[quote=pencilneck]Speaking of experiments, I’ll quote Leo.
“Inflation has been very mild the entire time. Higher rates, if in the cards, certainly isn’t going to cause inflation.”
I think that our entire outlook on interest rates is pre-global. As Japan and the US have demonstrated in recent years, in global environments low interest rates encourage investment outflow. Not all, but a lot of money goes to work in the areas (countries, in this example) with the best risk/reward, so money flows to countries with perceived low risk and higher interest rates.
Over the past few years we’ve had massive monetary inflation. This hasn’t yet translated into price inflation as capital has largely flowed elsewhere.
Our low interest rates have in effect acted to export a large portion of our monetary inflation to become price inflation in other countries. When interest rates rise, capital previously directed elsewhere will return. I believe we will see price inflation coincident with rising interest rates.
Of course, this belief is contrary to common opinion and 100 years of Fed policy. And comes from a certifiable idiot to boot. So take of it what you will.
To loop this back to the topic, if my theory holds true, the time to invest in silver (and other metals) will be when interest rates start rising. When that will be I have no idea.[/quote]
Interesting perspective, pencilneck.
We’ve had *plenty* of inflation here, IMHO, but it’s mostly been in speculative assets, including housing. Look at most commodities and they are still up from 2008-2010 levels. While many would claim that those prices were artificially low, I believe that prices at that time were correcting to where they should have been after being pushed to artificial highs via the manipulations of the Fed and Wall Street.
But there is no doubt that money has been sloshing around the globe in search of yield. If we get higher interest rates while still maintaining the same faith in our currency, it’s reasonable to expect that money will flow back here, but then interest rates would go down again if money flows to bonds.
