Although Jude sounds like a crackpot when he talks about the need for a price anchored to reality--as if gold were not an object of speculation--the deflation scare has been appearing in the media and trade press books for about a year or a year and a half now. It also aligns well with the view the U.S. is in a situation like Japan's a decade ago, since which time price deflation has been a persistent threat. As Doug mentioned the other day, Morgan said that that deflation has actually been much on AG's mind since 96.
I'm perplexed, though, at Jude's insistence that AG can actually do something about this. I mean, don't endogenous money, lower real reserve requirements (made possible by things like sweep accounts), and the growth of money market mutual funds mean that AG has pretty little to say about overall liquidity? Of course, he can try to perk up the markets' spirits, but . . .
Christian