In the current monetary system, the supply of money is not constant and the central banks of this world are free to create as much inflation (money-supply growth) as they want. There is a catch – the central banks can only do so as long as they can keep inflationary fears in check by constantly reminding the public of the threat of deflation.

Like the cast of a bad sitcom, the stars of the credit crunch are reuniting.

On Wednesday, neither gold nor silver showed any sort of direction…but they generally drifted lower before the Comex open. Of course the dollar rally didn’t help…but then again, oil was up to almost $124/barrel, so that should have made a difference but it didn’t.

The rally continues, spurred by an RBI credit policy which did not change interest rates but hiked CRR by 25 basis points to suck out some more liquidity and by some encouraging corporate results, such as those of DLF which made a fourth quarter profit of a whopping Rs 2176 crores!

At their two-day meeting that starts today, Tuesday, U.S. Federal Reserve policymakers will have to grapple with a moral choice that is well beyond the pay grade of central bankers – choosing between the financial stability of U.S. homeowners and world hunger.

Well, as I suspected, it doesn’t look like the Bank of England’s £50bn injection is going to bring down mortgage rates any time soon.

Thomas G. Donlan’s new essay in Barron’s is titled “Lands of Waste and Debt” with the subhead “The states send signals that it will not be a happy Spring”, which makes me ask the obvious question “It won’t be happy for who?”, as I am all in gold, silver and oil, and I am dead-bang sure that I will be VERY happy for a long, long time…

In the beginning of the resource bull market, all commodities were created equal. They all rose together, with the exception of a few products like aluminium and rubber, which lagged the rest of the group. Now, things are different. Call it the great energy sorting.

As expected, UK interest rates come down a quarter per cent to 5%. London equities are down 75 points, the pound is grovelling against the euro like never before and DSG International (Curry’s/PC World) says promotional goods are all that’s selling, as it dishes out another profit warning.

Oil Touches Record Set Only Last Month… The Surprise Report That Set off the Rally…IMF, Fedheads Both Seeing U.S. Recession… And Guess Who Says It’s Already Started?…Amoss Unpacks Fed’s Newest Liquidity Scheme…Williams’s Hyper-inflationary “Armageddon” Outlook…New Commodity Boom: Thieves Get the Lead Out…Hugo vs. Homer: Clash of the Titans