Eventually after a total collapse of stock markets due to deflation will create new textbooks in Economics 101. A chapter will be created on deflation from Hyperinflation and irresponsible borrowing. The real estate bubble, the mortgage defaults and the complacency in the main streets are signs of trouble ahead.
The same happened in ancient time before steady decline of economy finally caused the deflation and trouble. The deflation driven fundamentals question the bull theory and applicability of Dow theory in this case. The complacency says April will be a month investors will remember for a long time.
Some analytic models say gold can reach $1500 an ounce for a brief period. Longer term however, gold will fall because of deflation. This time Government is too busy spending money on other things.
It does not have the appetite or capability to bail out major banks. The FDIC can handle up to three major bank failures. After that it is broke itself.
News RSS