Thu, 19 January 2012
Mike "Mish" Shedlock finally made it on to FSN's distinguished guest list. While Mish is often controversial and frequently derided by other members of the prognostication class, he has a unique perspective, which is entitled to some respect. As he explains it, the massive destruction of assets, such as real estate and debt backed securities has actually led to a shrinking of the money in circulation. Even though the Monetary Base M0 has greatly expanded in recent years, none of these newly created dollars have found their way in to the money supply. The reason is simple, banks aren't lending because of the lack of credit worthy borrowers.
As a result, while governments have greatly stepped up borrowing, inflation, as he sees it, has remained subdued. Nonetheless, he believes that the declining confidence in government and the global monetary system is leading to ever increasing gold prices. He's a big gold proponent and believes that it's the place to be. While some may take issue with his take on inflation versus deflation, he appears to arrive at the right place--gold is going up.
He's got a blog at http://globaleconomicanalysis.blogspot.com/ and is a registered investment advisor representative for Sitka Pacific Capital Management.
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