It is, but it isn't a linear relationship. The advent of the petrodollar circa 1971-1973 introduced a market dynamic whereby we export a lot of inflation to other nations.
The Gold Standard
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It is, but it isn't a linear relationship. The advent of the petrodollar circa 1971-1973 introduced a market dynamic whereby we export a lot of inflation to other nations.
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^^^^^^^^^^^^^^^^^^^^
@Cigarlover I'd like to get Zed's take on your questions.
Do you mind if I copy & paste to the other forum? OR could you drop this in the lunatic fringe thread over there?
@Cigarlover I'd like to get Zed's take on your questions.
Do you mind if I copy & paste to the other forum? OR could you drop this in the lunatic fringe thread over there?
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Cigarlover
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Most definitely. Go for it.
Cigarlover
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I thought that might be part of it but wasn't sure if M-2 also included money we sent out of the country. I always understood it to be within the US borders and available to the US.
It definitely makes sense that we are exporting our inflation. Thats why when others sell our treasuries that inflations come home and gold goes up. Thats a direct reaction anyway.
On the other hand, lately, as in the last year or so, the fed has been reducing it's balance sheet and restricting money supply. So why is gold going up? Are we printing more than the fed is restricting or reducing it's balance sheet?
To me, things seem to make sense at times. Other times I just don't understand it. Seems very confusing.
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I don't know what to think, never really considered it. But I'm thinking it might simply be a flaw in the logic being used. A semantic of the thought process.
I think we're going to to go "oh yeah, I should have thought of that" when we get the answer.
Something along the lines of the old "missing dollar" brainteaser:
Three people check into a hotel and pay $30 for a room, each contributing $10. Later, the hotel manager realizes the room was actually $25, so he gives $5 to the bellhop to return to the guests. The bellhop, however, decides to keep $2 for himself and gives $1 back to each guest.
Now, each guest has effectively paid $9 (since they originally paid $10 but got $1 back), totaling $27. The bellhop kept $2, bringing the total to $29—but they originally paid $30! So where did the missing dollar go?
I think we're going to to go "oh yeah, I should have thought of that" when we get the answer.
Something along the lines of the old "missing dollar" brainteaser:
Three people check into a hotel and pay $30 for a room, each contributing $10. Later, the hotel manager realizes the room was actually $25, so he gives $5 to the bellhop to return to the guests. The bellhop, however, decides to keep $2 for himself and gives $1 back to each guest.
Now, each guest has effectively paid $9 (since they originally paid $10 but got $1 back), totaling $27. The bellhop kept $2, bringing the total to $29—but they originally paid $30! So where did the missing dollar go?
Fed's balance sheet went from $4T in 2019 to $9T at the peak (+$5T) and QT has reclaimed $2T (it is back down to $7T).
Gold did not reflect the QE since 2020. Paper games and markets chasing other assets (real estate, stocks).
Gold's current run has been largely fueled by foreign buying (China, India). USA is just recently waking up on gold. There is still a lot of room for capital rotation from stocks and real estate to gold. $.02 FWIW.
Viking
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