plan.
Social Security started out well enough, of course. The first person to receive a check was Ida May Fuller who paid Social Security taxes for three years that came to a total of $24.75. Her very first monthly check in 1940 was for $22.54. And since she lived to be 100, she collected $22,888.92.
Read More @ TheDailyBell.com
by Susanne Posel, Occupy Corporatism:
While a compromised version of the Cybersecurity Act of 2012 was introduced to the Senate in July, the false claims of “. . . foreign governments, criminal syndicates and lone individuals are probing our financial, energy and public safety systems every day. It would be the height of irresponsibility to leave a digital backdoor wide open to our cyber adversaries” was perpetuated by President Obama.
Shawn Henry, a veteran of the cyber security division in the FBI, stated in a CBS interview that although he has no proof, Russia and China are behind infiltration and damage to computers in America, while also claiming that he feels it is “very, very likely” that a massive cyber-attack is due to occur.
According to Jay Carney, White House Press Secretary, Obama may just write an executive order to ensure his cybersecurity agenda is implemented. “In the wake of Congressional inaction and Republican stall tactics, unfortunately, we will continue to be hamstrung by outdated and inadequate statutory authorities that the legislation would have fixed. Moving forward, the President is determined to do absolutely everything we can to better protects our nation against today’s cyber threats and we will do that.”
Read More @ OccupyCorporatism.com
HARP,
The Home Affordable Refinance Program, is a streamline refinance
program developed to help borrowers who have continued to make their
mortgage payments, but have be unable to refinance due to a decline in
their home value. While it is encouraging that more and more underwater homeowners are gaining the benefits of today’s low interest rates, tremendous profits are being made at their expense. Lack of competition is the primary catalyst, but the underlying economics of the large “too big to fail” banks will do nothing but stoke additional anger in the general public.
Expect this trend to continue until the dynamics of the program is
changed once again, possibly in HARP 3.0. Until then, the cash cow will
continue for the TBTF banks.
Knowledgeable precious metals investors will be familiar with Jay Taylor. He’s an accomplished analyst with respect to the precious metals market itself, and also has a thorough understanding of the precious metals miners. Beyond that, Jay is simply a fine gentleman with whom I have been fortunate enough to become personally acquainted.
It was no surprise to learn that BNN – Canada’s self-described “business news channel” — would explicitly tell Jay Taylor not to even mention GATA’s name when he was being interviewed about the precious metals market. Knowing his integrity, it’s also not surprising that Jay has disclosed being pressured in this manner (even though it likely means he won’t get invited back there again).
It was only a couple of months ago how Ted Butler noted that (for the first time), JP Morgan and the Corporate Media felt compelled to openly deny silver manipulation. Now on the same day that we’re hearing that the CFTC is about to drop its silver investigation, we also hear that Canada’s only business news channel is blatantly censoring GATA – the single-biggest whistleblower on precious metals crime/manipulation.
Read More @ SilverGoldBull
Reader Denise wants to know precise definition of who is not in the labor force. That’s easy enough. The answer is found straight from the list of BLS frequently asked questions.
Who is not in the labor force?
Labor force measures are based on the civilian noninstitutional population 16 years old and over. (Excluded are persons under 16 years of age, all persons confined to institutions such as nursing homes and prisons, and persons on active duty in the Armed Forces.) The labor force is made up of the employed and the unemployed.
The remainder — those who have no job and are not looking for one — are counted as “not in the labor force.” Many who are not in the labor force are going to school or are retired. Family responsibilities keep others out of the labor force.
“Looking for a Job” is Key to Understanding Reported Unemployment Number
The BLS description seems logical enough except it ignores those who want a job but did not look in the past four weeks.
BLS questions (shown below) will root those people right out of the labor force.
Read More @ GlobalEconomicAnalysis.blogspot.com
While a compromised version of the Cybersecurity Act of 2012 was introduced to the Senate in July, the false claims of “. . . foreign governments, criminal syndicates and lone individuals are probing our financial, energy and public safety systems every day. It would be the height of irresponsibility to leave a digital backdoor wide open to our cyber adversaries” was perpetuated by President Obama.
Shawn Henry, a veteran of the cyber security division in the FBI, stated in a CBS interview that although he has no proof, Russia and China are behind infiltration and damage to computers in America, while also claiming that he feels it is “very, very likely” that a massive cyber-attack is due to occur.
According to Jay Carney, White House Press Secretary, Obama may just write an executive order to ensure his cybersecurity agenda is implemented. “In the wake of Congressional inaction and Republican stall tactics, unfortunately, we will continue to be hamstrung by outdated and inadequate statutory authorities that the legislation would have fixed. Moving forward, the President is determined to do absolutely everything we can to better protects our nation against today’s cyber threats and we will do that.”
Read More @ OccupyCorporatism.com
TBTF Banks Laughing All The Way Home Thanks To HARP
HARP,
The Home Affordable Refinance Program, is a streamline refinance
program developed to help borrowers who have continued to make their
mortgage payments, but have be unable to refinance due to a decline in
their home value. While it is encouraging that more and more underwater homeowners are gaining the benefits of today’s low interest rates, tremendous profits are being made at their expense. Lack of competition is the primary catalyst, but the underlying economics of the large “too big to fail” banks will do nothing but stoke additional anger in the general public.
Expect this trend to continue until the dynamics of the program is
changed once again, possibly in HARP 3.0. Until then, the cash cow will
continue for the TBTF banks.
by Jeff Nielson, SilverGoldBull:
Knowledgeable precious metals investors will be familiar with Jay Taylor. He’s an accomplished analyst with respect to the precious metals market itself, and also has a thorough understanding of the precious metals miners. Beyond that, Jay is simply a fine gentleman with whom I have been fortunate enough to become personally acquainted.
It was no surprise to learn that BNN – Canada’s self-described “business news channel” — would explicitly tell Jay Taylor not to even mention GATA’s name when he was being interviewed about the precious metals market. Knowing his integrity, it’s also not surprising that Jay has disclosed being pressured in this manner (even though it likely means he won’t get invited back there again).
It was only a couple of months ago how Ted Butler noted that (for the first time), JP Morgan and the Corporate Media felt compelled to openly deny silver manipulation. Now on the same day that we’re hearing that the CFTC is about to drop its silver investigation, we also hear that Canada’s only business news channel is blatantly censoring GATA – the single-biggest whistleblower on precious metals crime/manipulation.
Read More @ SilverGoldBull
by Julian D. W. Phillips, Gold Seek:
Impact on the Eurozone and the Rest of the World
Should nations like Spain and Italy depart from the Eurozone we would see not a nation responsible for only 2% of the GDP of the Eurozone, but ones with a significant contribution [over 20%] to the GDP of the Eurozone. This would immediately force a Eurozone-wide appraisal of the value of the Eurozone itself. Two issues would be highlighted:
1. The Eurozone accounts for 40% of Germany’s exports. These would suffer hurting Germany’s export levels.
2. With the weak nations leaving the Eurozone, the value of the euro would rise tremendously as the overall Eurozone balance of payments would show a much stronger picture. This would hurt the export competitiveness of the Eurozone in international trade. A weak euro was perhaps the greatest benefit to Germany in particular that had to constantly wrestle with a strong Deutschmark before.
Read More @ GoldSeek.com
from opportunityshow:
Impact on the Eurozone and the Rest of the World
Should nations like Spain and Italy depart from the Eurozone we would see not a nation responsible for only 2% of the GDP of the Eurozone, but ones with a significant contribution [over 20%] to the GDP of the Eurozone. This would immediately force a Eurozone-wide appraisal of the value of the Eurozone itself. Two issues would be highlighted:
1. The Eurozone accounts for 40% of Germany’s exports. These would suffer hurting Germany’s export levels.
2. With the weak nations leaving the Eurozone, the value of the euro would rise tremendously as the overall Eurozone balance of payments would show a much stronger picture. This would hurt the export competitiveness of the Eurozone in international trade. A weak euro was perhaps the greatest benefit to Germany in particular that had to constantly wrestle with a strong Deutschmark before.
Read More @ GoldSeek.com
from opportunityshow:
from TheAlexJonesChannel :
An Ontario farmer who has been in a long legal battle over selling and producing raw milk says a co-op farm he’s involved with has been raided by federal inspectors.
An Ontario farmer who has been in a long legal battle over selling and producing raw milk says a co-op farm he’s involved with has been raided by federal inspectors.
by Tony Isaacs, Natural News:
Move over Frankenfish, corn, soy, cotton and beets. Now we have new
genetically modified Frankenapples with unnatural proteins designed to
keep apples from browning when sliced or bruised. British Columbia-based
Okanagan Specialty Fruits has submitted an application to the USDA for approval of new browning-resistant GMO apples.
The GMO apples, which are likely to first appear in the Golden Delicious and Granny Smith varieties, contain a synthetic gene that sharply reduces production of polyphenol oxidase, an enzyme responsible for normal apple browning. Okanagan believes their new browning-resistant “Acrtic Apple” could improve apple industry sales the way “baby carrots” did for carrot sales.
Read More @ NaturalNews.com
I guess the RNC decided... they don't want or need my vote this year...
Ron Paul or NO VOTE in November...PERIOD...
Move over Frankenfish, corn, soy, cotton and beets. Now we have new
genetically modified Frankenapples with unnatural proteins designed to
keep apples from browning when sliced or bruised. British Columbia-based
Okanagan Specialty Fruits has submitted an application to the USDA for approval of new browning-resistant GMO apples.The GMO apples, which are likely to first appear in the Golden Delicious and Granny Smith varieties, contain a synthetic gene that sharply reduces production of polyphenol oxidase, an enzyme responsible for normal apple browning. Okanagan believes their new browning-resistant “Acrtic Apple” could improve apple industry sales the way “baby carrots” did for carrot sales.
Read More @ NaturalNews.com
I guess the RNC decided... they don't want or need my vote this year...
Ron Paul or NO VOTE in November...PERIOD...
from matlarson10:
by Mike Shedlock, Global Economic Analysis:
Reader Denise wants to know precise definition of who is not in the labor force. That’s easy enough. The answer is found straight from the list of BLS frequently asked questions.
Who is not in the labor force?
Labor force measures are based on the civilian noninstitutional population 16 years old and over. (Excluded are persons under 16 years of age, all persons confined to institutions such as nursing homes and prisons, and persons on active duty in the Armed Forces.) The labor force is made up of the employed and the unemployed.
The remainder — those who have no job and are not looking for one — are counted as “not in the labor force.” Many who are not in the labor force are going to school or are retired. Family responsibilities keep others out of the labor force.
“Looking for a Job” is Key to Understanding Reported Unemployment Number
The BLS description seems logical enough except it ignores those who want a job but did not look in the past four weeks.
BLS questions (shown below) will root those people right out of the labor force.
Read More @ GlobalEconomicAnalysis.blogspot.com
by James Smith, Activist Post:
Recently, Tennessee state Rep. Kelly Keisling (R-Byrdstown) sent out
an email from his state email account to his constituents with a concern
that Obama and the Department of Homeland Security are planning events
leading to “martial law”.
Theories are only theories until facts allow them to be worked into being real. Two such theories are of evolution and creation. Neither can be called factual until one of them actually takes place.
Such is the animal known as “Conspiracy Theory”. Often whispered in the dark over a few beers as the fire in the camp fire goes out, or screamed across the airwaves over the fruited plains.
But sometimes, very rarely, can conspiracy theories be proven. And Representative Keisling may be onto “Conspiracy Fact”.
Fact: The Department of Homeland Security is looking to hire Role Players for the TSA/Air Marshall program starting in December.
Fact: The last time the US Government hired Role Players was in late 2008 – and it was the US Army.
Read More @ ActivistPost.com
Recently, Tennessee state Rep. Kelly Keisling (R-Byrdstown) sent out
an email from his state email account to his constituents with a concern
that Obama and the Department of Homeland Security are planning events
leading to “martial law”.Theories are only theories until facts allow them to be worked into being real. Two such theories are of evolution and creation. Neither can be called factual until one of them actually takes place.
Such is the animal known as “Conspiracy Theory”. Often whispered in the dark over a few beers as the fire in the camp fire goes out, or screamed across the airwaves over the fruited plains.
But sometimes, very rarely, can conspiracy theories be proven. And Representative Keisling may be onto “Conspiracy Fact”.
Fact: The Department of Homeland Security is looking to hire Role Players for the TSA/Air Marshall program starting in December.
Fact: The last time the US Government hired Role Players was in late 2008 – and it was the US Army.
Read More @ ActivistPost.com
from Zero Hedge:
Last week we wrote that
we were not surprised to learn that the first party of interest in the
PFG bankruptcy was “none other than JPMorgan, which together with
various other banks, will be the target of a subpoena by the PFG trustee.”
We added “How shocking will it be to find that Dimon’s company is once
again implicated in this particular episode of monetary vaporization.”
It appears that we were not the only ones shocked to learn that Jamie
Dimon’s firm could make a repeat appearance again when it comes to
missing client money: JPM itself seems to not have expected this
development. The result, as just reported by Reuters: “JPMorgan
Chase & Co on Monday sought to limit the power the bankruptcy
trustee for Peregrine Financial Group has to subpoena information from
financial institutions that did business with the failed brokerage.”
Why, whatever may JPMorgan be hiding, and whyever is it taking
preemptive steps from preventing such information from leaking into the
public domain: because it is too “burdensome” – it is only logical that
Jamie can not dedicate one person of his 261,453 employees to this
modest matter. No fear though: even if it is found that just like in the
MF Global bankruptcy JPM may have overreached just a tad when it comes
to money that doesn’t belong to it, the CFTC can just say that as a
result of an extensive 4 year investigation, JPM was found to have done
nothing wrong, and if the public can please already disperse.
Read More @ Zero Hedge.com
BTFD...Keep Stacking...
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Last week we wrote that
we were not surprised to learn that the first party of interest in the
PFG bankruptcy was “none other than JPMorgan, which together with
various other banks, will be the target of a subpoena by the PFG trustee.”
We added “How shocking will it be to find that Dimon’s company is once
again implicated in this particular episode of monetary vaporization.”
It appears that we were not the only ones shocked to learn that Jamie
Dimon’s firm could make a repeat appearance again when it comes to
missing client money: JPM itself seems to not have expected this
development. The result, as just reported by Reuters: “JPMorgan
Chase & Co on Monday sought to limit the power the bankruptcy
trustee for Peregrine Financial Group has to subpoena information from
financial institutions that did business with the failed brokerage.”
Why, whatever may JPMorgan be hiding, and whyever is it taking
preemptive steps from preventing such information from leaking into the
public domain: because it is too “burdensome” – it is only logical that
Jamie can not dedicate one person of his 261,453 employees to this
modest matter. No fear though: even if it is found that just like in the
MF Global bankruptcy JPM may have overreached just a tad when it comes
to money that doesn’t belong to it, the CFTC can just say that as a
result of an extensive 4 year investigation, JPM was found to have done
nothing wrong, and if the public can please already disperse.Read More @ Zero Hedge.com
BTFD...Keep Stacking...
by Vedran Vuk, Casey Research:
ou’ve probably heard that a strong dollar means weaker gold prices.
Yet anyone who has been watching the markets closely knows that “strong dollar = weak gold” isn’t exactly true.
Sometimes, when the dollar strengthens, gold will fall. Other times it will stay flat or can even rise.
So where does that uncertainty leave gold investors?
The Dollar-Gold Relationship Has Some Surprises
We really need to understand the gold-dollar relationship in precise terms, not general ones.
One thing that you can do is look at a chart of gold and the USD/EUR over the past six months, starting from the February 1 price of $1,749.50:
It clearly shows that gold has been going down as the dollar has been gaining against its primary competitor, the euro.
In fact, the percentage gain for the dollar is nearly the same as the decline in gold, just under 10%. Seems like an almost perfect inverse correlation, right?
No, not exactly. Look closer.
There are a lot bumps and anomalies along the way. Sometimes gold has a mind of its own, separate from the dollar, meaning that other factors must be driving it.
Read More @ CaseyResearch.com
CNBC has as a headline “US Shares Seen Higher on Jobs Data Boost”,
a very interesting (and rather bullish) take on the state of affairs
given what I see as the actual situation. If you recall, I had a much
less sanguine perspective last May, as illustrated in US Employment Hopium Smoking Idealists? An interesting contrast to the MSM title above comes from a much smaller publication (Hawaii News Daily) which ran this story a few days ago:
Attention subscribers: New subscription research is available for download in the consumer discretionary sector – Preliminary Analysis (Consumer Discretionary)
Did you know that a smaller percentage of Americans are working today than when the last recession supposedly ended? But you won’t hear about this on the mainstream news. Instead, the mainstream media obsesses over the highly politicized and highly manipulated “unemployment rate”. The media is buzzing about how “163,000 new jobs” were added in July but the unemployment rate went up to “8.254%“. Sadly, those numbers are quite misleading. According to the Bureau of Labor Statistics, in June 142,415,000 people had jobs in the United States. In July, that number declined to 142,220,000. That means that 195,000 fewer Americans were working in July than in June. But somehow that works out to “163,000 new jobs” in July. “
Read More @ BoomBustBlog.com
ou’ve probably heard that a strong dollar means weaker gold prices.Yet anyone who has been watching the markets closely knows that “strong dollar = weak gold” isn’t exactly true.
Sometimes, when the dollar strengthens, gold will fall. Other times it will stay flat or can even rise.
So where does that uncertainty leave gold investors?
The Dollar-Gold Relationship Has Some Surprises
We really need to understand the gold-dollar relationship in precise terms, not general ones.
One thing that you can do is look at a chart of gold and the USD/EUR over the past six months, starting from the February 1 price of $1,749.50:
It clearly shows that gold has been going down as the dollar has been gaining against its primary competitor, the euro.
In fact, the percentage gain for the dollar is nearly the same as the decline in gold, just under 10%. Seems like an almost perfect inverse correlation, right?
No, not exactly. Look closer.
There are a lot bumps and anomalies along the way. Sometimes gold has a mind of its own, separate from the dollar, meaning that other factors must be driving it.
Read More @ CaseyResearch.com
by Reggie Middleton, BoomBustBlog.com:
CNBC has as a headline “US Shares Seen Higher on Jobs Data Boost”,
a very interesting (and rather bullish) take on the state of affairs
given what I see as the actual situation. If you recall, I had a much
less sanguine perspective last May, as illustrated in US Employment Hopium Smoking Idealists? An interesting contrast to the MSM title above comes from a much smaller publication (Hawaii News Daily) which ran this story a few days ago:Attention subscribers: New subscription research is available for download in the consumer discretionary sector – Preliminary Analysis (Consumer Discretionary)
Did you know that a smaller percentage of Americans are working today than when the last recession supposedly ended? But you won’t hear about this on the mainstream news. Instead, the mainstream media obsesses over the highly politicized and highly manipulated “unemployment rate”. The media is buzzing about how “163,000 new jobs” were added in July but the unemployment rate went up to “8.254%“. Sadly, those numbers are quite misleading. According to the Bureau of Labor Statistics, in June 142,415,000 people had jobs in the United States. In July, that number declined to 142,220,000. That means that 195,000 fewer Americans were working in July than in June. But somehow that works out to “163,000 new jobs” in July. “
Read More @ BoomBustBlog.com
from Azizonomics:
John Cochrane thinks that central banks can attain the price-stability of the gold standard without actually having a gold standard:
“While many people believe the United States should adopt a gold standard to guard against inflation or deflation, and stabilize the economy, there are several reasons why this reform would not work. However, there is a modern adaptation of the gold standard that could achieve a stable price level and avoid the many disruptions brought upon the economy by monetary instability.
The solution is pretty simple. A gold standard is ultimately a commitment to exchange each dollar for something real. An inflation-indexed bond also has a constant, real value. If the Consumer Price Index (CPI) rises to 120 from 100, the bond pays 20% more, so your real purchasing power is protected. CPI futures work in much the same way. In place of gold, the Fed or the Treasury could freely buy and sell such inflation-linked securities at fixed prices. This policy would protect against deflation as well as inflation, automatically providing more money when there is a true demand for it, as in the financial crisis.”
The obvious point is that the CPI is a relatively poor indicator of inflation and bubbles. During Greenspan’s tenure in charge of the Federal Reserve, huge quantities of new liquidity were created, much of which poured into housing and stock bubbles. CPI doesn’t include stock prices, and it doesn’t include housing prices; a monetary policy that is fixed to CPI wouldn’t be able to respond to growing bubbles in either sector. Cochrane is not really advocating for anything like the gold standard, just another form of Greenspanesque (mis)management.
Read More @ Azizonomics.com
John Cochrane thinks that central banks can attain the price-stability of the gold standard without actually having a gold standard:“While many people believe the United States should adopt a gold standard to guard against inflation or deflation, and stabilize the economy, there are several reasons why this reform would not work. However, there is a modern adaptation of the gold standard that could achieve a stable price level and avoid the many disruptions brought upon the economy by monetary instability.
The solution is pretty simple. A gold standard is ultimately a commitment to exchange each dollar for something real. An inflation-indexed bond also has a constant, real value. If the Consumer Price Index (CPI) rises to 120 from 100, the bond pays 20% more, so your real purchasing power is protected. CPI futures work in much the same way. In place of gold, the Fed or the Treasury could freely buy and sell such inflation-linked securities at fixed prices. This policy would protect against deflation as well as inflation, automatically providing more money when there is a true demand for it, as in the financial crisis.”
The obvious point is that the CPI is a relatively poor indicator of inflation and bubbles. During Greenspan’s tenure in charge of the Federal Reserve, huge quantities of new liquidity were created, much of which poured into housing and stock bubbles. CPI doesn’t include stock prices, and it doesn’t include housing prices; a monetary policy that is fixed to CPI wouldn’t be able to respond to growing bubbles in either sector. Cochrane is not really advocating for anything like the gold standard, just another form of Greenspanesque (mis)management.
Read More @ Azizonomics.com
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