Gogh, sei vorsichtig, was du da schreibst,
der Pezi glaubt das alles und krönt sich zum Super Mega Mod
Ich hab ihm so ein schönes Oma Depot zusammengestellt, aber auf das geht er nicht ein.
Aber er kann ja nur frotzeln und stänkern.
Und BEDENKET:
Wenn ma den PeterSilie nicht hätten
und an Löffel,
nachher miassat ma d´Suppn
pfeilgrad mit de Händ fressen.
Eldo, keep cool!
Übersetzungshilfe: Wörterbuch Österreichisch - Deutsch,
Residenz Verlag
Tschonko
The Wallace Street Journal
They are not our enemy
April 21, 2005 - By David Bond, Editor The Silver Valley Mining Journal
Wallace, Idaho - Unbeknownst to the millions of tourists who visit this bewitching French capital at least once in their lifetimes, a giant extended finger of insolent ill will protrudes larger than life from the city's legendary skyline.
No, it is not the Eiffel Tower. We will get to what it is after a few digressions, but suffice to say this gesture of insolent ill will is not aimed at Americans. It wasn't even aimed at the Nasties.
In fact, dining over quail, cheese, poissons and a few agreeable wines with new friends and Paris' best and brightest at La Grande Cascade, we were taken aback at how Un-un-American our Parisian friends were; indeed how un-un-American the whole city is.
Paris is one of the last neighborhood cities left on earth. Paris and London each sport a population of about 12 million but there are important differences; in London, about 3 million actually live in the "City" proper; the rest are in the 'burbs. In Paris the opposite is true: 9 million of its 12 million citizens live in town. So Paris is and remains a city of neighbourhoods. Non-smokers and dog- and cat-haters would be mortified in such a place as Paris; everyone has a dog, although leashes are a scarce sight, and if there are places (other than in front of the Mona Lisa, or inside the Notre Dame de Paris cathedral) where smoking is prohibited, we could not find any. Everybody, it seems, smokes and has a dog. Reminded us a bit of northern Idaho, except even in Wallace, the health Nazis have run smokers out of the restaurants and many of the bars.
(Here was an odd scene: a group of Americans huddled in the rain outside a hotel entrance, smoking, suffering out of habit. Inside the lobby, meanwhile, a festoon of ashtrays and comfortable seating awaited us.)
We were on a mission in Paris, to establish a beach head for the Silver Revolution. It will be a tough sell. Northern Europe is feeling a bit smug these days. The Euro is exceptionally strong. (Our earlier suggestion that a quick way to riches would be to track our travel itinerary and go long the currencies of the country we are visiting has proved up nicely. The Euro, the Pound Sterling and the Swiss Franc have all enjoyed recent highs versus the Federal Reserve Not as we have traipsed from place to place on the Continent and the UK. The counterbalance to our USD's increasing valueless-ness is the rotgut low price of wines and beers we would pay a fortune for stateside.)
The French think we Yanks are a tad crackers for stirring things up in the Middle East. History may prove them right, and it may prove them wrong. The French stopped the Arabs at Poitiers in AD 736 and have been having problems with them ever since; Arabs now account for 12 percent of the population of Paris. But after 400 years of increasingly mechanized bloodshed, the Continent is ready for a little peace and quiet, and doesn't want to think about the gloom and doom of a very real looming currency crisis.
When it does, the man they'll be looking up is Paris businessman Eric Lemaire, who has launched a website, http://www.24hpm.com (24-hour precious metals, get it?) aimed at the European reader. Eric works all of those 24 hours, half in support of his family and his business (he employs about 100 people in Paris) and the other half tweaking and tuning his site. The site is available in three languages. It is more than a labor of love for the 42-year-old Lemaire; it is his passion, his plea to his countrymen not to forget the perfidies of the American and British central banks in the 20th Century, who muscled Europe's gold away from them and set the stage for planetary depressions and two world wars.
It will be, as we said, a hard sell. As often happens with new fiat money such as the Euro, a period of bliss and a false sense of prosperity ensues and people don't want to think hard times can return. Eric laughingly paraphrases Alan Brownspan: 'Yes, I can guarantee you that Social Security entitlement benefits will be paid in full. What I cannot guarantee is the purchasing power of those benefits when they are paid.' And he wonders how many Americans heard or understood the threat implied in Brownspan's words.
Eric's pitch is that silver is money, which in the French language (and about 50 others) is self-evident. L'argent means silver in French. L'argent also means money. The reason for that sameness is beyond the purview of this rant, but it should not be lost on those who care about preserving their personal or corporate wealth. Yet he pulls out of his pocket a 1-ounce triple-nine "10 Sterling" silver round and his countrymen assembled about the table at the Grande Cascade are astonished that such a barbaric thing still exists - or that it could buy a meal or a round of drinks or a couple of rolls of film in Wallace, Idaho.
He reminds his guests that it was not wheelbarrow loads of silver the Germans of 1932 were taking to the grocers for a loaf of bread. It was boatloads of paper, and hideous war ensued. In the very fine spirit of Mexico's Hugo Salinas Price, Eric Lemaire is taking silver's case to the people. And just as Hugo is winning over Mexico, Eric will prevail in Europe.
Never forget that Paris was the birthplace of civilized revolution. While the French Revolution climaxed with the storming of the Bastille on July 14, 1789 and the beheading of Louis XVI in January 1793, it had been fermenting as far back as 1715 under the rein of Louis XIV, at first peacefully, then with increasing violence (or as money guys would say these days, "velocity"). During those years much of France's nobility's gold and silver went overseas, to America, to finance the fomenting American Revolution. It's a truth many of us schooled in the U.S. have forgotten, but it is not a kinship the French have forgotten.
"Do not be mistaken," inveighs Eric as he pulls a famous illegal U-turn on the Champs Elysee, muttering "No cops." (Everything you've heard about driving in Paris is true. There are no rules and fewer laws - not even any stop signs, and no need for meaningless lane demarcations. Smart Cars snub the world. Yet there is order in this chaos, the only rule being: The guy who gets there first wins.)
"Our nation is very friendly to your people, and I wouldn't know one person here who wouldn't fight for the US if she was attacked. Paris still remembers Ben Franklin and Hemingway," he reminds us.
And though he feels alone at times, Eric Lemaire of Paris is not alone. Hecla Mining Company's Phil Baker came up to Zurich yesterday to pitch the Continent's analysts as part of the Denver Gold Forum's annual jaunt to Europe, a high-powered confab of miners and funds. Instead of devoting his allotted time to flogging Hecla stock, Baker pitched the product. What a welcome breath of fresh air. Yes, Hecla's a great and low-cost mining company, they've got great properties all over the Western Hemisphere, and blah-blah-blah. But here's the real story, the end product: silver.
The digital-versus-silver argument in photography just doesn't wash. Third-world nations developing a taste for archiving their families' histories pictorially will turn to silver film, not digital cameras, and because conservatively 60 percent of silver used in photography is returned to the supply chain via recycling, any diminuition of silver's use in film is largely zero-sum. Medicine is huge: silver is the most effective killer of bacteria known to man, and unlike pharmaceuticals, the bugs don't grow immune to it. Silver is the Third World's savior, able to purify water, able to boost efficiencies in electrical transmission, able to heal. And it has no market-rational substitute.
Europe may be hearing this message for the first time this year. And another message: silver will be higher priced and increasingly volatile over the next few years, as above-ground supplies dry up and demand heightens. "Europeans are surprised and amazed to learn about its uses," Hecla's IR veep, Vicki Veltkamp, tells us over dinner at the Baur au Lac. It will take a while to sink in. Italy has been the most receptive so far.
So keep slogging away, Eric my friend. There's no lonelier place than to be ahead of the curve. Fear not. If there's anything left of us after the U.S. concludes Chapter Two of the Great Crusades, The Yankees are coming. The Yankees are coming.
Oh, and about that big green weenie in the heart of Paris. Next time you look at a picture of Notre Dame de Paris cathedral, study the tall center spire. It sticks out green-black, tarnished, unloved in contrast to the immaculately scrubbed rest of the building. Notre Dame was constructed over several centuries, but mainly finished in AD 1345. Not until 1845, five centuries later was that big center spire erected. The French do not consider that center spire to be OEM. A tacky add-on, they think. So they refuse to clean it despite entreaties from the Vatican. Sticks out like a sore thumb, that spire, and the French prefer it that way.
In such minor acts of defiance are born and nurtured revolutions. Vive la France!
Take calculated risks !
Pursue Achievable Goals !
was sagst du heute eigentlich zum goldpreis eldo
Ueber 430 $ ,da kann man ruhig schlafen, Peter.
Der HUI koennte besser sein, ich hoffe die 190 halten diese woche.
aha siehste du benutzt langsam meine zahlen siehste die sind also garnich so schlecht aber bald wir es sehr ernst hoffe dann schläfst du noch gut eldo bist du eigentlich ein dr?
wird gold eigentlich rund um die uhr gehandelt oder kann man sagen 22 uhr ist in den usa feierabend und es geht erst wieder gegen 2 uhr in japan los?
oder anders formuliert 22 bis 0 uhr tut sich da am goldmarkt normalerweise noch was?
Cooperate and reap greater rewards !
Associated Press
Greenspan: Budget Deficits Pose Danger
Thursday April 21, 4:20 pm ET
By Jeannine Aversa, AP Economics Writer
Greenspan Warns Bloated Budget Deficits Pose Threat to the Nation's Long-Term Economic Health
WASHINGTON (AP) -- On the same day that Federal Reserve Chairman Alan Greenspan issued a fresh warning about the dangers of bloated budget deficits, Congress considered new tax breaks for the energy industry and an $81 billion measure to pay for U.S. military operations in Iraq and Afghanistan.
The events Thursday illustrated the challenges -- "hard choices," as Greenspan put it -- that policy-makers face in trying to control spending.
Greenspan, who steadily has pressed lawmakers, told the Senate Budget Committee that unless the situation is reversed, the economy in the years ahead could "stagnate or worse."
Meanwhile, the House neared passage of legislation that would give billions of dollars in benefits to energy industries. The Senate prepared to vote on an $81 billion measure for war costs in Iraq and Afghanistan.
Greenspan's plea for fiscal fitness coincides with the deterioration of the government's balance sheets.
In 2000, the government posted a record budget surplus. Four years later, there was a record deficit, $412 billion. The deficit this year is projected to come in at $427 billion.
Even with plans to control deficits by restricting domestic spending, President Bush and Congress project that deficits over the next five years will exceed $200 billion annually. The shortfalls are expected to increase as baby boomers soon begin to retire. 
"The harsh reality here is that our fiscal condition is not improving," said Sen. Kent Conrad of North Dakota, the top Democrat on the Senate Budget Committee.
"I think part of the frustration of many of us on this committee is convincing our colleagues that there really is a problem," he said. "And they're probably not going to be convinced unless the American people are convinced. And it's very hard to convince people there is a real threat to our collective economic security when the economy seems to be doing reasonably well."
In the long run, persistently large budget deficits threaten the economy because they can push up interest rates for consumers and businesses. Higher borrowing costs would effect the willingness of consumers and businesses to spend and invest.
Greenspan told senators that "the federal budget is on an unsustainable path," in which large deficits will lead to higher interest rates.
Sen. Pete Domenici, R-N.M., said Congress "overpromised" in its Social Security and health care commitments.
But he questioned Congress' political will to tackle the problem.
"I have been asking the question in my own mind. `Will we be able to solve the problem' -- that is make the policy decisions in a timely manner -- or will we in America await a failure -- a major failure in the health delivery system before we do anything?"
Greenspan repeated his support for a return to budgeting policies that would require Congress to offset future increases in government spending or new tax cuts with reductions in other government programs or tax increases.
A decade-long pay-as-you-go provision expired in 2002.
"Our budget position is unlikely to improve substantially in the coming years unless major deficit-reducing actions are taken," Greenspan said.
Greenspan touched a nerve with Democrats, some of whom are still stinging from the Fed chairman's endorsement of Bush's $1.3 trillion tax cut in 2001. That cut was proposed when the government was expecting a decade of budget surpluses.
"I was wrong like everybody else on the issue of surpluses," Greenspan said.
In 2001, Greenspan said the tax cut should be accompanied by a mechanism that would rescind the tax cut if economic forecasts changed. He said it was "frankly unfair" for people not to remember that point.
"I think it is fair to consider how your message would be taken," said Democratic Sen. Paul Sarbanes of Maryland, recalling the 2001 tax cut endorsement. "It clearly was taken in the way that I have suggested in giving the green light."
Democrats mostly blame the growing budget deficits on Bush's tax cuts, which the lawmakers contend mainly benefited the wealthy.
Republicans credited the cuts with helping the economy rebound from the 2001 recession. The costs of the cuts, along with paying for wars in Afghanistan and Iraq and fighting terrorism at home, have led to the deficits, Republicans say.
The committee chairman, Sen. Judd Gregg, R-N.H., said the cuts were "good policy" as evidenced by the "economic recovery ... and the shallowness of the recession. ... But that's history. We're trying to look forward here."
@ eldo
hast du auch physisches gold mach mal davon ein paar schöne bilder und vor allem wen du münzen hast mach ein bild und stell es rein ich versuch das auch schon 2 tage aber gelingt nich ich glaube langsam man muß sie einscannen
Pezi das musst du meinen Butler sagen.
na dann lass ihn nur nich merken was du für erfolge mit minenaktien hast sonst denk der noch am ende du kannst seinen lohn nichmehr bezahlen und rennt aus dem haus wie der hui durch die 200 
Und bitte komme mich nicht besuchen !
The Wallace Street Journal
The Middle Finger, and Hope for Silver
By David Bond, Editor
The Silver Valley Mining Journal
Wallace, Idaho – Unbeknownst to the millions of tourists who visit this bewitching French capital at least once in their lifetimes, a giant extended finger of insolent ill will protrudes larger than life from the city's legendary skyline.
No, it is not the Eiffel Tower. We will get to what it is after a few digressions, but suffice to say this gesture of insolent ill will is not aimed at Americans. It wasn't even aimed at the Nasties.
In fact, dining over quail, cheese, poissons and a few agreeable wines with new friends and Paris' best and brightest at La Grande Cascade, we were taken aback at how Un-un-American our Parisian friends were; indeed how un-un-American the whole city is.
Paris is one of the last neighborhood cities left on earth. Paris and London each sport a population of about 12 million but there are important differences; in London, about 3 million actually live in the "City" proper; the rest are in the 'burbs. In Paris the opposite is true: 9 million of its 12 million citizens live in town. So Paris is and remains a city of neighbourhoods. Non-smokers and dog- and cat-haters would be mortified in such a place as Paris; everyone has a dog, although leashes are a scarce sight, and if there are places (other than in front of the Mona Lisa, or inside the Notre Dame de Paris cathedral) where smoking is prohibited, we could not find any. Everybody, it seems, smokes and has a dog. Reminded us a bit of northern Idaho, except even in Wallace, the health Nazis have run smokers out of the restaurants and many of the bars.
(Here was an odd scene: a group of Americans huddled in the rain outside a hotel entrance, smoking, suffering out of habit. Inside the lobby, meanwhile, a festoon of ashtrays and comfortable seating awaited us.)
We were on a mission in Paris, to establish a beach head for the Silver Revolution. It will be a tough sell. Northern Europe is feeling a bit smug these days. The Euro is exceptionally strong. (Our earlier suggestion that a quick way to riches would be to track our travel itinerary and go long the currencies of the country we are visiting has proved up nicely. The Euro, the Pound Sterling and the Swiss Franc have all enjoyed recent highs versus the Federal Reserve Not as we have traipsed from place to place on the Continent and the UK. The counterbalance to our USD's increasing valueless-ness is the rotgut low price of wines and beers we would pay a fortune for stateside.)
The French think we Yanks are a tad crackers for stirring things up in the Middle East. History may prove them right, and it may prove them wrong. The French stopped the Arabs at Poitiers in AD 736 and have been having problems with them ever since; Arabs now account for 12 percent of the population of Paris. But after 400 years of increasingly mechanized bloodshed, the Continent is ready for a little peace and quiet, and doesn't want to think about the gloom and doom of a very real looming currency crisis.
When it does, the man they'll be looking up is Paris businessman Eric Lemaire, who has launched a website, http://www.24hpm.com (24-hour precious metals, get it?) aimed at the European reader. Eric works all of those 24 hours, half in support of his family and his business (he employs about 100 people in Paris) and the other half tweaking and tuning his site. The site is available in three languages. It is more than a labor of love for the 42-year-old Lemaire; it is his passion, his plea to his countrymen not to forget the perfidies of the American and British central banks in the 20th Century, who muscled Europe's gold away from them and set the stage for planetary depressions and two world wars.
It will be, as we said, a hard sell. As often happens with new fiat money such as the Euro, a period of bliss and a false sense of prosperity ensues and people don't want to think hard times can return. Eric laughingly paraphrases Alan Brownspan: 'Yes, I can guarantee you that Social Security entitlement benefits will be paid in full. What I cannot guarantee is the purchasing power of those benefits when they are paid.' And he wonders how many Americans heard or understood the threat implied in Brownspan's words.
Eric's pitch is that silver is money, which in the French language (and about 50 others) is self-evident. L'argent means silver in French. L'argent also means money. The reason for that sameness is beyond the purview of this rant, but it should not be lost on those who care about preserving their personal or corporate wealth. Yet he pulls out of his pocket a 1-ounce triple-nine "10 Sterling" silver round and his countrymen assembled about the table at the Grande Cascade are astonished that such a barbaric thing still exists – or that it could buy a meal or a round of drinks or a couple of rolls of film in Wallace, Idaho.
He reminds his guests that it was not wheelbarrow loads of silver the Germans of 1932 were taking to the grocers for a loaf of bread. It was boatloads of paper, and hideous war ensued. In the very fine spirit of Mexico's Hugo Salinas Price, Eric Lemaire is taking silver's case to the people. And just as Hugo is winning over Mexico, Eric will prevail in Europe.
Never forget that Paris was the birthplace of civilized revolution. While the French Revolution climaxed with the storming of the Bastille on July 14, 1789 and the beheading of Louis XVI in January 1793, it had been fermenting as far back as 1715 under the rein of Louis XIV, at first peacefully, then with increasing violence (or as money guys would say these days, "velocity"). During those years much of France's nobility's gold and silver went overseas, to America, to finance the fomenting American Revolution. It's a truth many of us schooled in the U.S. have forgotten, but it is not a kinship the French have forgotten.
"Do not be mistaken," inveighs Eric as he pulls a famous illegal U-turn on the Champs Elysee, muttering "No cops." (Everything you've heard about driving in Paris is true. There are no rules and fewer laws – not even any stop signs, and no need for meaningless lane demarcations. Smart Cars snub the world. Yet there is order in this chaos, the only rule being: The guy who gets there first wins.)
"Our nation is very friendly to your people, and I wouldn't know one person here who wouldn't fight for the US if she was attacked. Paris still remembers Ben Franklin and Hemingway," he reminds us.
And though he feels alone at times, Eric Lemaire of Paris is not alone. Hecla Mining Company's Phil Baker came up to Zurich yesterday to pitch the Continent's analysts as part of the Denver Gold Forum's annual jaunt to Europe, a high-powered confab of miners and funds. Instead of devoting his allotted time to flogging Hecla stock, Baker pitched the product. What a welcome breath of fresh air. Yes, Hecla's a great and low-cost mining company, they've got great properties all over the Western Hemisphere, and blah-blah-blah. But here's the real story, the end product: silver.
The digital-versus-silver argument in photography just doesn't wash. Third-world nations developing a taste for archiving their families' histories pictorially will turn to silver film, not digital cameras, and because conservatively 60 percent of silver used in photography is returned to the supply chain via recycling, any diminuition of silver's use in film is largely zero-sum. Medicine is huge: silver is the most effective killer of bacteria known to man, and unlike pharmaceuticals, the bugs don't grow immune to it. Silver is the Third World's savior, able to purify water, able to boost efficiencies in electrical transmission, able to heal. And it has no market-rational substitute.
Europe may be hearing this message for the first time this year. And another message: silver will be higher priced and increasingly volatile over the next few years, as above-ground supplies dry up and demand heightens. "Europeans are surprised and amazed to learn about its uses," Hecla's IR veep, Vicki Veltkamp, tells us over dinner at the Baur au Lac. It will take a while to sink in. Italy has been the most receptive so far.
So keep slogging away, Eric my friend. There's no lonelier place than to be ahead of the curve. Fear not. If there's anything left of us after the U.S. concludes Chapter Two of the Great Crusades, The Yankees are coming. The Yankees are coming.
Oh, and about that big green weenie in the heart of Paris. Next time you look at a picture of Notre Dame de Paris cathedral, study the tall center spire. It sticks out green-black, tarnished, unloved in contrast to the immaculately scrubbed rest of the building. Notre Dame was constructed over several centuries, but mainly finished in AD 1345. Not until 1845, five centuries later was that big center spire erected. The French do not consider that center spire to be OEM. A tacky add-on, they think. So they refuse to clean it despite entreaties from the Vatican. Sticks out like a sore thumb, that spire, and the French prefer it that way.
In such minor acts of defiance are born and nurtured revolutions. Vive la France!
hab auf meinem atlas geschaut @ eldo aber ich finde keine autobahn nach SA 
sehr schade
Pezi, es ist besser du gehst zum arzt ohne das du auf die Autobahn musst. Mache mal Urlaub zumindest bis deine visionen vorbei sind ..kann ich dir nur empfehlen :))
Und mit dem Rauchen wuerde ich aufhoeren, weg mit allen Flaschen und medikamenten die du vielleicht nimmst.
Keine Sorge,wenn Gold bei 410 Dollar ist dann meldet sich jemand bei Dir.
Der Oma wuerde es auch gut tun, also raus ins gruene mit dir, oder auf.... wen und was auch immer !!. 
Draussen findest du deine Sternderl viel schneller als hier, geht mal in die Abteilung Hemden und Knoepfe.
Gruss
Eldorado
Here is a question that pops up over and over again: does the future hold inflation or deflation?
Inflationists point out that rising energy prices will cause prices in general to rise, and that is inflationary. Deflationists say that slowing economic growth will cause prices to fall. However, these are not the issues. They are the consequences of events and circumstances.
Inflation is not a general increase in prices, and similarly, deflation is not a general decrease in prices, just as fever is not an infection. Fever is the consequence of an infection and if you don't know that, how would you know to look for the infection and cure it? You can mitigate the fever with drugs, but that won't make the infection go away. As long as people think inflation is an increase in prices and deflation is a decrease in prices they will not be able to look beyond the nonsense promoted by the general media.
Monetary inflation is an increase in the supply of money and deflation is a decrease in the supply of money. That is it. But when the money supply increases, money loses value in relation to goods and services and that can lead to a general increase in prices. The increase in prices, however, is a consequence of money losing value. Price increases themselves are not inflation. Suppose that the money supply remains constant but that the supply of steel is interrupted for some reason. The price of steel will most likely rise, but that is not inflation. It is true that if steel output is diminished then the amount of money relative to available steel will increase and the same would occur if steel output remained constant and the money supply increased. Both events would lead to higher steel prices but only the latter increase would be due to inflation.
Deflation, of course, is just the opposite: a decrease in the money supply.
But what is money supply? Senator Ron Paul asked Federal Reserve Chairman, Alan Greenspan, what he considered to be the best tool to measure money supply. Greenspan plainly admitted that he was at a loss for picking out what such a measure might be. When Senator Paul suggested that it must be difficult to manage something you cannot even define, Chairman Greenspan not only agreed with him but also said it was "impossible". What a startling admission by United States' leading maker of monetary policy. If we don't know what money supply is, how can we determine whether the money supply is increasing or decreasing?
We could count the number of notes and coins outstanding, but that does not give us a clear picture of money supply since it does not account for debt, and debt plays an enormous role in our current financial system. There are monetary aggregates, such as M1, M2 and M3 that include various forms of deposits at financial institutions as well as notes and coins in circulation. The concept behind these categories is that they represent decreasing levels of activity, with M1 being the most active. I often use M3 for my own calculations since it is the broadest measure of money. But in reality M3 still does not account for all of the money outstanding.
According to the Quantity Theory of Money, MV = PT.
M is the money supply,
V is the velocity of money,
P is the average price level and,
T is the total number of transactions.
While the above equation is not a definition of money, it can give us some indication of what might be going on. The national income (I) is the total income earned in a country and is a known entity. It is also equal to the total number of transactions times the average price level: I = PT (note that P and T cannot be measured directly). That implies that the national income also equals MV, the product of the money supply and the velocity of money.
The US national income doubled from 1990 to 2004, from $5.1 trillion to $10.3 trillion. All we really know then is that the product of money supply and the velocity of money doubled as well. How much of that was due to an increase in money supply and how much of it was due to changes in the velocity of money, we don't know.
We can get some idea of what the money supply did by looking at M3. From 1990 to 2004, M3 increased by almost 130%. Assuming then that the total money supply increased by a similar percentage, and since that increase is greater than the increase in national income, one could infer that there has been an offsetting decrease in the velocity of money.
Could it be that the dollars that China and Japan are hoarding have reduced the velocity of money relative to the inflation of money? Given that China and Japan together hold over 20% of the outstanding US Treasuries, which is equal to about 9% of M3, I would say the answer is yes.
Now to get back to the question of which will win out: inflation, or deflation.
The United States is saddled with a lot of debt. Individual, corporate and government debts are all at unprecedented levels. Debt expansion in the US is a consequence of record low interest rates during a period of relatively high economic growth and prosperity. Those who argue that inflation is more likely say that the economy cannot withstand a dramatic increase in interest rates and therefore the Federal Reserve will not allow interest rates to rise either too rapidly, or too far. They also contend that the Federal Reserve will most likely reduce interest rates at the first sign of economic trouble and low, or falling interest rates, will be conducive to even more debt creation, which is also an increase in money supply, and therefore inflationary.
Deflationists argue that the amount of outstanding debt, and borrowers' ability to pay the interest and principle due on that debt, are the real risks. Should the economy slow down, or interest rates rise, we could see an increase in the amount of defaults and bankruptcies. If the lenders do the correct thing, which is to write the bad debt off their books, the money supply will be reduced and that is deflationary.
I am in the deflationists' camp.
How will commodity prices and the price of gold be affected?
I expect China will allow its currency to appreciate against the dollar and since that implies it, and Japan, no longer need to hoard as many trade dollars as they are currently hoarding, the dollar exchange rate will fall (see last week's commentary at http://www.paulvaneeden.com). It also means that China and Japan will buy fewer US Treasuries, implying US interest rates will rise. A rise in US interest rates will stifle the US economy and that is when the debt load will become a factor. With rising interest rates and a slowing economy we could see a dramatic increase in personal and corporate bankruptcies, which is, of course, deflationary.
But offsetting this deflation of the money supply could be an increase in the velocity of money since Japan and China will not be hoarding as many dollars. An increase in the velocity of money appears inflationary, as it can make prices rise. So even though we may be experiencing deflation in the true sense of the word, it could well be masked by an increase in the velocity of money.
If, indeed, we see a slowdown in US economic growth we should also see an increase in unemployment. An increase in unemployment, rising interest rates, slowing economic growth and an increase in bankruptcies are not going to make US consumers feel wealthy. We will see the wealth effect in reverse as consumers begin to save and cut down on their spending.
But at the same time, the US dollar will be falling. The US is grossly dependent on foreign products, so even though we might be in a deflationary period we could still see the prices of imported goods rise. Oil is one such item. An increase in the oil price, however, ripples through the whole economy and puts upward pressure on prices. Most significantly, it causes the price of gasoline to rise, directly impacting the disposable income of consumers.
The US might surprise me and reduce its oil consumption, but will it be enough to offset the falling dollar? Keep in mind that oil prices could fall in Europe, China and Japan while the price of oil rises in the United States.
Less consumer demand and slower economic growth will have an impact on discretionary purchases. So I expect we will see the prices of capital goods, luxury items and non-essentials go down in the US assuming that they are not imported or made from a high percentage of imported items. Automobiles come to mind. Look at the state of the US automobile industry and you will see that it is already in shambles. I would not be surprised to see an American automobile manufacturer declare bankruptcy. GM ??
To people looking only at prices and thinking that they are observing inflation or deflation, the picture will be muddy. Most people look at the Consumer Price Index and assume they are getting a clear picture, but they're not. The Consumer Price Index is a very unreliable gauge of inflation, real or imagined. Even so, those that look at the prices of food and energy, as well as imported materials, will think we are experiencing inflation. Those that look at the prices of capital goods will think we are in deflation. But if you look at the money supply, I think that the biggest threat is deflation and there is, in my opinion, not a thing the government can do about it.
By having both a trade deficit and a budget deficit, especially given their magnitudes, the government's hands are tied. China and Japan will decide the fate of the US dollar and the US economy.
Now, regardless of whether we see inflation or deflation in the United States, the price of gold in US dollars will rise if the dollar falls. It is as simple as that. If the US were the only economy in the world, and the US dollar the only currency, then we could have predicted what will happen to the gold price under either inflationary or deflationary conditions. But the reality is that gold is truly an international currency. Its price is relatively constant, and rises over time in proportion to the inflation of fiat currencies. When measured in one specific currency, such as the dollar, the gold price becomes inextricably linked to that currency's exchange rate.
If you're trying to figure out whether the gold price will rise or fall depending on whether the US experiences inflation or deflation you are wasting your time. In the short term the gold price in US dollars will rise or fall depending on what the US dollar exchange rate does. In the long term the gold price in US dollars will depend on the inflation rate of the dollar. Since the dollar is a fiat currency, it is bound to be inflated until it is worthless, however long that may take.
Paul van Eeden
