Jim Puplava has robust convictions….
The CEO of Financial Sense News Hour, Jim is a man you should listen to carefully if gold factors in your portfolio or if you are thinking about adding gold anytime soon.
In this interview, Jim talks about how the dollar affects gold prices.
He discusses whether we are moving into a phase of deflation or inflation and gives his views on what exactly that will mean to gold investors.
He discusses the likely impact of inflationary or deflationary forces, which one he believes will win out, and the effect it will have on our economy.
Finally, he makes a very interesting prediction.
Of course, any investor will tell you that deflationists and inflationists have been arguing for years.
Each side has data to back up its claims, so investors end up none the wiser and non the wealthier. All the arguing simply causes confusion, and that invariably that leads to inaction.
One thing they can't argue about though: A defining moment in the deflation versus inflation argument will present itself when our current overburden of debt finally blows up.
On the one side, deflationists will point to periods in history where deflation resulted from that overburden.
But as always, there's more to the argument.
Jim emphatically states:
"The outcome depends on whether or not the economy is operating under a fiat currency system, because there's never been a deflationary depression when one's been in place."
When I saw this claim, I wanted to hear more, because deflationary forces seem strong at the moment.
I asked Jim for a chat about his viewpoint.
I wanted to get as clear as possible as I could about Jim's thoughts on deflationary pressures, because it has direct and significant implications for investments, including gold, something all my readers care deeply about.
Here's my candid interview with Jim.
Jeff Clark: For those who don't know you, Jim, tell us what you do.
Jim Puplava: Basically I head up three companies. We have our own independent broker-dealer; we have a money management firm and we have a media company which produces the Financial Sense News Hour online. I head up those three companies and am the CEO.
Jeff: It's been four years since the financial crisis, and we're still debating inflation vs. deflation. I found your claim quite compelling, so tell us what you found in your research.
Jim: Well, why don't we begin with the financial crisis that transpired between 2007 and 2009? It's something every investor remembers.
The deflationists would argue that in a crisis as big as that, the resulting downturn in the economy is always deflationary.
But if we look at that period, the money supply continued to expand. In my opinion, inflation is associated with monetary policy.
Jeff: We should probably define the terms we're using.
Jim: This is one of the problems we have when talking about deflation.
You will often hear, for example, that "housing prices fell by 30%" or the "stock market fell by 40%," supposedly meaning it was deflationary.
But that is a specious argument at best, because if we call the crash in real estate and the stock market deflation, then what would the deflationists argue now that housing is starting to turn around?
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