Is the US government fiddling (the figures) as 'Rome' burns ? To come : dollar crash and global economic depression ?
(Some good graphs here.... 'hyper bubble in real estate' ; M3 data,
THE CORE RATE
by Jim Puplava
A caller into a Washington D.C. talk show asked a very pertinent
question regarding the business of living. "Have they changed the way
they measure the rate of inflation? The CPI report in May was zero
percent, excluding food and energy. If you take those things out, that
is what is primarily driving up everything. What would be the real
inflation rate, if you add back everything they take out?" The host of
the show turned to his guest, a financial reporter from The New York
Times. The host of the show and the Times reporter were caught
flatfooted. The Times reporter couldn't answer the question. The host
then went on to say, "The inflation rate as it is reported has been
quite low over the last few years. Next caller."
The caller to the show reflected the growing disconnect between Main
Street, Washington and Wall Street. Each month consumers see their
living costs go up-whether at the grocery store, the gas station, or
at the end of the month when bills are paid. Personal income has
stagnated, failing to keep pace with the rise in the cost of living. In
the meantime the media keeps spinning any increase-whether it is
booming real estate prices, rising gasoline prices, grocery bills,
doctor and dentists bills or movie tickets-as nonevents. Prices keep
going up. Wages keep falling further behind. It is a repeat of the
staginflationary 70's taxes and inflation. Inflation is on the rise
and so are taxes. Property taxes go up each year, making it difficult
for homeowners to hang on. The social security base rises each year
making more of a worker's income subject to the tax. States are raising
sales tax and auxiliary fees, while some states have raised income tax
rates. Like many of the items of the CPI index, rising taxes never get
In effect, what this caller was asking was how and when did they change
the way they measure the rate of inflation? On a first hand basis he
was experiencing inflation in his personal life with rising food and
energy costs. There was a major disconnect between what he experienced
in real life on a day-to-day basis and what he was told in published
inflation reports. The host of the show and the financial reporter from
the Times had no answers.
Washington, We Have A Problem
The caller was smart enough to know something changed and he was right.
In the early 90's the government realized it had a problem with
rising entitlement costs for Social Security, Medicare, and government
pensions. These entitlement payments were indexed by the inflation rate
each year. With inflation on the rise it meant these costs were rising
faster, thus making government deficits much worse. In order to bring
the government deficits under control, it would be necessary to bring
rising entitlement costs down.
One way to lower entitlements would be to bring the inflation rates
down, which would translate into lower Cost of Living Adjustments
(COLA). The way to do this was to bring down the rate of inflation.
However, this was not done by natural means, but artificially through
statistical manipulation. The supply of money and credit began to go
parabolic in the 1990s as shown in the graph of M3. The rise in money
and credit would mean higher inflation rates. Higher inflation rates
would mean higher COLA adjustments, which would lead to bigger
The solution was to change the way inflation is measured. Media reports
began to surface on how CPI was overstated. The real inflation rate was
actually much lower according to government and Federal Reserve
officials. The Senate Finance Committee appointed the Boskin Commission
to study the problem and find a solution. The Boskin Commission
published its final report "Toward a More Accurate Measure of the
Cost of Living," and submitted its findings to the Senate on December
4, 1996. The Boskin report recommended downward adjustments in the CPI
of 1.1%. The CPI, which is used as the basis for COLAs to Social
Security and government pensions, if lowered as recommended by the
commission, would reduce future entitlement payments as well as impact
other government programs. The CBO estimated that by overstating CPI by
1.1% it added $691 billion to the national debt by 2006. By then the
annual deficit would rise anywhere from $148 billion to $200 billion
annually by overstating the inflation rate. In effect the government
was overpaying because the actual inflation rate was much lower.
The Boskin Commission recommended several changes to the CPI index
develop and publish two indexes
abandon the fixed-weight formula for CPI goods
change the weight of items in the index from arithmetic weighting to
introduce substitutions in the index
seasonal adjustments to account for price increases that occur on a
seasonal basis, which would smooth out the fluctuations
Reduce prices by quality improvements
The result of their implemented suggestions is the mish mash we have
today, which bears no resemblance to reality. The Commissions
recommendations had widespread support in the Clinton Administration, a
Republican Congress and from financial luminaries such as Alan
Greenspan, who was expanding the money supply at a very rapid rate as
shown in the graph above.
Up until the Boskin/Greenspan initiative surfaced the CPI was computed
each month using a fixed basket of goods. That changed after the Boskin
Commission. The Bureau of Labor Statistics (BLS) began using
substitutions in their monthly computations of the CPI. If beef prices
rose, it was assumed that people substituted chicken. If chicken prices
rose, then consumers would switch to fish. If all these prices rose,
well consumers would become vegetarians or maybe start eating Alpo.
In addition to changing items in the index through the substitution
principal the BLS also changed the weights of items in the index.
Instead of straight arithmetic weightings the BLS began to use
geometric weighting. The benefit of geometric weighting is that it
automatically gave a lower weighting to those items in the CPI that
were rising in price and higher weightings to items in the index that
were falling in price.
As an example of how geometric weighting can produce lower values, a
recent example from the 90's bull market will illustrate the point
through two Value Line Indexes. The indexes are essentially the same.
They are made up of 1650 stocks. One index is arithmetically weighted
and the other is geometrically weighted. Between January 1990 and
December 2000, both indexes-which include the same stocks-produced
totally different outcomes and returns. The geometric index peaked in
April 1998. The arithmetic index did not reach its first peak until May
2001. The return from January 1990 to December 2000 was 52% versus over
300% for the arithmetic index. The geometric index peaked in 1998,
while the arithmetic index did not reach its first peak until 2001.
Since 2001 the arithmetic index has gone on to reach new a new high on
6/17/05, while the geometric index has never recovered from its peak in
1998. This is just one example how geometric weighting can produce
lower outcomes not only in stock market indexes but also in inflation
The manipulation didn't stop there. The bureau also began to adjust
prices for quality. This practice became known as hedonics. Hedonics
adjusts the prices of goods as a result of the increased pleasure a
consumer derives from a product. A few examples will illustrate how
removed the index has moved away from reality. Tim LaFleur is a
commodity specialist for televisions at the BLS. In December last year
he adjusted the price of a 27-inch television set for quality
improvements. The 27-inch television set had a retail cost of $329.99.
However, he decided the new model, which still sold for $329.99, had a
better screen. After putting this improvement through the governments
complex hedonic adjustment model he determined the improvement in the
picture was worth at least $135! Taking in this improvement he adjusted
the price of the TV by $135, concluding that the price of the TV had
actually fallen by 29%!  The price reflected in the CPI was not the
actual retail store cost of $329.99, but $194.99. The only problem for
we consumers is that if we went to Best Buy or Circuit City to buy that
TV, we would still pay $329.99.
Another example of hedonics at work is the way the BLS treats rising
automobile prices. Mr. Reese, a specialist for autos, took a 2005 model
car, which went from $17,890 in 2004 to $18,490 in 2005. After
adjusting for quality items and making antilock disc brakes standard,
the bureau adjusted the actual $600 price increase down by $225. The
problem for we consumers is that the price of the car in dealer
showrooms was still $18,490.
The Substitution Effect
Substitution also plays a role in reducing the CPI. From 2001-2003 the
CPI index fell by 1.6% reaching a low of 1.1%. Wall Street and the Fed
were talking about the risk of deflation. Deflation was predicted
everywhere in the press. The financial world became fixated over the
risk of deflation even though the monetary presses were working
overtime, credit was mushrooming, and asset bubbles were inflating in
the mortgage, bond, and real estate markets. The reason for the decline
was the substitution effect. Instead of using new car prices, which
were going up each year, the BLS substituted used car prices, which
were falling. In place of exploding real estate prices, the Bureau gave
more weight to the price of rents, which were falling as more
households bought homes. Rents were given more weight even though 69%
of households own a home versus the 31% that rent.
What makes this look even more ridiculous is that in April the National
Association of Realtors reported a year-over-year price increase in
homes nationally of 15%.
Year Over Year Increase In Household Residential Real Estate Values
2000 2001 2002 2003 2004 Through 3Q Cumulative
$1,010.3 $1,088.7 $1,197.0 $1,430.5 $1,601.7 $6,328.4
Source: Don't Ask, Don't Tell
One has to wonder as what kind of creativity will be used now that
rents are starting to rise as apartment owners remove lease incentives.
Perhaps the hedonic models will begin adjusting rising rents downward
due to changes in the quality of amenities such as swimming pools,
running water, magnificent views of the freeways, or the artistic
effects of polluted air in creating colored sunsets.
Many homeowners may not be aware that as a homeowner they receive a
fictional income referred to as Owner's Equivalent Rent (OER).
Essentially the BLS samples the price of rents in residential housing
to come up with what a homeowner would receive hypothetically if they
were to rent their own home. That sounds idiotic to me, since most
homeowners would agree the family castle is in many cases a money pit
and not a source of income. Unless the home is owned free and clear,
most homeowners have cash outgo each month due to mortgage payments,
property taxes, utilities, and repairs. As absurd as this concept
appears, OER gets the largest weighting in the CPI index of 23% versus
actual rent, which gets only a 6% weighting. OER is purely fictional,
yet it carries the greatest weight within the CPI index.
Hedonics helps the BLS keep rising prices for goods in the CPI from
ever showing up as rising prices. Even though the cost of housing,
energy, food, medical bills, prescription drugs, tuition, and
entertainment have soared, the government keeps reporting moderate
inflation. Hedonics is partially responsible. It has become a
convenient and subjective way of removing prices increases from the
CPI. The combination of substitution, changing the weight of goods
rising in price, hedonics and seasonal adjustments is one reason why
the CPI and reported inflation has remained as subdued as it is
reported each month. The problem is that these numbers are all
fictional and bare no resemblance to what households face each month
with their actual budgets.
As if these distortions weren't enough, there are the seasonal
adjustments that remove the price increases that occur during certain
times of the year, i.e. gasoline prices during the summer driving
season or heating oil during the winter. Seasonal adjustments are
nothing more than "intervention." They are designed to remove or
scale down volatility or price spikes. The only problem is that price
spikes never show up in the CPI. Only price drops get recorded. Price
spikes are statistically smoothed away so they never show up. Sharp
spikes in oil, gasoline, heating oil, or food get statistically
adjusted. This keeps the CPI low. It is why the caller at the beginning
of this article was puzzled. What consumers see everyday in real life
is so different than what the government reports and the markets accept
each month. It is unreality TV.
Another way of understating the CPI is the "core rate," which is a
nonsensical phrase that is commonly used in the financial world.
Whenever the CPI rises, they back out food and energy to give us the
core rate, which is much lower. Whenever the CPI rate goes lower, they
refer to the CPI rate and not the core rate as they did this month. The
CPI fell 0.1% in May from April. It was the first decline in 10 months.
The drop was due to falling energy prices. Oil prices started out the
month of May at $53.56 a barrel. They fell to $49.65 mid-month before
rising back to $52.75 at the end of the month. Did the drop of $.81
really account for a drop in the CPI of 0.10%? If the CPI is as
moderate as the Fed claims, then why are they raising interest rates?
Could it be inflating asset bubbles, such as real estate, mortgages,
and consumption, the imbalances in our trade deficit or expanding
annual credit of $2.7 trillion? They haven't really told us.
Finally, let's clear up the other nonsensical notion of excluding
energy. Energy is essential to industrial economies. It takes energy to
extract raw materials from the earth. It then takes energy to
manufacture the things we use and consume. It also takes energy to
transport the goods we produce. Even the energy we consume takes energy
to produce whether it is oil, natural gas, or electricity. Petroleum
products contribute about 40% of the energy we use in the United States
each year to other products that we never think about.
Transportation accounts for an estimated 67% of all petroleum use in
this country. The rest is accounted for by nonfuel products and
petrochemical and feedstocks. The list below from the EIA/DOE is not
exhaustive, but is illustrative of the many uses of petroleum.
"Nonfuel use of petroleum is small compared with fuel use, but
petroleum products account for about 89 percent of the Nation's total
energy consumption for nonfuel uses. There are many nonfuel uses for
petroleum, including various specialized products for use in the
textile, metallurgical, electrical, and other industries. A partial
list of nonfuel uses for petroleum includes:
· Solvents such as those used in paints, lacquers, and printing inks
· Lubricating oils and greases for automobile engines and other
· Petroleum (or paraffin) wax used in candy making, packaging,
candles, matches, and polishes
· Petrolatum (petroleum jelly) sometimes blended with paraffin wax in
medical products and toiletries
· Asphalt used to pave roads and airfields, to surface canals and
reservoirs, and to make roofing materials and floor coverings
· Petroleum coke used as a raw material for many carbon and graphite
products, including furnace electrodes and liners, and the anodes used
in the production of aluminum.
· Petroleum Feedstocks used as chemical feedstock derived from
petroleum principally for the manufacture of chemicals, synthetic
rubber, and a variety of plastics.
Petroleum feedstocks have been used in the commercial production of
petrochemicals since the 1920's. Petrochemical feedstocks are converted
to basic chemical building blocks and intermediates used to produce
plastics, synthetic rubber, synthetic fibers, drugs, and detergents.
Naphtha, one of the basic feedstocks, is a liquid obtained from the
refining of crude oil.
Petrochemical feedstocks also include products recovered from natural
gas, and refinery gases (ethane, propane, and butane). Still other
feedstocks include ethylene, propylene, normal- and iso-butylenes,
butadiene, and aromatics such as benzene, toluene, and xylene. These
feedstocks are produced by processing products such as ethane
(separated from natural gas), distillates, naphthas, and heavier oils.
Industry data show that the chemical industry uses nearly 1.5 million
barrels per day of natural gas liquids and liquefied refinery gases as
petrochemical feedstocks and plant fuel. 10 Demand for textiles,
explosives, elastomers, plastics, drugs, and synthetic rubber during
World War II increased the petrochemical use of refinery gases. Gas
byproducts from the production of gasoline are an important source of
As shown above from the government's own energy information sheets, the
use of petroleum is critical to our modern industrial way of life. Does
it really make financial sense to remove it from an inflation gauge
that is used to assess the cost of living? Think of what life may
become without energy. We may soon find out, if peak oil is really
here. With the price of energy at $60 a barrel, excluding its rise from
the cost of living is as impractical as it is disingenuous.
The "core rate" is a fictional concept designed to sooth the
financial markets and distract them from the reality of rising
inflation. The core rate does not exist anywhere in our economy. It is
a fictional concept designed to obfuscate inflation.
The next time you go to the grocery store and experience shock and awe
as the checker rings up your shopping cart, ask him or her for the
"core rate." See what kind of look you get. For that matter, when
it comes time to make your monthly mortgage payment, instead of making
the payment, send a bill to your lender for "owners equivalent
rent." And the next time you pay your taxes in any form, whether
income or property, hedonically adjust the bill for the lower quality
of government service. If your tax bill went up, just use hedonics to
adjust the bill downward. Ah, you might say, "This is impractical.
Nobody can ever get away with that." You would be right, but perhaps it
is a question we must now ask of government. Somebody should start
questioning the reported inflation numbers as our caller did at the
beginning of this article. Problems can only be solved when they are
acknowledged first. Washington, we have a problem: it is inflation, not
What needs to be monitored next as the US economy falls into recession
and perhaps depression is what happens to money and credit and the
price of the dollar. If credit expands and if the Fed or foreign
central banks print money to buy our bonds, where will the next asset
bubble occur? As long as we live in a world of fiat currencies with no
backing to any of the world's currencies central banks are free to
print as much money as they want. There is nothing to stop them from
doing so. What we have seen in this new fiat world is that when money
and credit expands rapidly there are always sectors that will inflate
and others that will deflate. As the technology bubble deflated, three
bubbles in bonds, mortgages and real estate took its place. During this
time, while new assets bubbles were in the process of inflating as one
asset bubble deflated, the CPI fell and was cut in half, giving sway to
the argument of deflation. In reality, the only deflation that was
taking place was at the BLS in its substitution and hedonic statistical
The deflationist's argument that inflation only takes place during
times of war and expanding government budgets isn't necessarily true.
War or expanding budgets aren't necessary for inflation to occur.
Prime examples are Latin America, more recently Argentina, Brazil,
Turkey and Russia, as is the Weimar Republic. If deflation takes hold
in the US, it won't be as the deflationists now see it. It will be as
result of the currency falling faster than the rise in nominal prices
as it occurred in Weimar Germany.
Given the size of mortgage debt and the amount of leverage in our
economy and financial system the Fed will not tighten rates in a
significant way. The table listed below, taken from the current bond
market and John Williams' real CPI, shows just how far behind current
interest rates are from real inflation rates.
REAL NEGATIVE INTEREST RATES
Real CPI 5.5%
Funds 1 Yr
T-Bill 2 Yr
Note 5 Yr
Note 10 Yr
Note 30 Yr
3.25% 3.48% 3.62% 3.73% 3.95% 4.25%
Source: John Williams' Shadow Government Statistics,
As the US debt burden increases with each passing month, the Fed has
only one option, which will be to print money. Up until now foreign
central banks have relieved the Fed of most of that burden. Foreign
central banks have been doing most of the money printing in an effort
to sterilize capital inflows into their countries and keep their
currencies from appreciating.
This issue has become more serious than is commonly recognized.
According to the latest Q1 2005 Z.1 "Flow of Funds" report first
quarter non-financial debt expanded a record $2.411 trillion. As Doug
Noland reports in his June 10th Credit Bubble Bulletin, during the
decade of the nineties non-financial debt expanded on average $700
billion annually. Blow-off credit creation is now more than three times
the pace. 
Consider these facts from Doug Gillespie Research:
During 2004, foreign investors absorbed an extraordinary 98.5% of all
Treasury issuance, a net of $357.2 billion acquired, versus a net of
Foreigners absorbed almost as large a proportion of the issuance of US
agency securities, 93.7%, a net of $129.6 billion acquired, versus net
issuance of $138.3 billion.
Thus, combined foreign purchases of Treasuries and agencies equaled a
stunning 97.2% of total issuance, $486.8 billion, versus $500.8
As to the purchase of corporate bonds, foreign investors took down a
net of $265.5 billion, 44.7% of total issuance of $594.3 billion.
In addition to the huge proportion of foreign Treasury acquisitions
last year, the Federal Reserve added $51.2 billion to its own Treasury
portfolio. This means that during 2004, the Fed and foreign investors
absorbed $408.4 billion or about 112.7% of the total issuance of $362.5
billion. Obviously, this had a highly favorable influence, on balance,
on Treasury yields during 2004, although an influence hugely lacking in
traditional open-market characteristics. [Author's note-this explains
the Greenspan conundrum as to why long-term yields fell, while the Fed
raised short-term rates]
As of 3/31/05, foreign investors held a total of $9.723 trillion of US
financial assets, up almost $400 billion from revised holdings of
$9.326 trillion as of 12/31/04. From 3/31/04, the increase was
approximately $1.11 trillion.
As of 3/31/05, foreign financial liabilities totaled $4.634 trillion,
resulting in a net foreign claim against the US of $5.089 trillion.
For all of 2004, foreign investors acquired a record net $1.255
trillion of US financial assets. During 2005's first quarter, this
figure fell to an annual rate of $1.170 trillion, not materially below
last year's record level.
During this year's first quarter, a very high 73.6% of US
financial-asset acquisition by foreign investors was in highly
marketable (therefore, highly liquid or "exposed") asset classes.
This was up from 66.0% for all of 2004, and equal to the same 73.6%
level achieved in 2003. 
The following table taken from the same Gillespie report shows just how
much of our debt has been acquired by foreigners in the last decade.
The Fed has had little need to monetize debt. Foreigners are doing the
Fed's dirty work.
FOREIGN HOLDINGS OF U.S. SECURITIES
03/31/2005 12/31/2004 03/31/2004 12/31/1994
Treasuries 43.0% 42.5% 40.1% 18.3%
Agencies 13.2% 12.7% 11.2% 5.7%
Corp. Bonds 27.3% 26.6% 25.3% 13.4%
Corp. Equities 13.4% 13.0% 12.4% 7.0%
Source: Gillespie Research / Federal Reserve
In effect, the US is exporting its inflation and it will ultimately
result in deflation in the rest of the world, which is heavily laden
with overcapacity and hyperinflation in the US when foreigners no
longer finance our deficits. That is when the end game of
hyperinflating our way out of our debt bubble really begins. Unlike the
gold standard, there are no self-correcting mechanisms in the global
monetary system. The dollar or any other currency for that matter has
no intrinsic value. All currencies are fiat and have no limit to the
amount of its supply. There can be no dollar short position as some
imply, because by its very nature the supply of dollars is unlimited as
the above statistics illustrate.
The real risk is what happens when confidence in the dollar wanes as it
must. Like the Weimar Republic, which had its currency accepted as a
means of payment during the initial stages of inflation, the gig was up
once foreigners realized the full extent of the mark's depreciation.
That is when they began disposing the mark and the hyperinflationary
stage was set to unfold.
What we can say now is that the US is experiencing real inflation in
the economy that is much higher than what is reported (6-8%). In
addition to real inflation in the economy, the US has experienced
hyperinflation in the financial economy-first in the stock market
(the tech bubble between 1995-2000) and then in the mortgage, bond and
real estate markets since 2000. If inflation continues to increase as I
suspect in the real economy, I can guarantee you it will never show up
in the CPI and PPI. Real inflation will be removed statistically
through the magic of hedonics, geometric weighting, substitution, and
This whole process of purposefully understating the real inflation rate
also keeps real inflation artificially subdued. Think of all of the
aspects of our economy that are tied to the CPI. Listed below are just
a few examples:
Wage and labor contracts
COLAs on pensions
Market interest rates
Labor contract negotiations begin with CPI adjustments. Annual raises
at companies are based on CPI changes. Think of how many workers fall
further behind in their pay because of an understated CPI. How many
landlords are cheated out of their just rents by understated inflation
rates? How many retirees are robbed of real increases to their pensions
as a result of underreported inflation? What would be the real rate of
interest, if bond investors figured out that the real inflation rate
was 6% and not 3% as reported by the BLS.
An understated CPI also overstates GDP by not removing the full
inflationary impact of pricing from nominal numbers. It also overstates
productivity by overstating the numerator part of the equation.
Any debate over deflation or inflation must begin with the truth. By
habitually pointing to an understated CPI as proof that inflationary
forces remain moderate is disingenuous at best and fraudulent at its
worst. The truth is that we are experiencing real inflation rates of 6%
in the real economy and hyperinflationary rates in the financial
economy in bonds, mortgages, and real estate. When the next downturn
comes, it will most assuredly alert investors to keep a sharp eye out
for the next asset bubble to hyperinflate. Will it be stocks as
occurred in the Weimar Republic, Japan and the US? Will it be hard
assets such as gold, silver, and other hard commodities as has occurred
throughout all of history when governments inflate?
What we have now is inflation. Forget the CPI, PPI, and the "core
rate." These are all fraudulent inflation gauges designed to confuse
and obfuscate the real inflation issue. There is no such thing as the
"core rate." The core rate doesn't exist in the real world. Next
time you see an increase at the grocery store, the gasoline station,
your utility or cable bill, your children's tuition, your property
taxes or your dentist's or doctor's bill, ask for the "core rate."
That is when you will be confronted by the reality of its fiction.
P.S. The inflation/deflation debate will be showcased on the FSN
network with both sides making their case. Bob Prechter was the first
guest, Dr. Marc Faber, and John Williams will be next in line.
P.P.S. A lengthy piece on hyperinflation will be written making its
case after my summer sabbatical in August. Part II of "The Great
Inflation" coming sometime in late September early October. The piece
will be lengthily and may be published in four parts due to the length
of its contents. I've got Mary worried, because it's beginning to
look like "War & Peace."
P.P.P.S. As many are fond of making bold predictions, I'll make a few
TEN REASONS FOR HYPERINFLATION
Global oil production will peak between 2005-2008. Economic growth
ceases to exist as global economies and markets are thrown into chaos
The War on Terror escalates into a resource war over oil pitting the
great powers the US, China, and Russia in a replay of "The Great
Debt creation and monetization hyperinflates as the government's
deficit spirals out of control with a war and a depression.
Foreigners begin to bail out of the dollar setting off a dollar crash.
The US puts in place capital controls to corral US and domestic money.
The War on Terror will be given as the reason.
The government takes over GSEs owning most American mortgages.
A national mortgage bailout bill is passed lengthening mortgage
payments in an effort to forestall debt defaults. A new restructuring
agency will be set up to repurchase impaired mortgages from the banking
system and renegotiate terms of the debt to avoid default. The 100-year
mortgage is born.
A national retirement security act is passed forcing private pensions
to buy long-dated zero-coupon government bonds that will be inflated
away. The reason given will be for plan protection against bear
As the US economy goes into a hyperinflationary depression the rest of
the world's economies follow suit. Money printing on a grand scale
occurs in western and Asian economies as governments wrestle and try to
satisfy the demands of a social welfare state and an angry, aging
As governments hyperinflate and debase their currencies, gold will take
on its true role as money rising in value against all currencies. The
world will move towards a global currency backed by gold.
I have a few more, but these first ten should do for now.
MY ARGUMENTS FOR DEFLATION:
Elimination of the Federal Reserve
Gold backing of the U.S. dollar
Honesty returns as a virtue in Washington
Need I say more?
- posted 14 years ago