Mish Shedlock on Gold, Inflation, and Deflation

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Mike “Mish” Shedlock has one of the most successful financial blog sites.

He responds to articles from a unique point of view. This site is a convenient clearing house for information on articles from many sources.

He is known as a deflationist. He has positioned his site as the premier site that forecasts inevitable deflation. He has overshadowed Martin Weiss, the son of J. Irving Weiss, who was predicting price deflation back in 1967. I was predicting price inflation in 1967. Martin Weiss continued the family tradition all through the 1980′s and 1990′s. He had a near monopoly on the position, sharing it with A. Gary Shilling and a few others. Then Mish showed up. He has a far larger audience than they do. His site is far more informative than any other deflationist site.

This is Mish.

Before he started
his site, he was a highly successful photographer. This barely describes
his achievement. He got his photos published in 85
publications, including covers
. It takes years to build this sort
of portfolio. You must eat, drink, and sleep photography. You must
master the tools of the trade. You also need creativity. This is not
a part-time occupation. It is not a hobby. It is a career.

I know what it takes. I used to be an amateur photographer. I gave it up in 1960. I knew I did not have the time to become really good and also pursue my work in economics, history, and markets. I had to choose. (Economist Thomas Sowell made the same decision.)

Mish launched his site in 2005, as far as I can determine. His photography must have suffered, because he spends a lot of time updating the site and commenting of the state of the markets.

He is known as a deflationist: a man who predicts price deflation. Yet he is also an inflationist. Let me provide examples.

Thursday, June 30, 2005
The deflation debate heats up

As debt everywhere is repudiated in a deflationary crash, the grand experiment in Fiat money backed by nothing will lead to reinstatement of the gold standard or a gold/silver standard and once that debt is all wiped clean and we start over from a complete K-Cycle deflationary debt purge, then we can see inflation take off.

Sunday, October 28, 2007
Basket of Insanity at OPEC

Eventually, all currencies (except gold) go to zero. The only difference is the speed at which they get there. Warranted or not on relative merits, the U.S. dollar is winning the race among major currency pairs.

Tuesday, June 02, 2009
Speculative Bets Against The Dollar Highest Since July 15, 2008

Of course fiat currencies do not really float anyway. They simply sink at varying rates, slowly going worthless over time.

Eventually, every fiat currency in existence is headed for zero. Gold is not headed to zero.

So, he sees some nations returning to a gold standard. Others will not. This is a political prediction. We have not seen any country return to a domestic gold standard since 1933, when the USA, the last gold standard nation, abandoned it by Presidential fiat. We have not seen an international central bank gold standard since 1971, when the USA abandoned it by Presidential fiat.

You must understand his scenario before you judge the plausibility of his criticism of those of us who predict mass inflation. He says that every currency that is not gold-backed will fall to zero. The world will be a two-standard economy for a while: gold standard currencies and fiat currencies. Then the fiat standard currencies will all die: fall to zero. That will leave only the worldwide gold standard currencies. We will see what the 19th century did not: a universal gold coin standard, with full redeemability of paper money and credit money on demand.

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Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible.

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