Earlier this week, I spoke to Malcolm Palle at the Mining Maven regarding the Fed’s recent decision to keep interest rates on hold. The view of The Money Enigma is that the Fed is too focused on a Keynesian “output gap” view of the world, i.e. the notion that inflation can only rise if the economy overheats. As discussed in many recent posts, the view of The Money Enigma is that inflation is primarily driven by a sustained decline in the value of money, not by the level of economic activity.
Fiat money is a proportional claim on the future output of society and, therefore, its value is highly leveraged to confidence in the long-term economic outlook. If long-term economic confidence is damaged, then the value of money can decline sharply and inflation can rise sharply, even in an environment of weak aggregate demand.
In the second part of the interview, we discuss a couple of small-cap, UK-listed mining companies that are making great strides to a possible turn in the commodities cycle. Although it is still early days, it seems as though commodities are following the traditional boom/bust cycle, albeit this cycle has been more pronounced on both the upside and the downside!
You can listen to the interview here: http://www.miningmaven.com/mining-blog/miningmaven-podcast-no-14-with-gervaise-heddle-covering-gold-mtr-eua-20160321479/