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Our Far More Inelastic Fear

Posted by: Tom Keene on December 16, 2011

It’s all about relative supply curves - the supply curve for bullion is far more inelastic than is the case for paper money. It really is that simple.”

David A. Rosenberg, Gluskin Sheff, Toronto (Go Habs!), as quoted by, 26 July 2011.

I have no clue on the direction of gold. I am tainted by the sainted memory of my mother who kept enough Krugerrands in the bedroom drawer to crack a floorboard.

She, like most of the known world, enjoyed macroblather (35,000 feet economics without a clue of 900 foot microeconomics and an hellacious cross-wind and we’re all going to die!).

Wise up. Rosenberg and other argumentative and smart economists and strategists understand you’re toast without microeconomic foundations supporting your macroeconomics.

Be responsive to the Newtonian dynamics of say, elastic capital flows and as gold plunges, our far more inelastic fear. Discuss.

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EconoChat captures Tom Keene's thoughts on economics, finance and investment. He is editor-at-large for Bloomberg News and hosts Bloomberg Surveillance and Bloomberg on the Economy on NYC1130, Sirius 129 and XM 130 and Surveillance Midday on Bloomberg Television. His complete interviews are at Tom Keene on Demand. Look for Tom on twitter @tomkeene

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