Larry Kudlow, Arthur Laffer, and the Bush administration thought the world worked like this: Gold will give you some useful knowledge about future inflation, but it is not an absolutely reliable indicator in and of itself. Kudlow has made this case on both his blog and his TV show, Kudlow and Co. Laffer has said as much on Kudlow's show, which has become the command center for the no-inflation camp. And the chairman of the president's Council of Economic Advisors has predicted "modest inflation" after looking at "market indicators" such as interest rates.

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