Eric King: “Art, you
brought up the Fed and the distortion in the markets. What about the Fed
distorting the markets and is there a danger of something like the 1987 stock
market crash coming out of all of this?”
Cashin: “You are in uncharted
territory in many ways. This is what the ancient mapmakers would call, ‘Terra
incognita, or ‘Land unknown.’ That is why you see people like John Paulson,
brilliant, made more money than just about anybody in the housing collapse, and
he’s long gold and handcuffed and tied in.
Many of the other hedge fund
managers bought gold. Why did they buy it? They bought it for classical
economic reasons. They believed that if the Fed was going to print money
relentlessly, hand-over-fist, it must follow, as night follows day, that you
will have a burst of inflation that will shake the Earth. They think back to
the Weimar Republic.
We have not had any of that because
the people are so frightened. So money has no velocity. Inflation lies dormant
so far, and that’s why gold is having such a tough time.”
Eric King: “Art, you’ve warned so many times and you
keep watching the St Louis Fed money indicators to look for growth in the money
supply. What about that situation because when you warn so many times about
things you are always right, and it’s because you’ve been doing this for half a
century. What Paulson is looking for, and others, it’s coming isn’t it?
Cashin: “The ingredients are set
up for spontaneous combustion. It’s not there yet. Particularly since QE3, if
you look at the St. Louis Fed and you look at the monetary base or money stock,
which is the raw material for money, this is the one the Fed really has control
over, and it was not moving up for months.
Well, we stopped moving sideways
months ago, and it (money supply) has gone nearly parabolic. The amount of raw
material, money pumped in by the Fed and others shot up like a rocket. Can you
have explosive inflation? Certainly you can. When people start to lend it and
spend it step back, because the Fed may not be able to put that Genie back in
the bottle.”
at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/5/18_Art_Cashin_-_Money_Supply_Going_Parabolic,_Gold_%26_Inflation.html
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