Thanks for your response MoorookaMick. I agree with all of your points to a degree.
I think goldbugs need to find responses to two issues as follows:
1. If the terms of a large debt are generous enough, it can be carried indefinitely without requiring resolution by inflation. Therefore, we need to establish if, when, and why the terms may worsen. That, in turn, requires an understanding of the pressures on bond markets.
2. No matter how much money is created, it has little or no inflationary impact if it stays behind the doors of a bank. If inflation is to develop to the degree necessary to revitalise gold prices, we need to understand whether these sequestered funds will eventually be loaned out (rapidly), or whether additional inflationary initiatives, such as lavish fiscal deficits, can be expected.
I'd say Dr Shane Oliver and his article are not to be taken lightly, particularly as others have raised the same points repeatedly and not been answered.
If there's any good news, I think it's that Dr Oliver takes the rationality, stability and fidelity of the markets too much for granted. For example, if I recall correctly, he was blindsided by what happened in 2008.
