A Manufactured CPI, Other Perils and Gold

It seems especially clear to gold bulls and contrarians that the global economy is close to a tipping point. Good times don’t last forever, trees don’t grow to heaven, and history has borne out that at some point the excesses of every prolonged economic growth cycle have to be purged.

There is mounting evidence that something is about to break with a deadly cocktail of potential disasters conspiring against the sort of Goldilocks economic growth we’ve enjoyed. To name a few: Peak Oil, the housing bubble, overloaded and tapped out US consumers deep in debt, a very shaky European economic situation/idea, the reality that at some point China may stumble, the possibility of a repeat of 9/11, and P/E ratios and investor complacency levels that are still way too high.

The big question however, and one hotly debated by the prognosticators and pundits is what form the downturn will take? There are calls for everything from deflation, to stagflation, to hyperinflation, to a return to the realities of a longer cycle in the form of a Kondratieff Winter.
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