i think rick ackerman has forgotten one of the first rules of investing: don't fight the fed

But isn't that exactly what you do when you buy gold?

. he refers to central banks as "puny" but those puny bankers have the authority to print money. anyone who thinks the fed is toothless is going to find out the hard way that is not the case. i don't know when deflation will give way to inflation, but it will, and the resource stocks will be the leading indicators that tell us that in advance.

Granted central banks have a lot of power, but there's one thing they can't do, and that's create real, sustainable demand. To have genuine demand, you need genuine prosperity - the kind of prosperity that comes from fruitful economic activity that creates employment and thus purchasing power. Right now the Fed can print all the money it wants, but if no one's willing to lend, or more to the point, if no one's able to borrow, then it will have little effect.

Frankly, this deflation vs inflation argument is a bit of a red herring. It doesn't speak to the root of the problem, which is an excess of debt on the one hand, and an aversion to further lending on the other. Until that situation is resolved, we are going nowhere, Fed notwithstanding. They can print all the money they like, but if all people do is pay down debt (shocking concept, no?) then whatever "recovery" they're hoping to engineer will just have to wait until balance sheets are repaired, and people begin to feel better about their situation. Then we can worry about inflation, but we are years away from that point.

Before we get there though, we are going to face an even bigger challenge than inflation/deflation, which is of course "peak oil" - an issue that's been shoved on the back-burner by the recent credit collapse, and is now being driven by that same collapse in the sense that energy companies (like everyone else) are being forced to reduce expenditures due to lack of available credit.

ebear