Let me start off and say the longer one continues to operate under the assumption that we still have free markets the less likely you are to make money, and the more likely it is you will lose money.
Folks we have virtually every central bank in the world printing money (and I think this includes the US). We have negative interest rates in many parts of the world and 0 every place else. I can say without a bit of hesitation that market intervention is now just a fact of life in modern markets. To ignore it is to ignore a very big fundamental piece of the puzzle.
Bernanke theorized several years ago that any determined government could create inflation at will by threatening to, or actually expanding the money supply. He then proved his theory in 2009 during the only brief deflationary period since the Great Depression. QE1 stopped deflation in it’s tracks. Heck for anyone willing to open a history book you know that Roosevelt was able to stop deflation in the 30’s when he effectively doubled the money supply by revaluing the price of gold.
The simple fact is that once all currencies became purely fiat, deflation became a thing of the past. As long as a government has the ability (and will) to print unlimited amounts of currency there is simply no level of debt that can’t be inflated away. The problem has never been deflation, the problem is going to be inflation (currency crisis). That is the end game to this mess that began in 2000 with the popping of the internet bubble.
I’ve maintained for 8 years now that the day the SEC banned short selling in the financials during the heart of the market crisis in 2008 that was the moment we crossed the Rubicon from which there was no coming back. That was the day free markets died in the world. That was the point in history where the protection of the banks became priority #1 and all laws governing fair market practices were set aside so the banks could make money through any means possible, fair or foul.
This post was published at GoldSeek on 20 March 2016.