More of this…as previously reported by the Chief.
Firstly, Mogambo Guru continuing to sound off in his imimitable style:
More generous inflation protection
Around here, governments are freezing open staff positions and trimming budgets, which is bad news for an economy that depends on government spending, like America’s. And so it seems natural that we learn from Bloomberg.com that, “New York Mayor Michael Bloomberg ordered agency heads to freeze all city hiring and cut their budgets this year and next, anticipating less revenue as Wall Street profits drop and real estate sales slow.”
The net effect is that “New York state faces a budget gap of $4.3 billion next year, up from $3.6 billion estimated three months ago, as Wall Street job cuts and losses reduce tax revenue, the Division of Budget said. The state normally collects about 20% of its revenue from taxes on Wall Street companies and employees.” 20%! Wow! No wonder Wall Street sharpies are always sticking me with fees, expenses and commissions!
But rememebr – the economy is REALLY doing just fine! Didn’t the Dow go up 300 today? Besides, inflation is low, right?
Read on…
The dollar is now worth less than 1/800th of an ounce of gold – the most significant financial development in the world today. Why is this more important than crude oil over US$95, or copper over $3, or wheat over $7? Because, unique among all the commodities and industrial products in the world, gold is money.
What does this mean: “gold is money”? It means that gold has the primary desired characteristic of money, which is stability of value. Thus, when the “price of gold goes up”, the value of gold doesn’t change much. What you are witnessing is the value of
currencies declining. The dollar, yes, but also the euro, yen and yuan. The result of declining currency value is inflation.
Read more for a pretty good primer on the gold standard and our current inflationary environment.