Six weeks ago this column observed that with the price of gold having passed $1,500, the U.S. economy was already in the midst of a downturn, and that it would be foolhardy to wait for always backward looking and unreliable government statistics to reveal what gold already had. Though unemployment figures are as unreliable as the rest, Friday's anemic report points to a slowdown in economic activity that the dollar's fall in concert with gold's spike foretold.
The reason why is very basic. Contrary to the popular view among economists that currency devaluation is necessary during periods of economic hardship, debasement works against the very investment that drives company formation and job creation given the tautological reality that any returns on investment will come back in cheapened money.
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