The price of gold is the best indicator of a currency’s purchasing power. From Alasdair Macleod at alasdairmacleod.substack.com:
Monetary authorities and domestic users do not understand the true relationship between their fiat currency, the threats to its purchasing power, and the relationship with gold.
It’s now increasingly assumed that the US economy is not performing as well as the statistics suggest, and that the Fed must cut interest rates and keep on cutting. The assumption is based on a mixture of Keynesian hope and market experience of the last three or four decades, which cover the work-experience of today’s investment managers. Last week I quoted from an article by Ambrose Evans-Pritchard in The Daily Telegraph of 5 June, who wrote that “Citigroup says that the Fed will have to cut interest rates in July and at every meeting until mid-2025”. Therefore, a research report from one of the largest banks in the US is evidence of this view.
It must be admitted that in the short term, such a strong consensus over interest rates can become self-fulfilling. Perhaps the ECB led the way last week with the first cut in its deposit rate, which suggests that the back chat between leading central banks confirms that the ECB will not be alone and that we can expect the Fed to follow as soon as it decently can, though officially it is still fence-sitting. And perhaps the Bank of England will cut after the UK’s general election.
Unfortunately, the problem for central banks is that inflation is proving to be sticky, and the prospect of it returning to their 2% target and remaining there is remote. To understand why this is the case requires an understanding of what inflation represents: it is a decline in the currency’s purchasing power. It’s just that evidence of the decline is reflected in a higher level for prices generally.
May we get a von Mises style economist one day which would probably never be allowed.
Gold will forever be valuable and about those precious minerals in Uke, I wonder how much in Afghanistan?
o[+_+]o says one trillion and that Uke 404 has world’s largest reserves of titanium and ore, untapped lithium and massive coal.
Yee-Haw! Got there first tonight and scored eggs, bacon, chicken breast, sirloin, all new in package with use by 06/11.
There was a horkin’ fiber chunks 5lbs. box of ground beef with some fingers pierced packaging. (DOH!)
I’ll whip one up for Rocky Raccon who comes out in the day now and will sometimes not like the menu like a cat…LOL at the little critter.
Made it back just in time as lightning show was going and the first drops started as I stepped on the porch.
Mad Max world doesn’t scare me as demoralization is hard with morale czar, saw an ultimate film nerd video stating that Hardy is the Feral Child grown up and Mel will return to the Wasteland!
Hopefully G Miller sees this and brings Mel back with the great Tina Turner Hero song going as the crowd stands and cheers and the shekels roll in, after all he made the franchise.
Breaking from America:
Horse With No Name