In the Inflation vs. Deflation debate, Gary North has come up with this grabber-of-a- headline: “If Deflation Is Coming, Sell Your Gold,” he writes at LewRockwell.com. If North is trying to scare deflationists into abandoning their arguments, giving banner play to such bad advice should only make them snicker and hoot. For in fact, deflation is already here in spades, in the form of a financial implosion that has wiped at least $80 trillion dollars worth of “wealth” from the world’s books. And in the midst of this, of course, gold has performed superbly for investors. North would ignore these facts to argue that no deflation has occurred, technically speaking. He points out that the money supply in the form of excess bank reserves has actually doubled recently, as indeed it has. But the supposed robustness of M1, M2 and M3 will be scant consolation to investors who have seen their net worth evaporate by 30% to 50% or more in the last year or so. It will also not cheer the hundreds of millions of homeowners and investors who are getting crushed by the main symptom of the deflation that North says does not exist – i.e., an increase in the real burden of debt. A Helicopter Ben Believer North’s arguments represent monetarism’s last stand. A True Believer in the inflationist creed of Helicopter Ben, he is one of those guys who has been arguing for decades that, if deflation were to threaten, They would not let it happen. In fact, deflation has not only happened, it has completely overwhelmed the central banks’ collective ability to pump even a dime’s worth of inflation into the real estate market, or to stimulate a mere ripple of new borrowing. We always thought North was smarter than the “They-would-never-let-it-happen” crowd, but apparently
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