Falling Rates, Rising Stimulus

But regimes come and regimes go, including monetary ones... and now it feels like the balance of power is shifting once again.

The whole world continues to mop its brow with the sweat of deflation worries – but that is precisely the excuse the world’s central bankers use as they chug out fresh stimulus like mad.

As for gold’s achilles’ heel, high and rising interest rates, remember which way rates are going now (straight down). The U.S. and Europe have embarked on an aggressive “reflate at all costs” program, and it is still too early to register those costs. The piper may take his time, but he always gets paid.

What’s more, the mandarins that whisper into Obama’s ear are warning him not to be conservative... not to hold anything back... to remember that FDR’s near-fatal mistake in the 30’s was doing too little rather than too much.

New York Times columnist Paul Krugman (a recent Nobel Laureate) has even said this: “My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent.”

So we can bank on another round of jaw-dropping government stimulus being thrown into the mix. Dollars, dollars, dollars. “Don’t worry about the deficit this year or the next,” our President-elect tells us

A Gift to Wise Hands

For those who can take a Gnome’s eye view of things, the dollar’s late 2008 short-covering rally is a gift. It has given the powers that be a false sense of complacency as their printing presses run deep into the night.

We will soon wake up to a time when the world is awash in dollars it neither needs nor wants... and when interest rates drag along at rock bottom, Japan-style, in a bid to prop up the struggling U.S. economy.

When that time comes, the Gnomes will have their revenge.

Justice Litle is Editorial Director, Taipan Publishing Group
Courtesy: www.taipanpublishinggroup.com