By: Julian D. W. Phillips | Tue, Jan 10, 2012
Currency Debasement and Price Stability Risks
Despite the small moves in exchange rates between the U.S. dollar and the euro, confidence and trust has been debased. Looking forward to 2012, we see that deflation is becoming a rising danger. After the decay in 2011 that has hammered confidence in the euro, the need to issue more and more 'new' money is growing. The Eurozone is moving into recession (if it is not already in one). The Eurozone is more than likely to lose one or more of its weaker members -this will be good for the euro itself though--so liquidity shortages may force more money supply growth already exceptionally high in many countries.
Despite the 40-year long campaign to prevent gold from returning to any active role in the developed world's monetary system, gold remains the only universally-accepted currency whose supply cannot be increased by policy-makers. The equivalent of money issuance for gold is new mine production, which has been on a relatively flat trend for the past ten years.
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