In this week’s Off the Cuff with Mish & Chris podcast, Mish and Chris referee:
Bernanke vs. Gold
- How accurate is the Fed Chairman’s criticism of the gold standard?
- Perception vs. Reality
- Why does the economy feel so bad when the stock market feels so good?
- You vs. the Herd
- Why now is the time for having the courage of your convictions.
There are a lot of mixed messages swirling around of late. Sound money advocates champion precious metals, while our Fed Chairman derides the gold standard as an anachronistic failed experiment. A steady drumbeat of discouraging data shows that the global economy still faces serious risk, but the stock market suggests times could hardly be better. It’s times like these when a steady hand on the tiller can make all the difference.
Bernanke Twisted Logic in Criticizing Gold Standard
This week, Fed Chairman Ben Bernanke kicked off a public speaking tour to help raise awareness of the Fed’s mission. His first topic: the gold standard. Or more specifically, why the gold standard is flawed and deserved to be abandoned.
It’s little surprise that Mish and Chris disagree with Chairman Bernanke. In fact, both see the ‘weaknesses’ that Bernanke cited as appealing selling points for returning to a gold standard. Curtailing monetary inflation and deficit spending? Limiting fractional lending? Sounds pretty good, say Chris and Mish.
Perception vs. Reality
Despite — or, better said, because of — the markets grinding higher and higher each week, Chris and Mish are very nervous. Stock prices seem completely oblivious to a growing parade of seriously concerning data: Europe is seeing the same weakness that led to Greece’s default infecting Portugal and Spain; flat-lined home sales despite record seasonal weather; warnings from the ECRI that another recession is likely.
Exuberance and/or willful blindness appear to be driving asset prices right now. Unless you really like excessive risk, it’s a good time to take your chips off the table.
Staying Focused
In times like these, when the herd is thundering in a completely different direction than you are, it’s natural to have some doubts.
by former_user