“The real poison pill is allowing Social Security and Medicare costs to escalate unabated. Does anyone in either party want to admit the truth? … the best hope still remains that all compromises fail.“
The above thought prompted Uncle Frank to respond in a comment “Mish relishes chaos and financial ruin for this country so his gold holdings shoot-up in value. Everyone has an ulterior motive you know.”
Since I get accused of this sort of thing quite frequently, please let me point out a few things:
- Gold has been sinking, as it should, if Congress is fiscally prudent.
- Government Should be Prudent
- Government Won’t Be Prudent
Should Congress be fiscally prudent (and the fiscal cliff is not close to being fiscally prudent), I would change my stance on gold in one second flat.
Nonetheless, should Congress fail to address the Fiscal Cliff, I would expect the exact opposite of what Uncle Frank suggests.
In short, regardless of my personal beliefs regarding gold (that one would be prudent to buy and hold gold), I actually advocate government and Fed policies that are contrary to my recommendations.
My reasons are easily explained:
- Neither the Fed nor the government gives a damn about what is fiscally prudent.
- Both the Fed and Congress are highly likely to debase currency, causing gold to rise, even if I think that is bad economic and fiscal policy, which of course I do.
Thus the accusations of Uncle Frank, and countless others before him are 100% baseless. Should Congress actually do what I advocate, I think it would not be good for gold.
I recommend governmental actions on the basis of policy merit alone, not based on my stock market positioning. I find it very sad that few others do the same.
Mike “Mish” Shedlock
Addendum: In the second to last paragraph, I stated “Should Congress actually do what I expect …”. The correct word is “advocate” as should be obvious by the preceding discussion. The word was changed.
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