Comment: North believed, rightly,

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North believed, rightly,

North believed, rightly, that commodities had become a bubble last March saying that that bubble had burst and that phase of the gold bull market was over. He was touting deflation because Bernanke had held the Adj. monetary base flat for over 18 months, in effect, actually deflating.

So, in that case when credit is being destroyed the demand for cash would be high and the dollar would rise in order to service the current debt payments. Gold suffers under those circumstances.

Now, since the FED has been inflating the adj. monetary base for 6 months AND have stopped paying interest (zero-bound interest rates) on the excess reserves being held by member banks his argument is that they will have to lend to survive. If that's the case, then yes that is a recipe for inflation.

North never said that Gold would not ultimately win out over the fiat currencies, but in March 2008 was not the time for that to happen. Now, the stage is set. We'll see if he's right.

Me? I'm not betting against him again. He was right in his analysis a year ago and I think he's right this time. If the 30 year bond yield continues to rise, then the last bubble has popped... the dollar bubble and at that point we're Iceland times a million.


Every decent man is ashamed of the government he lives under. -- H.L. Mencken

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