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Thread: Let's talk about the gold market

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  1. #17
    jk's Avatar
    jk is offline Shadow Fed, iTulip Select Member, The Brain
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    May 2006

    Default Re: Let's talk about the gold market

    i know i've said this before, many times, but i'll repeat it:
    when discussing inflation we MUST distinguish between value vs other fiat currencies and value vs "stuff" - goods and services.

    also finster is right to distinguish prices in dollars from e.g. prices in gold, but i earn my living in dollars and pay my bills in dollars. i expect that will remain the case for many years, probably the rest of my life. i say this because there is no global ready alternative to the dollar except hugely revalued gold, and the political system and banking systems are far from prepared to accept this alternative. also gold is not great as a medium of exchange since its supply is so inelastic while many prices, especially wages, are so inelastic. i think the usd may lose its global pre-eminence but i've long said i think the world will break into 3 currency zones, and i live in the one which will still use the dollar.

    in recent developments groceries have certainly gotten more expensive during the pandemic - not a surprise given stresses on the distribution system. meanwhile i read about dairies dumping milk and crops rotting in the field because of problems in the distribution system, including mismatches between underutilized systems geared for bulk buyers like restaurants, vs bottlenecks in distribution systems aimed at consumers, combined with panic hoarding.

    this last is emblematic of the supply chain reformation which will contribute to driving prices higher once we get past 1-3 years of [fiat] deflation.

    as to your observation, llanlad2, certainly nominal everyday expenses in the dollar world i inhabit have been rising all my life. but it's hard for me to evaluate changes in the cost of infrequent, large purchases - autos most notably are nominally much more expensive than 10 or 20 years ago but they are quite different in their safety, comfort and convenience features as well as their mileage and other technologies. housing is more costly [but houses have steadily grown in size and amenities], water heaters, furnaces, and so on. simultaneously, no one can doubt that electronics prices have been declining steadily - how many people buy a purpose-built camera these days?. then, of course, we have to include the price of services even as the nature of those services change - utility bills, subscriptions of all kinds including streaming services, stock transaction commissions, access to encyclopedic knowledge, navigation services, communications in general- the cost of "mailing" something, 21st century "teletype," voice calls, video calls. heaven knows what's happening at the moment or will happen in the future, but the cost of airfare has declined enormously.

    but it's everyday expenses we pay every day, and which hit us the hardest and most directly.
    Last edited by jk; 06-02-20 at 08:13 AM.

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