 Dollar Declines as Gold Rises
Bill Bonner
Provided as a courtesy
of Agora Publishing & The
Daily Reckoning
Posted Jul 14, 2009
Yesterday, stocks went nowhere.
Oil went nowhere. And the dollar went down as gold went up.
The reason for the dollar's
decline and gold's rise was given in the front-page headline
of today's Financial Times. China launched a "new
dig" at the dollar, it says. As near as we could tell, China
merely stated the obvious - that the world is going to have to
find a better monetary system. The US dollar won't be king
of the hill forever. And China, which is up to its neck in
dollars, would like to find a solution sooner rather than later
- that is, before the dollar goes the way of all paper.
The dollar will eventually
give way to inflation and devaluation, but probably not soon.
"I'm absolutely worried
about inflation," says John B. Taylor.
But here at The Daily Reckoning,
it is not inflation that worries us... it's the lack of it. Making
a long story short, as long as the feds see no inflation they
will continue trying to create it. In the end, they will get
more than they wanted.
And where will investors flock
when that day comes? You guessed it - to our favorite yellow
metal.
Though, right now, instead
of inflation, we have deflation.
Today's New York Times tells us that deflation in Ireland
has reached 5.4% - the highest since the Great Depression of
the '30s.
You know the reasons for deflation
as well as we do. The world suddenly has too many people who
borrowed too much money to buy too many things they really
didn't need and really couldn't afford. This caused the world's
producers to greatly over-estimate the 'real' demand. Their customers
began to disappear in 2007. Their factories are still standing.
Jul 13, 2009
Bill Bonner
email: DR@dailyreckoning.com
website: The
Daily Reckoning
Bill Bonner
is the founder and editor of The Daily Reckoning.
Bill's book,
Mobs,
Messiahs and Markets: Surviving the Public Spectacle in Finance and
Politics, is a must-read.
He is also the
author, with Addison Wiggin, of The Wall Street Journal best seller
Financial
Reckoning Day:
Surviving the Soft Depression of the 21st Century (John Wiley
& Sons).
In Bonner and
Wiggin's follow-up book, Empire
of Debt:
The Rise of an Epic Financial Crisis, they wield their sardonic
brand of humor to expose the nation for what it really is - an
empire built on delusions.
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