So many points to respond to...I picked the top 5/25moda0306 wrote: 1. So now you're measuring inflation via the price of long-term contract financial assets? Does that mean we had staggering deflation when the stock & bond market got hit in 1981, even though CPI still rose by 10 that year?
2. Does this mean that we have "inflation" because the bond prices rose? That seems like a foolish way to look at it.
3. Does this mean every time they go down, we have deflation, and every time they go up, we have inflation?
4. It's not about whether gold hits $2k, $3k, or $10k, but how quickly the U.S. dollar is losing real value. If the dollar is losing value fast enough (25% per year), one might want to consider putting a pause on their rebalances.
5. So you might want to be more specific about the savers that are being punished (assuming that the fed is grossly setting interest rates too low).
The "moda....please" comment was I thought you were trying to educate me on how atrificially low rates spur gold up and artificially high pushes it down. Wait, are you now agreeing the fed creates "artificially" low or high rates? This is a breakthrough .
as to the others..........
1. 1981 saw a blow off top in gold crushing the latecomers to the party and a flush out of hope for stocks in a bear market before a 20 yearish bull run. The fed succeded in destroying inflationary expectations with double digit rates and slayed the inflation beast....at least for a while.
2. Seems foolish or is foolish? Bond prices rise for a lot of reasons. One of them happens to be the central bank printing trillions of dollars to buy them. Yes this is inflation and also suggests to the market a greater likelihood of more printing to come.....possibly a massive amount. Can't fight the fed so the smart money will front-run if it can.
3. No
4. If gold is slicing through 2k, 3k, 4k then the dollar is losing purchasing power in real terms, no question. How will you know it's dropping 25%? Do you think the government or media will tell you? :):) The smart money will move first into gold and bid it up in anticipation. PPers will be selling to them on the way up before they know what hit them.....unless you are really savy or have a rule in place like....I only rebalance every 2-3 years, not based on fixed rules like 15/35 bands. That last point I think is a much better option since we all know now (hopefully) that there's no such thing as a re-balance bonus.
5. Simple, short-term rates are lower than inflation and lower than the market would put them absent fed manipulation. Buying 30 year bonds to get 4% is NOT a solution. There's a lot more risk there that many people don't want. The artificially low rates discourage people from having savings accounts and CDs, really saving for a rainy day and making that capital available to grow the economy. Instead they might as well consume it or stick into stocks they don't want and maybe have no business buying.