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-- Posted Wednesday, 13 April 2011 | | Source: GoldSeek.com
Rick’s Picks Wednesday, April 13, 2011 “Phenomenally accurate forecasts” Now that I’ve got your attention, let me announce that I am exiting the Deflation vs. Hyperinflation debate for the time being. I’ve concluded there is little to gain arguing with, on the one hand, a guy who froths at the mouth whenever someone contradicts him even slightly; and on the other, a preening narcissist who comes to argumentation with the kind of lip-smacking arousal Jeffrey Dahmer must have felt hovering over the fresh corpse of a teenage boy. These guys are bad news, as lacking in civility and manners as buzzards on the prowl. My suggestion is to avoid them both. Better that you should tune to the hyperinflation arguments of Steve Saville, Peter Schiff and a few others who seem less concerned with trouncing, slicing and dicing opponents than with presenting facts that might better prepare you for the financial crisis ahead. The very best of them, in my opinion, is FOFOA blogspot, where the essays are erudite, the discussion elevated and the arguments as knowledgeable as any you will find. Not that FOFOA -- or anyone else, for that matter -- has won me over; for I remain convinced that deflation, not hyperinflation, will do us in economically. To understand why, I’d suggest following the mile-deep discussion thread that my commentary on the topic generated last week at Rick’s Picks. You’ll discover that there is no point on either side of the argument that is airtight. Hyperinflationists can make you doubt most anything I might say, just as I can stir doubts about anything they might say. That said, my biggest doubt concerning their side of the story involves mortgage debt, since hyperinflation will be impossible as long as tens of millions of homeowners are yoked to $250,000 mortgages on homes worth perhaps half that or less. Also, hyperinflationists assume that a worthless dollar implies hyperinflation. Maybe not. I would argue that the rate at which the dollar falls to worthlessness is crucial (a point explicitly addressed at FOFOA). Were the dollar to collapse overnight, for example, we might find that suppliers of crude oil, rather than demanding $1,000 per barrel, would require payment in gold. You can dispute whether this is likely, but you cannot argue that it is impossible. $10,000 Gold? And how about all of those dreamers who think gold will soar to $10,000 an ounce or more when the financial day of reckoning arrives? I used to believe this impossible, but the forum discussion has got me thinking: Suppose the dollar is falling apart one day and all of those who hold paper gold in the form of futures contracts determine to take delivery? Would gold get short-squeezed into the ionosphere under such circumstances? Or would the futures exchanges simply change the rules, letting those who are short contracts slip the noose? No one can say for sure. Nor can anyone predict how politicians will react if and when the financial system collapses. Will they push the Fed to hyperinflate, effectively bailing out homeowners? And if they do, will the legislated action succeed? One thing’s for sure: hyperinflation cannot possibly occur by accident; it can only be enabled by political decision. Under the circumstances, it is impossible to predict exactly what will happen if the dollar crashes. On this point, I will feature the sage thoughts tomorrow of blogger Charles Hugh Smith. But the final word will go to a Wyoming rancher who, in the forum, reminded us that there are certain things of greater concern, even, than how gold, silver and dollars react to the coming financial catastrophe. *** Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2011, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Wednesday, 13 April 2011 | Digg This Article | Source: GoldSeek.com
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