[Rapala]

Raul, firstly to say thank you for daily writing effort, I regard it as the most important read of the day and feel I have been educated no end with regard to some complex issues. Another writer I greatly admire is John Hussman for his fact based historical analysis of the market. In his latest weekly comment he makes a conclusion that the USD is roughly 10% overvalued at present. I felt his evidence for such a conclusion was uncharacteristically weak and unsubstantial.

I know in the past you have had the view that the USD will tend to strengthen, would you care to agree/ dispute his conclusion?

[Rapala]

yeh sorry didn’t mean to imply it was a TAE article. I was trying to understand how increased loans still mean lower money velocity which gurusid has answered. (thank you gurusid. )

[Rapala]

Regarding the ‘QEuriouser’ Article above, it states that loans are are increasing at 4% since 2011(before this, it was negative).

I’m confused how this ties in with decreasing money velocity which as I understood is key to the whole deflation argument. If loans are increasing, surely this means money is increasingly being used to ‘buy stuff’ which would increase money velocity?

[Rapala]

I’ve been reading financial blogs for a couple years now and can honestly say that I feel have learned far far more in the last couple hours than all my previous years reading. It has all suddenly just clicked (even if it’s really scary). Thank you!

I do have one question I hope you might find the time to answer. You were both clearly worried about another even bigger crash after the 2008 crisis, but somehow governments seem to have kept the economy going on what seems to amount to little more than an expert PR campaign and keeping people in the dark about the true nature of the calamity we face.

While it’s impossible to make predictions regarding the unfolding of economic events, would you say you are more/less worried about the coming crisis than you were in say 2009/2010 and do you think governments have a chance of keeping the status quo for another few years as they have done since 2008?

[Rapala]

Thank you for your responses Steve and Nicole, you have greatly helped in my decision making.

[Rapala]

Hello everyone – 1st post. (and sorry for bumping an oldish article but it seemed most relevant one)

I have read and reread this fascinating article to try and make sure I am understanding it fully. It really is a critical issue for me as most of my savings are in gold and I am trying to decide whether to get into cash or not.

My understanding from it is that all the trillions the FED is printing will do nothing to spur inflation because a) banks are just using the money to increase their reserves as they do not have the appetite for risky loans and b) consumers are wary themselves of taking out new loans and are currently trying to pay off debt.

This means that all this money has the same effect as if they printed it and then just buried it. ie. close to nothing

However the thing I don’t understand is that this has been going on for 5 years and yet we are still seeing inflation. This article on zerohedge shows how money supply expansion does indeed have a matching cpi correlation.

https://www.zerohedge.com/contributed/2012-08-10/inflation-m2-and-velocity-money

So is this trend just temporary or is there another way to explain rising cpi index?

[Author]

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