Cold Water From WSJ's Market Beat

Matt Phillips of the Wall Street Journal's Market Beat blog points out something that's intended to cool hard-core goldbugs' hyperinflation ardor. If hyperinflation's around the corner, he notes, someone's forgotten to tell the bond market: the price of inflation-protected TIPS bonds gives an implied inflation forecast of 2.21%.

This point ties in with my own bubble hypothesis in this way: neo-goldbugs ascribe gold's bull market to the fall of the U.S. dollar and gold's utility as a crisis hedge. This double causation explains why gold's been marching up in a low-inflation environment. Add the likely New-Era story - which hasn't achieved general circulation (as of yet) - and you get a bubble which would be amplified by a return of inflation. For those who don't already know, my guess at the New-Era story is: a dethronement of the greenback as reserve currency, and its (at least partial) replacemrnt by gold. I've pegged it as a New-Era story because I don't think an all-out dethronement is that likely.