Wednesday, August 29, 2012

Barker's Newsbites: Wednesday, August 29, 2012


Yesterday's hits... today!

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1 comment:

William R. Barker said...

http://www.realclearmarkets.com/articles/2012/08/29/the_lost_bushobama_era_gave_us_the_gold_commission.html?utm_source=Email+Created+2012%2F08%2F28%2C+4%3A09+PM&utm_campaign=Goldcommission&utm_medium=email

Among those who yearn for a return to stable money values, the question has long been one of "do you think it will ever happen?"

What must be understood is that it was a cheap dollar policy beginning in 2001 that underlay what is now known as the "Financial Crisis."

* YES! BUSH!

* BUSH! BUSH! BUSH! (OF COURSE I DON'T RECALL ANY DEMOCRATS COMPLAINING AT THE TIME...) (*PURSED LIPS*)

[I]t can't be forgotten that absent the Bush administration's policies in favor of a weak dollar, there's no manic and recessionary rush into housing, no explosion in mortgage debt, and no major banks to bail [in 2008].

No doubt a Bernanke Fed that...has sought to gun the money supply...since 2008, but the simple truth is that the Fed has merely been piling on.

Flash forward to the present, neither Ron Paul's popularity nor the Bernanke Fed's lack of same are the muscular drivers of a desire to return to stable money values in the way that pundits suggest. Instead, a lost decade defined by weak, unstable money is - just as the growing movement to limit the size and scope of government is a result of a decade of limp economic growth.

If all roads lead to Rome, then nearly every negative economic symptom leads to a weak, unstable dollar...

(One positive tradeoff of our lost economic decade is that the electorate is finally taking dollar policy and levels of government spending seriously again.)

Looking ahead to the presumed Gold Commission, it must be stressed that if the GOP follows through. the Commission itself will be a dollar event on the upside. Indeed, lost in all the understandable unhappiness with the Fed's various "QE" attempts is that the dollar's value is far more political than it is a function of supply. The Gold Commission will signal a political class eager to strengthen the dollar and markets will not wait to do just that.

Figure when Fed Chairman Bernanke first announced QE two years ago in Jackson Hole, the announcement itself presumed Congressional and White House support for a falling dollar, and the dollar weakened long before the economy-sapping, dollar-softening bond buying began.

If the Gold Commission is seen as serious, expect the dollar to strengthen on market presumptions of same, and with a stronger dollar more vibrant economic growth as investment departs from the inflation hedges (think oil, land, farmland, rare art/stamps, and yes, gold) that grew so popular amid 11 years of greenback debasement.

No, gold doesn't immunize us from financial crises, but they certainly reveal themselves far less frequently when the dollar is stable.

Assuming a return to a gold-defined dollar, commodities would happily decline as would gold itself (the rise in gold and other commodities since 2001 the clearest sign of how little anyone anymore trusts the dollar). This [would help] get the economy moving again.

The Gold Commission from 1982 was formed after and as a result of the economic disaster that was the falling-dollar 1970s and today's Commission will form thanks to another lost decade of economic growth similarly authored by a weak dollar.

To put it very simply, thanks to the monetary errors of the Bush/Obama years, we have a once-in-a-generation chance to achieve something positive from all the economic hardship through the resumption of a strong, stable dollar.

Here's hoping we don't blow it this time.

August 29, 2012 at 7:53 PM

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