Gold Vs. Treasuries – Which Do You Believe? [And..Did France Cause the Great Depression?]

Forbes ^ | Oct. 12, 2010 | Michael Pento

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Any psychoanalyst looking at the behavior of investors today would see clear strains of schizophrenia in a comparison between the markets for gold and US Treasuries.

Currently, the 10-year Treasury yield is setting new lows on a daily basis. In the financial models all economists were taught at school, this would be an indication of an economy with low inflation expectations and a strong currency. But the dollar has fallen over 12% since June, and the price of gold continues to hit all-time highs. These results are completely antithetical. Bonds are flashing a warning sign of deflation, while gold and the dollar presage hyperinflation.

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Did France Cause the Great Depression? Douglas A. Irwin Dartmouth College September 2, 2010

Ralph Hawtrey (1932, 38): “I am inclined therefore to say that while the French absorption of gold in the period from January 1929 to May 1931 was in fact one of the most powerful causes of the world depression, that is only because it was allowed to react to an unnecessary degree upon the monetary policy of other countries.”

George Warren and Frank Pearson (1933, 125) were pushing a similar line about the problems with the gold standard: “The present depression is not an act of God for the purification of men’s souls. It is not a business cycle. It is not due to extravagant living. It is not due to unsound business practices. It is not due to too great efficiency. It is not due to lack of confidence, but is the cause of lack of confidence. It is due to high demand for gold following a period of low demand for gold. It teaches the devastating effects of deflation, but teaches no other lesson that is good for society.”