|
| quote: | Originally posted by Groundhog Boy
I'd rather have the tire that's partially inflated vs. the completely flat one that is most other currencies.
And everyone's right about the market at some point. I mean, I can say that the market will go up, and eventually it will, so I'll be right. It gets especially easy when you've witnessed a huge trend because it'll eventually end. I've watched Peter Schiff and Jim Rogers make comments that were bullish on commodities that have been completely off the mark in the past 6 months. Schiff's also been wrong on currencies, on the value of the dollar, inflation, etc. Do I think inflation will occur? Sure, at some point, but if I'd have bought commodities to guard against it 6 months ago, I'd have been slaughtered. |
You're right, but he vehemently called it and gave numerous reasons why the bubble was going to burst. I thought it was a no brainer at the time but for some reason few people wanted to listen.
Historically speaking, though, gold is one of the few things that's retained it's intrinsic value and that's simply for the fact that it doesn't degrade over time, it can't be copied or counterfeited (or printed up in a press), there's only a finite amount of it, and it can easily be measured for weight and purity.
I'd be willing to bet my left testicle that we're going to see major inflation but I do know that it takes some time. The distributionary effect of inflation is something which Richard Cantillon first propounded upon and today it's aptly called the "Cantillon effects" in memory of him.
As much as you guys like to rag on Ron Paul for following the Austrian School of Economics, he sure does seem to know his history.
From his book:
| quote: | "All right, some may say, prices may indeed rise, but so do wages and salaries, and therefore inflation causes no real problems on net. This misconception overlooks one of the most insidious and immoral effects of inflation: its redistribution of wealth from the poor and middle class to the politically well connected. The price increases that take place as a result of inflation do not occur all at once and to the same degree. Those who receive the new money first receive it before the prices have yet risen. They enjoy a windfall. Meanwhile, as they spend the new money, and the next wave of recipients spend it, and so on, prices begin to rise throughout the economy�well before the new money has trickled down to most people. The average person is now paying higher prices while still earning his old income, which has not yet been adjusted to account for the higher money supply. By the time the new money has made its way throughout the economy, average people have all this time been paying higher prices, and only now can begin to break even. The enrichment of the politically well connected�In other words those who get the newly created money first: government contractors, big banks and the like�comes at the direct expense of everyone else. These are known as the distribution effects, or Cantillon effects, of inflation, after economist Richard Cantillon. The average person is silently robbed through this invisible means and usually doesn�t� understand what exactly is happening to him. And almost no one in the political establishment has an incentive to tell him."
"When the value of Americans� savings is deliberately eroded through inflation, which is a tax, albeit a hidden one. I call it the inflation tax, a tax that is all the more insidious for being so underhanded: most Americans have no idea what causes it or why their standard of living is going down. Meanwhile, government and its favored constituencies receive their ill-gotten loot. The racket is safe as long as no one figures out what is going on."
- Ron Paul, The Revolution: A Manifesto pp 143-144
|
The fact that we're printing (or at least adding) trillions upon trillions of dollars to the current pool of money is going to bite us in the asses. It doesn't matter whether we can feel it's effects right now or not, IT IS INFLATION and it is going to come back to us with dire consequences.
|
