Author Archives: James_Hamilton

Gold and inflation

Federal Reserve Chair Ben Bernanke last week dismissed the suggestion that the recent surge in gold prices signals some kind of inflationary pressures:

So gold is out there, doing something different from the rest of the commodity group. I don’t fully understand the movements in the gold price, but I do think that there is a great deal of uncertainty and anxiety in financial markets right now and some people believe that holding gold will be a hedge against the fact that they view many other investments as being risky and hard to predict at this point.

I think Bernanke has this exactly right.

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Toxic assets and toxic oil

In some ways the Gulf of Mexico oil spill seems like a replay of the subprime lending disaster. Clever technological innovations blew up in a mess that nobody knew how to control, wreaking devastation on those innocently standing by. The actors and the scenes have changed, but you can’t shake the feeling you’ve been through this nightmare before.

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