Inflation: Silver Leads & Gold Follows
By: Stewart Thomson
SilverSeek.com
Tuesday, October 6th
1. When combined with rate cuts, QE becomes a deadly deflationary cocktail. Banks have no incentive to make loans, and T-bonds become the asset of choice. The T-bond money is squandered by governments, and money velocity implodes.
2. The bottom line is that bank and government wealth is inflated by QE, and the wealth of the average person is massively deflated. “QE to infinity” is better described as “deflation to infinity”.
3. Please click here now. In the mid-1990s, US money velocity peaked, and entered a multi-decade bear market. It was caused by the Fed forcing savers out of banks and into risk markets.
4. As government became an ever-bigger part of the global economy, productivity also entered a gigantic bear market.
5. The situation is dire. Modest rate hikes are desperately needed, because rate hikes pressure global governments to shrink themselves.
6. The hikes also incentivize savers to put money back into banks, where it can be professionally loaned to consumers and entrepreneurs.
7. Please click here now. Double-click to enlarge. That’s the quarterly bars XAU:gold chart. The Fed’s obsession with rate cuts helped grow government, destroy savers, and it also created an enormous multi-decade bear market in gold stocks.
The Rest…HERE
