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<p>[QUOTE="Cloudsweeper99, post: 685422, member: 3011"]That's a great question and goldbugs rarely think about it very much and only see the rise in gold as inevitable. The answer to your question is deflation. There is a lot of debt in the economic system that may have to be liquidated if it cannot be rolled-over. In that case, there will be a tremendous demand for dollars since they are the only acceptable payment for the debt. This is the normal outcome at the end of many credit booms. Now many people believe that the Fed and US Treasury will print massive amounts of currency to enable every debtor to inflate away their liability. </p><p><br /></p><p>But what if they don't? Then you will have massive asset liquidation sales to satisfy the debt obligations, including gold sales. </p><p><br /></p><p>That said, I'm in the inflation camp, but constantly keeping an eye out for signs that the current credit bubble will end in deflation. Nobody can say for sure which way it will end -- but many people will tell you they can. Just keep doing what you are doing. You are asking the right questions. :thumb:[/QUOTE]</p><p><br /></p>
[QUOTE="Cloudsweeper99, post: 685422, member: 3011"]That's a great question and goldbugs rarely think about it very much and only see the rise in gold as inevitable. The answer to your question is deflation. There is a lot of debt in the economic system that may have to be liquidated if it cannot be rolled-over. In that case, there will be a tremendous demand for dollars since they are the only acceptable payment for the debt. This is the normal outcome at the end of many credit booms. Now many people believe that the Fed and US Treasury will print massive amounts of currency to enable every debtor to inflate away their liability. But what if they don't? Then you will have massive asset liquidation sales to satisfy the debt obligations, including gold sales. That said, I'm in the inflation camp, but constantly keeping an eye out for signs that the current credit bubble will end in deflation. Nobody can say for sure which way it will end -- but many people will tell you they can. Just keep doing what you are doing. You are asking the right questions. :thumb:[/QUOTE]
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