원문 보기
now a lot of people were jumping to erroneous conclusions that the Fed was succeeding in its fight against inflation because commodity prices had already come down and people like Jeremy Siegel were saying that the FED should not be looking at the CPI anymore it was a lagging indicator it should be looking at these forward indicators where commodity prices were falling those were the same indicators that the Fed was ignoring commodity prices were Rising before the CPI and the Federal Reserve was completely oblivious to rise in commodity prices instead they were focusing on the CPI that did not yet reflect those increases while Jeremy Siegel is saying they're making the same mistake now they should be looking at the drop in commodity prices and not the rise in official consumer prices but I've been saying that Jeremy Siegel was wrong because that decline in commodity prices is only temporary and in fact that temporary decline has probably already finished and one of the reasons for the decline apart from the fact that we had moved up so much and nothing moves up in a straight line there's always going to be a correction was because some of that Chinese demand was taken offstream by the lockdowns well if the lockdowns are going to be lifted and that demand is going to return well that's going to put a lot of upward pressure on commodity prices and that is going to be very problematic for the FED because it's going to see inflation being pushed higher even as the economy continues to soften in fact the way most people believe the fed's policy will succeed in reducing inflation is by reducing Demand by weakening the economy by putting employed people out of work it's going to reduce demand Americans will have less incomes and therefore they'll buy fewer products or by raising interest rates if Americans are forced to spend more they're in income servicing their debt they have less money available to go out and shop and buy things or if interest on the money they have to borrow to buy those things goes higher and now Americans have to pay higher interest on the money they borrow to buy consumer goods well they'll buy fewer Goods because it now costs more to buy those goods because it costs more to borrow the money to buy those goods so everybody is focused on the way the FED is going to reduce demand and therefore bring down prices but what if International demand goes up at the same time that domestic demand goes down well that negates the impact that falling demand in the United States has on prices because foreigners could increase their demand so that net overall demand for these products goes up now certainly when it comes to certain services for which there is no International demand let's say a haircut if demand for haircuts goes down in the United States even if it goes up in China that doesn't affect the barber here in the United States because nobody from China is going to fly to America to get a haircut so it doesn't matter but if you're talking about a product that is available on the worldwide Market especially products that are manufactured in China anyway if demand from America goes down but the man from China goes up well instead of exporting that product to the United States the Chinese can just consume that product themselves and so that product stays in China it doesn't get exported to the United States and so the supply of goods in the United States goes down because you have higher demand in China supporting the price also there are products that we manufacture here in the United States or maybe that we grow that we could export to China if demand is higher abroad then products could be sent abroad to meet that higher demand and that means even if there's reduced demand here in the United States that reduced demand doesn't reduce price because the higher demand abroad resulted in the producer of that good shipping the product abroad and so you're not seeing a reduction in price everybody forgets that demand is worldwide I always talk about how we can have higher inflation during a recession because I realize that prices are not just determined by the ability of Americans to pay but it's the ability of everybody all around the world to pay and Americans are competing with Foreigners for the same goods and it's also not simply a function of demand but it's a function of Supply even if demand in America goes down Supply in America could go down even more because demand outside America goes up and Supply is diverted from the United States abroad and so even if American consumers are buying less there is even less Goods available for them to buy and so what ends up happening is fewer Goods get bought but the ones that do get bought are bought at ever increasing prices so we can have Rising prices even as demand Falls and one of the reason demand Falls is because prices are rising because Rising prices in and of itself reduces demand because I can demand a lot more of a good if the price is low as the price of that good goes up my ability to afford it and therefore my demand for that product goes down but that doesn't stop the inflation in fact historically the very worst inflations happen in Weak economies and they happen in Weak economies with high levels of unemployment and the other problem is during those periods of economic weakness and high unemployment that's when you get governments printing even more money you get larger deficits you get more money Printing and that creates demand but you don't have Supply you're just printing money and so you have even greater upward pressure on prices and another factor that is going to be contributing to the upward momentum in commodity prices and therefore higher inflation numbers is going to be the renewed weakness in the US dollar well I look at the report from Barrack not as bearish for gold but bullish because it's an acknowledgment of How High inflation is and how much costs are going up and if inflation is this bad gold is going to go up it's just a question of when the world wakes up to the reality of this inflation and by the way you can already see the demand in physical gold and silver where demand is skyrocketing Central Bank demand is skyrocketing in fact there were these is reports of a huge buyer in the gold market on Thursday when gold was making new lows there was a huge buyer that is maybe speculated to be China which makes a lot of sense to me I think China is really trying to stockpile its gold especially if China is thinking of doing something maybe making a move against Taiwan they're not going to do that until they've really short up their goal Holdings they want to divest themselves of U.S dollars and U.S treasuries and be loaded up with gold before they do anything that may invoke sanctions because if they divest of all their dollars and then they're not holding any U.S treasuries then they don't have to worry about U.S sanctions and in fact if they load up on gold and we try anything then they're going to benefit because the value of the gold they buy now is going to go way up in a world where we try to sanction a China that doesn't even have any US dollars left on its balance sheet because it's or already converted them into gold but it's only a matter of time and not much time before investors recognize that the price of gold is not only going to rise commensurate with the cost of producing it but it's going to rise more because as investors lose confidence in the ability of the fed and other central banks to rein in inflation now they're more motivated to hedge against inflation because they no longer can count on the central banks to protect them they have to look for their own protection and they can find it in gold
Comments 0