All Posts Tagged With: "deflation"

Just look up Warren Harding on Wikipedia. The first entry you will find is not the 29th president of the United States of America, but a rock climber with the same name.

Central banks ‘target’ a certain level of inflation because they think – or say they think – that a bit of inflation helps create full employment.

“Global trade rose at its fastest rate in more than five years in July,” The Financial Times reports, “suggesting the economic recovery is feeding through into commerce.”

That is clever to suggest that when rates rise people will have to find another way to say that houses are affordable. But we reckon when rates rise, as they eventually must, a lot of new home buyers will find out that access to cheap credit does not make a house affordable. It just makes the amount of debt you owe to the bank a lot larger.

Maybe this will sound like a bunch of whining by the end of the week. After all, three of the big four Aussie banks will report results this week. There will be billion dollar cash profit figures tossed around. But as we said last week, the earnings performance of financial firms in the last six months is a sham.

We began having doubts about the ‘feds inflate…gold soars’ hypothesis last year. It was too easy…too obvious. And if it were that easy to inflate a nation’s currency, how come the Japanese couldn’t get the hang of it…

The press attributed this week’s rise in gold to benign causes. The end of the world seems to have been postponed – indefinitely. Bloomberg reported that a clear majority of those polled thought the world economy was recovering.

The Trade of the Decade is still buy gold/sell stocks. And the decade isn’t over. If you have US stocks, this is a good time to sell. The Dow went up 63 points yesterday – a weak bounce after several days of losses.