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  • JPMorgan Sees ‘Currency Debasement’ Payback Risk From Stimulus

    From bnnbloomberg.ca

    The unprecedented monetary and fiscal measures unleashed around the world may lead to weaker long-term growth and currency debasement, supporting gold prices, according to JPMorgan Chase & Co. The risk of currency debasement may heighten next year, John Normand and Federico Manicardi wrote in the report, and will show in the value of Japanese yen or gold rather than the dollar. The risk of a surge in inflation will remain trivial in 2020 and stay subdued over the next two years, they said. The reductions in interest rates across Group-of-10 countries in response to the pandemic-induced halt to their economies left ... (full story)

When I took Economics I was taught that increasing a money supply resulted in increasing inflation.

I've said in the past that the 'old rules of economics' don't apply in the digital era. Now it seems that JPMorgan agrees as well.

What's a person to do?
...because you never know - until you do!
Inflation is very well visible in things that are scarce.
Food, water and oil are not scarce ... for now.
Thats why regular people dont sense inflation, but it is already there waiting for the proper events.
The risk of hyperinflation is enormous.
Quoting RazorFitch
{quote} Well , there is a deflation despite higher money supply, then it should be a bad new for metals...why is gold so expensive, while the retailers are suffering...
Gold has always increased during times of uncertainty so not really sure what you're getting at. Historically gold has appreciated when the global picture has darkened. Especially with all that's going on I expect gold prices to still go higher.
The markets are like water it ebbs and flows.
Quoting Momofrmnyc
{quote} Gold has always increased during times of uncertainty so not really sure what you're getting at. Historically gold has appreciated when the global picture has darkened. Especially with all that's going on I expect gold prices to still go higher.
I am just talking my brain out, I aint got any proof, just talking rubbish
Quoting RazorFitch
{quote} I am just talking my brain out, I aint got any proof, just talking rubbish

No I get it. Trust me I'm sitting on some small gold positions for years now. I purchased about 5 years ago around the 1050 mark. Slowly add on during levels but I just use it as a hedge honestly for other risk sensitive assets I have.
The markets are like water it ebbs and flows.
Quoting RazorFitch
{quote} I am just talking my brain out, I aint got any proof, just talking rubbish
Well man, thats something Everyone can agree on...
Bad days? How much have you lost?
Weve all been there...
Warning: A Dangerous Subversive: 1% of comments CoCed
True inflation is driven by the size of the output gap (real GDP ceiling less actual real GDP). Also in recent years it goes beyond US borders to include burgeoning world trade and low costs of oil (very competitive pricing). So monetary policies everywhere have been relaxed but that does not mean money supply has been exploding - partly due to financial crisis no-one knows still how money markets have changed (hence quantitative easing which has the central bank controlling the supply side of the market).

Along comes the pandemic which crunches real GDP as well as its ceiling leaving inflation unknown until the dust settles (if it does). The combination of all three crises has scared off inflation for years maybe a decade - 3? 1. GFC 2. Trump 3. Covid. But look to the output gap before anything else for signs of true inflation. Peace.
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  • Posted: May 21, 2020 9:10am
  • Submitted by:
     Newsstand
    Category: Fundamental Analysis
    Comments: 7  /  Views: 4,367