OT: gold-eagle editorial - "Debunking Deflation"

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From www.gold-eagle.com


-- Jack (jsprat@eld.~net), October 13, 1999


Thanks , Jack.

My own expectation is that today both deflationary and inflationary forces are increasing the volatility of markets. RE Y2K, 1st Qtr 2000, I suppose we will see increased prices for essential goods (gasoline, food, medicines) and decreased prices for non-essential goods (items that can be delayed in purchase like new cars or new homes).

This cvould be worse than either inlfation OR deflation. The studd you need costs more but your income ability to pay is less.

If consumer confidence and/or credit availability/credit worthiness suffers, the drop just in new car purchasers could result in significant unemployement due to curtailed manufacturing. A significant drop in manufacturing could impact services and supporting busniess.

I have seen this first hand in steel mill towns when the mill closes for good. Not only were the mill workers unemployed, but so were the businesses that depended on the mill workers as customers.

Action suggested:

1. Avoid taking on additional debt. 2. Try to reduce current debt, highest interest rate balences first. 3. Set aside some hedge in tangibles, like physical possession of gold or silver.

-- Bill P (porterwn@one.net), October 13, 1999.

Interesting analysis but it overlooks the fact that if the effects of Y2K on the global banking system are massive, there will be no way to digitally inflate the money supply. The current system has to be functioning in order to create money (actually credit) on anywhere near the scale necessary to sustain Life As We Know It.

-- cody (cody@y2ksurvive.com), October 13, 1999.

The steel mills were not closed due to "the economy" but were closed due to the Cold War. It was America's greatest strategistic move to go from losing the Cold War to winning it. While the Soviets fretted with "national industrial" statistics concerning its raw material, America ran out the door with a degree of sophistication and had other nations do the low end for itself, it then purchased the high end and technology jumped through the roof leaving the Soviets in the dust.

Better to have experienced discomfort and a repossessed car than to be a hostage to the Kremlin.

-- Paula (chowbabe@pacbell.net), October 13, 1999.

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