In Ho Hum – Fiscal Cliff Deal Stalls – Republicans Offer More and More Concessions; Poison Pill Nonsense I stated …
“The real poison pill is allowing Social Security and Medicare costs to escalate unabated. Does anyone in either party want to admit the truth? … Every compromise to date leaves the US worse off than if the fiscal cliff happens. Thus, the best hope still remains that all compromises fail.“
The above thought prompted Uncle Frank to respond in a comment “Mish relishes chaos and financial ruin for this country so his gold holdings shoot-up in value. Everyone has an ulterior motive you know.”
Since I get accused of this sort of nonsense quite frequently, please let me point out a few things:
- Gold has been sinking, as it should, if Congress is fiscally prudent.
- Government Should be Prudent
- Government Won’t Be Prudent
Should Congress be fiscally prudent (and the fiscal cliff is not close to being fiscally prudent), I would change my stance on gold in one second flat.
Nonetheless, should Congress fail to address the Fiscal Cliff, I would expect the exact opposite of what Uncle Frank suggests.
In short, regardless of my personal beliefs regarding gold (that one would be prudent to buy and hold gold), I actually advocate government and Fed policies that are contrary to my recommendations.
My reasons are easily explained:
- Neither the Fed nor the government gives a damn about what is fiscally prudent.
- Both the Fed and Congress are highly likely to debase currency, causing gold to rise, even if I think that is bad economic and fiscal policy, which of course I do.
Thus the accusations of Uncle Frank, and countless others before him are 100% baseless.
Indeed, I recommend governmental actions on the basis of policy merit alone, not based on my stock market positioning.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
“Wine Country” Economic Conference Hosted By Mish
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