gold, page-62763

From recent history, if the so called money printing was inflationary, hyper version would have been the side effect when it was introduced. It didn't happened so end of that speculation. I don't know how much sovereign debt is too much for US but I keep hearing that provided that debt is sustainable, Feds can keep expanding the Bal Sheet. The bigger the sovereign debt, the more the bond yields have to be low to keep payments of that debt sustainable. It is a large number and the US are constantly running budget deficits raising the debt ceilings yearly. In addition Trump is cutting taxes which exacerbate the budget deficits as the tax revenue drops. We could by precedent move into a Japanese style economy perhaps?

Here is Oz, Scomo is paranoid about running a budget surplus with tepid wage growth, low inflation, low retail sales and in fact low everything except the property markets. Low transactions of property turnover with a rising sale prices sold is not really representational of a booming property market conditions. I suspect he is using a different tack, a psychological way to manage the wealth effect to encourage spending. The problem is that we are back to the US experiences where the low IR rates seems to favor only higher end properties and not the 1hour drive suburbs that are popping up every where in major cities. I am more a 'seeing is believing' and here in the West, I just see empty office blocks, shop fronts and food business where the owners just closed up shop and walked away leaving plant and equipment behind.

To the point of technology, I see it as a suppression of wage growth. Gone are the days when a retailer can just simply mark up a product and find buyers unable to cross check competition unless they physically travel to check prices. It is instant price comparisons. Money is mobile geographically and today we read Mazda Thailand is shifting SUV back to Japan because of the strong Thai Bhat. Developed economies globally are suffering the same side effects where labor intensive jobs are exported overseas to cheap labor destinations who themselves compete with the cheapness of labor regionally! The manufacturing base (not the high end Tech products) here in Oz and I suspect likewise in Europe/US have deteriorated to the point I don't think we can classify it being a sector anymore. Now I understand sometimes why retail prices cannot rise besides monopolistic items like Iphone. Every develop economy is tapped out on monetary stimulus and the race to the bottom with their currencies is next. I win you lose scenario between 2 trading partner in a binary game of FX.

These are some of my superficial reasons why I think we are heading more towards the Japanese experiment with QE and side effects, debt trap. The worse part is because there isn't many areas of growth, the crowded space is equity markets globally. Govt cannot let this asset class fall which is fueled by limited investing options and cheap money. Just like the debt trap, equity markets are fueled by cheap money and the cycle continues.

AND this is why I think gold will not fall besides the daily price movements. A $100 move in gold isn't much from a % perspective but the margin expansion of the gold producers being a leveraged play is massive.