Logic, common sense, and rational deduction are useful means for comprehending the world. But they are merely tools. The user will always be limited by the quality and quantity of the information available and their ability to properly interpret it.
Data and knowledge gaps can lead to false conclusions. A wrong turn in the thought process can lead down a dead end street. Where the economy’s concerned, people must make decisions with incomplete information. That’s why things are often not what they seem.
For example, as night follows day and day follows night, should not price inflation follow the massive $3 trillion Fed balance sheet expansion that’s happened over the last 7-years? Simply connecting the dots quickly leads one to a ‘yes’ conclusion. More money chasing a static number of goods and services should result in price inflation. For prices must rise to balance out all the new money.
This, of course, makes good practical sense. In fact, it might even lead someone to sell dollars and buy gold. They’d have a bullet proof rationale guiding their decision, wouldn’t they? Continue reading
