Friday, June 8, 2012

Mike Maloney & George Soros on Gold (Updated)

  • We are fighting monetary deflation.
  • QE is failing.
  • Mike Malone: We need to let the free market work
  • Deflation occurring in “public money supply” while there is inflation occurring in the “banking money supply” driving up commodity prices.
  • George Soros filings indicate he is BUYING gold.

What I find interesting is the concept  of simultaneous inflation & deflation in the money supply. Essentially what he is describing is the large banks have "free money" they can borrow at zero interest rates to speculate on markets (and making them more unstable) while the consumer is experiencing deflation in that they cannot get loans from banks and see their purchasing power decrease through both inflation (in gas and food) and a lack of job growth.

Here's a great example from CNBC.

 Michael Shreve, a 57-year-old science teacher in Marysville, Wash., has watched helplessly as mortgage rates have fallen. He said that despite his stellar credit score, no bank had been willing to let him trade in his 6.35 percent 30-year mortgage because his house was now worth less than when he bought it.

Banks and corporations have access to cheap money while consumers are shut out:

As interest rates have been dropping to new lows seemingly by the week, American companies have been taking advantage of the cheap borrowing costs, but consumers have been largely left on the sidelines.
New data this week from the Federal Reserve shows that in the first quarter of this year, American businesses were taking on new debt at the fastest rate since the financial crisis in 2008. American households, though, were heading in the opposite direction, increasingly shedding debt.

 This is one of the reasons that the middle class has virtually evaporated over the last four years. Wealthy people are getting wealthier because they have access to cheap money while the poor are becoming poorer due to higher gas & food prices and a depressed labor market.

No comments:

Post a Comment