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| In deflationary times, IMHO, it is a lack of *qualified demand* for money. We are getting a taste of this right now. People who are qualified to borrow your money don't either need to or don't want to. And since money creation has been mostly credit extended, we are flirting with deflation - when everyone has been screaming that we have to have wild inflation because of the QEs. (Note that I said "flirting" with deflation.)
You're right about "good money" being in short supply during deflationary periods. From my reading, however, any good correlations that show consistent linkages between gold and either inflation or deflation are illusory. (Note - I have not done the study myself. I am only going on what I've heard/read from someone that I consider the best economic historian I have known.)
But, back to your point - gold is hoarded in deflationary times - just like "good money." Again, I am not arguing that anyone should not buy some gold. | |
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Germany also continues to take back gold.
