I think we need a thread on inflation which is closely related to gold in many ways, if you have any news or thoughts on inflation please post it here, so we can all benefit from a wider resource of information.
The proper definition is that inflation is the debasement of a currency by increasing its quantitiy. It is not about an increase in the general level of prices, which is what the economic establishment would have us believe.
When there are not enough tax payers to contribute funds needed by government, they bring more money into existence by printing it.
given that there is a limited number of assests (land for example, you can't print more of it) combined with unlimited printing of paper, the value of limited assests rise.
If inflation (let's call it money printing) increases at a steady rate, it can be absorbed by increases in wages, but when wages don't go up fast enough or when printing paper is done at excessive rates, problems start to emerge.
Traditionally asset prices are controlled by interest rates, this is a way of constricting money flow or money velocity (well that used to be the accepted mechanics, but some are not so sure anymore, read the article below).
The trend of falling interest rates has now ended, and the tide of financialisation is on the ebb. Recent events, covid lockdowns, supply chain disruptions and sanctions against Russia provide the tangible evidence that this must be so.
You do not need to be a seer to foretell a commodity price crisis and the prospect of widespread starvation from grain and fertiliser shortages this summer.
Common sense tells us that the end of the financialisation era will have far-reaching consequences, yet the outlook is barely discounted in financial markets.
If the Fed is unable to prevent bond yields from soaring much above current levels, most of this, including the $15 trillion invested in equities, will be wiped out.
The destruction of value measured in collapsing currencies will be economically catastrophic.
To avoid this fate that first China, and now Russia are commoditising their currencies and even planning for a new cross-border settlement medium tied partially to commodity values.
They hope to escape from interest rates rising in fiat currencies as they lose purchasing power. If the global conflict is financial, the West has lost it already. The geopolitical consequences are another story for a later day.
https://www.zerohedge.com/markets/era-financialized-fiat-dollar-standard-ending
