Thursday, January 09, 2014
Fed Tapering Into Weakness, Tangent's Rickards Says
I disagree with him about gold at least in the medium term; gold cannot rise like he predicts until deflation ends. (Deflation is just the fall in asset prices from a bubble which is caused by easy monetary policies.) Until bad debt is removed from the system inflation cannot take hold. So Rickard's point is that the Fed is fighting deflation with easy money and there is a stalemate right now between the two forces. Maybe not really a stalemate because the Fed is creating another asset price bubble. The important point is that this is just postponing debt liquidation.