Financial Collapse? Second Depression?

[BLADEMDA]

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http://www.youtube.com/watch?v=UePiTykiNEg&feature=related

Schiff has been more righ than wrong so far in 2011.

 

[BLADEMDA]

http://www.youtube.com/watch?v=UseYKxDLnOw


he Aftershock Survival Summit - YouTube

​

www.youtube.com/watch?v=UseYKxDLnOw42 min - Jul 18, 2011 - Uploaded by NewsmaxTV
To get your free investment kit, go to www.SurvivetheAftershock.com. WARNING: This video contains shocking truths about the real state of the ...



This guy predicts a second Depression in 2013. The problem is he has been right on so many things so far.

 

[BLADEMDA]

The Only Industry Where Over The Last Couple Of Months Where You Can Really Say The Fundamentals Have Dramatically Improved Is The Gold Mining Industry


These stocks represent a lot of value. I think we have a long away to go. (...) I think the only industry where over the last couple of months where you can really say the fundamentals have dramatically improved is the gold mining industry. During that time period the mining costs have come down yet the value of what they are mining has skyrocketed. These mining stocks are as cheap as they have ever been over the last 10 years as far as P/E basis.

These gold stocks have barely moved and nobody owns them.

Peter Schiff

 

[urge]

http://www.youtube.com/watch?v=UseYKxDLnOw


he Aftershock Survival Summit - YouTube

​

www.youtube.com/watch?v=UseYKxDLnOw42 min - Jul 18, 2011 - Uploaded by NewsmaxTV
To get your free investment kit, go to www.SurvivetheAftershock.com. WARNING: This video contains shocking truths about the real state of the ...



This guy predicts a second Depression in 2013. The problem is he has been right on so many things so far.

Why the staged interview?

 

[BLADEMDA]

Why the staged interview?

The book is being used by Financial letters/Advisors to sell their services. The interview is an elaborate advertisement.

However, the theme of the Book and interview remains intact. It is quite possible that 2013 will make the Era of Jimmy Carter look like the roaring 1950's. One should at least prepare for the collapse of the U.S. dollar and Stagflation.

 

[BLADEMDA]

I'm still looking for fresh ideas for a significant portion of my portfolio. Real Estate- Nope, Stocks- Fine until the end of 2012 or Obama wins re-election, Gold- In a bubble but likely to go up, Silver- Ditto like Gold but more risky in a recession, Bonds- Scary going forward.

It seems my best bet is Currency hedge. If Gold falls back (as many experts wrongly predicted) then I would add heavily to my positions. I'm patient waiting for $1600 or less to add to my portfolio. Silver could go wild above $50 an ounce by the end of this year.

I do like Gold mining stocks until the bubble bursts in Gold. Gold miners have significantly lagged the price of Gold (GLD).

Any other suggestions? I don't mind NOT earning money as long as the underlying asset holds its own against inflation.

 

[BLADEMDA]

 

[BLADEMDA]

GENEVA -- The U.S. dollar has hit a record low against the Swiss franc of 0.7485 centimes to the dollar – a drop of almost 30 percent from a year ago.
The slump Monday came on the first day of European trading following the U.S. government debt downgrade last week.
The Swiss government was holding an emergency meeting Monday to discuss the current turmoil on the financial markets and how to deal with the increasingly valuable franc that is hurting Swiss exporters.

 

[sevoflurane]

I'm still looking for fresh ideas for a significant portion of my portfolio. Real Estate- Nope, Stocks- Fine until the end of 2012 or Obama wins re-election, Gold- In a bubble but likely to go up, Silver- Ditto like Gold but more risky in a recession, Bonds- Scary going forward.

It seems my best bet is Currency hedge. If Gold falls back (as many experts wrongly predicted) then I would add heavily to my positions. I'm patient waiting for $1600 or less to add to my portfolio. Silver could go wild above $50 an ounce by the end of this year.

I do like Gold mining stocks until the bubble bursts in Gold. Gold miners have significantly lagged the price of Gold (GLD).

Any other suggestions? I don't mind NOT earning money as long as the underlying asset holds its own against inflation.

👍

Thx for that.

Would AAA tax free bonds be a safe place? Some of those yields could potentially keep up with inflation.

 

[BLADEMDA]

👍

Thx for that.

Would AAA tax free bonds be a safe place? Some of those yields could potentially keep up with inflation.

Yes,

A good Municipal AAA rated bond is fine as long as you are prepared to sell if things take a turn for the worse. Also, inflation is one thing but what about DEVALUED currency which the bond is priced in?

What if Bernanke prints more money? What if the debt doesn't get under control? What is the real value of the underlying currency going forward?

A nation can't simply print money to achieve prosperity.

In my opinion, the reason Gold didn't collapse last week is because CENTRAL BANKS are buying/hoarding Gold. They are aware of Currency risk in the world and GOLD is protection.

 

[sevoflurane]

Hard to pull the trigger when it's at record highs. But your point is well taken and I agree with you. If it does what silver did a couple of months back, I'll end up putting more in my portfolio.

 

[sevoflurane]

GENEVA -- The U.S. dollar has hit a record low against the Swiss franc of 0.7485 centimes to the dollar – a drop of almost 30 percent from a year ago.
The slump Monday came on the first day of European trading following the U.S. government debt downgrade last week.
The Swiss government was holding an emergency meeting Monday to discuss the current turmoil on the financial markets and how to deal with the increasingly valuable franc that is hurting Swiss exporters.

This is disturbing.

 

[BLADEMDA]

This is disturbing.

Get used to it. What are you doing to prepare for a possible U.S. Currency collapse?China is buying Gold. Chavez is bring all his Gold back home.

What if Obama beats Perry next year? What will that bring to your dollar and investments? If Obama wins Gold is going over $2500 an ounce and Silver over $70.

 

[BLADEMDA]

Venezuelan President Hugo Chavez ordered the central bank to repatriate $11 billion of gold reserves held in developed nations’ institutions such as the Bank of England as prices for the metal rise to a record.
Venezuela, which holds 211 tons of its 365 tons of gold reserves in U.S., European, Canadian and Swiss banks, will progressively return the bars to its central bank’s vault, Chavez said yesterday. JPMorgan Chase & Co. (JPM), Barclays Plc (BARC), and Standard Chartered Plc (STAN) also hold Venezuelan gold, he said.
“We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home,” Chavez said yesterday on state television. “It’s a healthy decision.”
Chavez, whose government depends on oil for 95 percent of its export revenue, is looking to diversify Venezuela’s cash reserves from U.S. and European banks to include investments in emerging markets including Brazil, China, India, Russia and South Africa, central bank President Nelson Merentes said yesterday. The world’s 15th-largest holder of gold is bringing back its gold after a 28 percent rally in the price this year.

 

[BLADEMDA]

Our economic death spiral into the Second Great Depression
Wracked up by both parties over many decades our debt has evolved into a yearly deficit that can no longer be serviced with tax revenue and borrowing.
To avoid default Ben Bernanke chose to monetize the un-payable portion of our deficit. Each month about 100 billion dollars are created out of thin air to cover our government’s bills.
This has set forth an unstoppable, self reinforcing, negative-feedback-loop whereby:
Debt monetization (printing money out of thin air to cover the portion of governments spending not satisfied by tax revenue and borrowing) reduces the value of the dollar.
The debt monetization triggers dollars to flow out of bonds and into commodities.
This increases demand, commodity prices rise.
As commodities make their way into the supply chains businesses and consumers realize higher prices.
Since globalization has caused wages to stagnate at 1970 levels, and with 23% unemployment, businesses try to eat increases, this in turn reduces hiring, causes layoffs and kills expansion.
Consumers reduce their purchases, case in point: Wal-Mart is losing market share to the Dollar Store - that right there spells retail health (read: it’s terminal).
Nations whose citizens spend 32%-52% of their entire budget on food are especially affected.
In those nations where citizens spend 32%-52% of total their income on food; food riots erupt, social unrest breaks out, governments topple.

 

[BLADEMDA]

Benanke will give us more heroin in the short term. He will print, inject liquidity and buy stock assets. In other words, the "junkie" will keep getting his fix over the next 12 months. However, Ultimately the heroin addict will face a steep price for his addiction.

Many economists see not only a risk of a recession but a Depression circa 1932 is quite possible.

 

[BLADEMDA]

http://www.youtube.com/watch?v=9egB8CSMI9U&feature=player_embedded#!

 

[cfdavid]

If we can't fix our jobs problem, which I'm seeing NOTHING being done to rectify in the longer term (i.e. reprioritizing the sectors that the most successful advanced and emerging economies target and covet (whom aren't natural resource rich) such as manufacturing).

I firmly believe we are headed for massive social upheaval. When you start taking hundreds of thousands of young dudes whom don't see a real future for themselves, we'll start seeing huge numbers of 30 somethings living at home, unable and unwilling to support/start a family, the beginings of class warfare, increased crime and substance abuse, and perhaps a disintegration of the family unit. This is not speaking of the crisis that young women will also experience.

Clearly we all have a steak in this. Too bad we've had such HORRIBLE economic/financial leadership over the past 30 decades, which has culminated in a major deindustrialization of this country.

We can't all be doctors and engineers (I can no longer say lawyers since they too are underemployed).

 

[sweetalkr]

Dude this is for blademd, bet against the market. There are etfs that bet against Dow s&p etc. And look for international investments. If u think it's a global recession, bet against international and watch exponential drops compared to us and mint $ until they stop short selling

 

[Gardner]

Hard to pull the trigger when it's at record highs.

That's what my wife said when Gold was at a record high of $850. That's what she said again when Gold hit a record high at $1050, except that time I bought. It will go up and down, but the fundamentals are strong.

 

[Gardner]

I've been following Peter Schiff and Jim Rogers for a few years now. They know what they are talking about.

Look at this clip from 2006 and 2007 where Peter Schiff was absolutely mocked for his predictions. http://www.youtube.com/watch?v=2I0QN-FYkpw. It's not just that he said "the market will go down" or something vague. He was very specific about what would happen.

 

[sevoflurane]

That's what my wife said when Gold was at a record high of $850. That's what she said again when Gold hit a record high at $1050, except that time I bought. It will go up and down, but the fundamentals are strong.

Yep. This is true. However, what happened to gold in 2008? It went down with the stock market. Even so, I agree that it is a safe haven for those who want to preserve wealth in the current milieu. I'm not looking at hitting a home run. I just want to preserve what I have now.

 

[RT2MD]

So my question is this:

How would this affect somebody who is currently in school without any real assets besides a house? I'll be getting done with medical school in 2014, at this point hoping to do a gas residency (and fellowship?), so I won't really be earning anything until 2018/2019. Does this put me at an advantage, since I don't really have anything invested yet? Or does that mean that I'm totally screwed, since I won't have that much in reserves to fall back on? On the flip side, my wife's income may increase quite a bit over the next couple of years... to the point where we would be looking at investments/more serious retirement plans. (She is one of the few lawyers who got very lucky in this job market)

I have a name of a financial planner that a friend of mine (anesthesia pain doc) used when he was about in the same situation as I'm in now - older, married, kids, just starting medical school, etc. but I haven't set up an appointment yet... I need to do that.

Thanks.

 

[Monty Python]

If we can't fix our jobs problem, which I'm seeing NOTHING being done to rectify in the longer term (i.e. reprioritizing the sectors that the most successful advanced and emerging economies target and covet (whom aren't natural resource rich) such as manufacturing).

I firmly believe we are headed for massive social upheaval. When you start taking hundreds of thousands of young dudes whom don't see a real future for themselves, we'll start seeing huge numbers of 30 somethings living at home, unable and unwilling to support/start a family, the beginings of class warfare, increased crime and substance abuse, and perhaps a disintegration of the family unit. This is not speaking of the crisis that young women will also experience.

Clearly we all have a steak in this. Too bad we've had such HORRIBLE economic/financial leadership over the past 30 decades, which has culminated in a major deindustrialization of this country.

We can't all be doctors and engineers (I can no longer say lawyers since they too are underemployed).

Preface: my sources are the current edition of Forbes magazine, and also reading The Economist (a UK publication) for the past several years.

1. A large amount of the overall blame is squarely Richard Nixon's. His taking the dollar off the gold standard is largely to blame for today's weak dollar and the economic fallout it produced. See: http://www.forbes.com/sites/charles...al-monetary-error-the-verdict-40-years-later/

2. Employers are reluctant to hire at present, largely due to implications if Obamacare passes scrutiny with court challenges and becomes final law.
See: http://www.heritage.org/Research/Reports/2011/07/Economic-Recovery-Stalled-After-Obamacare-Passed

3. Other Obama administration new rules/regulation/policies are just gumming up the gears of our economy.

4. Despite all the bad news (which I don't discount) both Forbes and The Economist foresee the US overcoming all the problems and having a bright future in the upcoming decades. Especially when you factor in the fertility rate of a lot of our current economic competitors. On that particular aspect the US is already in a very enviable position, while for our competitors it looks economically disastrous.

 

[epidural man]

I've been following Peter Schiff and Jim Rogers for a few years now. They know what they are talking about.

Look at this clip from 2006 and 2007 where Peter Schiff was absolutely mocked for his predictions. http://www.youtube.com/watch?v=2I0QN-FYkpw. It's not just that he said "the market will go down" or something vague. He was very specific about what would happen.

Wow, Peter Schiff is my new hero.

What gets me is how the critics are LAUGHING at him - like he is ******ed, yet he was spot on.

I wish I could somehow ask those guys today why they were laughing.

 

[cfdavid]

Wow, Peter Schiff is my new hero.

What gets me is how the critics are LAUGHING at him - like he is ******ed, yet he was spot on.

I wish I could somehow ask those guys today why they were laughing.

Examples of the traditional pundits, "high profile" analysts from large I-Banking firms, and even fianance/economic "leaders" in D.C. getting it so wrong that I find it hard to believe THEY believed what they were saying abound.

 

[BLADEMDA]

Trinity your post is very accurate. I too hope the U.S. Does well going forward. I do agree with points 1-3. But, until we get control of our debt and spending problems the U.S. Currency and economy will suffer.

The economy is very fragile and the risk of a second recession is quite real which is why the Bernanke is talking about QE3.

 

[BLADEMDA]

Trinity your post is very accurate. I too hope the U.S. Does well going forward. I do agree with points 1-3. But, until we get control of our debt and spending problems the U.S. Currency and economy will suffer.

The economy is very fragile and the risk of a second recession is quite real which is why the Bernanke is talking about QE3.

Did you see the Jobs report? ZERO job growth. The market tanked. QE3 is coming or we are headed into another recession.

 

[BLADEMDA]

Politics

Employers Add Zero Net Jobs in August, Unemployment Rate Unchanged at 9.1 Percent

Read more: http://www.foxnews.com/politics/201...nt-rate-unchanged-at-1-percent/#ixzz1WpXRWDp3
​

 

[BLADEMDA]

The world’s developed economies are trapped at the “stall speed” of low growth and need to have greater fiscal stimulus and less austerity to kick-start growth, leading economist Nouriel Roubini told CNBC Friday.

Getty Images​

Speaking at the Ambrosetti Forum on the shores of Lake Como, near Milan, Roubini said in an interview: “We are in a worse situation than we were in 2008. This time around we have fiscal austerity and banks that are being cautious.”
Roubini, known for his bearish views on the world economy, thinks that there is a 60 percent chance of a second recession imminently. Economic data of recent weeks presents a mixed picture.
On Thursday, the US government announced that jobless claims dropped by 11,000 to 409,000 last week. Friday's employment report in the US is expected to show a gain of only 75,000 nonfarm jobs during August, with the unemployment rate steady at 9.1 percent.

 

[Narcotized]

The economy is very fragile and the risk of a second recession is quite real which is why the Bernanke is talking about QE3.

Couple of corrections:

We never left the first recession. Anyone that tells you we did has absolutely no idea what they are talking about.

Between the choices of default, massive spending cuts and civil unrest, and printing money, the third option will be chosen everytime. QE will never end. Long term target price of gold is infinity.

 

[deleted126335]

The world’s developed economies are trapped at the “stall speed” of low growth and need to have greater fiscal stimulus and less austerity to kick-start growth, leading economist Nouriel Roubini told CNBC Friday.

Getty Images​

Speaking at the Ambrosetti Forum on the shores of Lake Como, near Milan, Roubini said in an interview: “We are in a worse situation than we were in 2008. This time around we have fiscal austerity and banks that are being cautious.”
Roubini, known for his bearish views on the world economy, thinks that there is a 60 percent chance of a second recession imminently. Economic data of recent weeks presents a mixed picture.
On Thursday, the US government announced that jobless claims dropped by 11,000 to 409,000 last week. Friday's employment report in the US is expected to show a gain of only 75,000 nonfarm jobs during August, with the unemployment rate steady at 9.1 percent.

ROUBINI'S ACCURACY:

http://moneywatch.bnet.com/investin...uriel-roubini-misses-another-prediction/2389/

 

[Gardner]

Yep. This is true. However, what happened to gold in 2008? It went down with the stock market. Even so, I agree that it is a safe haven for those who want to preserve wealth in the current milieu. I'm not looking at hitting a home run. I just want to preserve what I have now.

Sevo, I absolutely agree. When I say I bought gold at $1050 and now it is around $1870ish, I don't believe for a minute that I have some huge return on my investment. Rather, I believe that change in the price is merely the decline in the dollar over that time. Gold is purely a vehicle to preserve wealth for me.

 

[pgg]

Sevo, I absolutely agree. When I say I bought gold at $1050 and now it is around $1870ish, I don't believe for a minute that I have some huge return on my investment. Rather, I believe that change in the price is merely the decline in the dollar over that time. Gold is purely a vehicle to preserve wealth for me.

Odd ... I can't think of anything else I buy that's become >78% more expensive in that same period.

Except silver.

🙂

 

[deleted126335]

Odd ... I can't think of anything else I buy that's become >78% more expensive in that same period.

Except silver.

🙂

Take a good hard look at the X-axis on the chart, i.e. how many years we are talking about. Now, does it take a genius to suspect that maybe the some time in the next few years the direction of the Y-axis is more likely to me more negative than positive. When, I can't say. Might the Y axis go lots more vertical? yup. But with every other commercial on CNBC, FOX, and Bloomberg advertising investing in gold, my guess is soon. Where were those commercials ten years ago?

http://en.wikipedia.org/wiki/File:Gold_price_in_USD.png

 

[CambieMD]

I've been following Peter Schiff and Jim Rogers for a few years now. They know what they are talking about.

Look at this clip from 2006 and 2007 where Peter Schiff was absolutely mocked for his predictions. http://www.youtube.com/watch?v=2I0QN-FYkpw. It's not just that he said "the market will go down" or something vague. He was very specific about what would happen.

According to Peter Schiff, the economic down turn started around 2006. The present economic down turn will be with us for years. The attempts at quick fixes willl only make things worse.

Both political parties are out to lunch. We cannot spend our way out of this. Decreasing revenue will not help either.

Cutting spending on education will not be felt immediately but in years to come it will be felt. This country will be even weaker in math and science.

It took the USA decades to get into this mess. It may take a decade for the country to get out of it. Our standard of living has been reset lower.

Beware of those who promise miracle cures.

The politicians all say that the hate Washington ,D.C politics but they are all want to stay in office.

I am reducing my debts and watching how much I spend. I expect things to get worse.

Cambie

 

[cfdavid]

Take a good hard look at the X-axis on the chart, i.e. how many years we are talking about. Now, does it take a genius to suspect that maybe the some time in the next few years the direction of the Y-axis is more likely to me more negative than positive. When, I can't say. Might the Y axis go lots more vertical? yup. But with every other commercial on CNBC, FOX, and Bloomberg advertising investing in gold, my guess is soon. Where were those commercials ten years ago?

http://en.wikipedia.org/wiki/File:Gold_price_in_USD.png

I admit to getting a little nervous when the high school educated clerk in a factory starts day trading Amazon during the dot.com bubble. Likewise, when the Xerox repair guy I was speaking to planned on "flipping" his brand new home (2500 sq ft) "within about a year", just as the housing bubble was at it's maximum.

Just the other day the pharmacy tech dude at my hospital was chattering about gold....

Not being elitist, but when the "masses" hop onto any bandwagon, at least recent history tells us it might not be a great thing for sustainability of that asset category....

While there was no such arguement about "a new paradigm" or "this is different" with regards to the housing bubble, there certainly was during the dot.com period. And there is, now, for about gold, ableit the arguement is ofcourse a different one.

Perhaps one major difference is that we are hearing more and more semi-credible chatter about renewed interest in returning to some sort of gold standard. Who knows....

I'm generally bullish on gold, but I think it's better to trade it right now. Long positions, even over a weekend, make me a bit nervous. Hard to call the peaks and valleys, but our global economy is coming apart in many ways (I know that's an arguement for gold), and I think anything is possible. So, we can simply look foward to more volatility.

I do think gold has more upside, however, given that the Euro zone seems to literally be coming apart at the seams, and that monetary easing all over the world (take the Swiss for example, whom are going to devalue the franc in order to protect their exports in an environment where everyone ELSE is inflating.... Where does all this end?) is happening at alarming rates.

I think being cautious is important right now...

I'm also of the opinion that fundamentals haven't really mattered for quite some time. Markets move based upone the latest news headline, and they have very short term memories. Learning to interpret how one or two asset classes might respond to the latest news can be a worthwhile endeavor, but it takes some time.

 

[BLADEMDA]

I admit to getting a little nervous when the high school educated clerk in a factory starts day trading Amazon during the dot.com bubble. Likewise, when the Xerox repair guy I was speaking to planned on "flipping" his brand new home (2500 sq ft) "within about a year", just as the housing bubble was at it's maximum.

Just the other day the pharmacy tech dude at my hospital was chattering about gold....

Not being elitist, but when the "masses" hop onto any bandwagon, at least recent history tells us it might not be a great thing for sustainability of that asset category....

While there was no such arguement about "a new paradigm" or "this is different" with regards to the housing bubble, there certainly was during the dot.com period. And there is, now, for about gold, ableit the arguement is ofcourse a different one.

Perhaps one major difference is that we are hearing more and more semi-credible chatter about renewed interest in returning to some sort of gold standard. Who knows....

I'm generally bullish on gold, but I think it's better to trade it right now. Long positions, even over a weekend, make me a bit nervous. Hard to call the peaks and valleys, but our global economy is coming apart in many ways (I know that's an arguement for gold), and I think anything is possible. So, we can simply look foward to more volatility.

I do think gold has more upside, however, given that the Euro zone seems to literally be coming apart at the seams, and that monetary easing all over the world (take the Swiss for example, whom are going to devalue the franc in order to protect their exports in an environment where everyone ELSE is inflating.... Where does all this end?) is happening at alarming rates.

I think being cautious is important right now...

Mark this down. Gold will surpass its all time high of $2200 an ounce (inflation adjusted). I expect that price next year. I also hope a sweep by the Republicans next year will cause massive change in the way govt. operates and spends money. A Republican victory next year will cause many traders to SELL Gold and ask questions later. Fear will now be on the BUYERS of Gold.

An Obama Victory and Gold SOARS to $2500 an ounce. Ouch!

 

[BLADEMDA]

 

[BLADEMDA]

A current Graph would show Gold at over $1800 an ounce so please make a mental addition of that to the above picture. Obama has wrecked this economy and spent us into oblivion. His re-election will spur Gold to highs the world has never seen before.

 

[cfdavid]

According to Peter Schiff, the economic down turn started around 2006. The present economic down turn will be with us for years. The attempts at quick fixes willl only make things worse.

Both political parties are out to lunch. We cannot spend our way out of this. Decreasing revenue will not help either.

Cutting spending on education will not be felt immediately but in years to come it will be felt. This country will be even weaker in math and science.

It took the USA decades to get into this mess. It may take a decade for the country to get out of it. Our standard of living has been reset lower.

Beware of those who promise miracle cures.

The politicians all say that the hate Washington ,D.C politics but they are all want to stay in office.

I am reducing my debts and watching how much I spend. I expect things to get worse.

Cambie

I agree with all of the above. When one looks objectively at the U.S., we're so very far from heading in the right direction that it makes me sad.

I do believe, however, that there will still be "winners" and opportunities in the U.S., even big ones. All of the problems that we speak of here regularly will see solutions, and those people presenting such solutions will be rewarded. Though, there will be many more losers than winners, which is essentially the demise of the middle class, which is horrible in the long run as I think we'd all agree upon.

Even with the disaster that has become South Africa (for example), there are still massive deals being done, and a lot of money to be made IF you're in the right industry. The masses? Different story.

And with the recent Supreme Court ruling that completely facilitates the driving of politics by special interests, so long as you belong to one of those special interests, it's likely that you will see some benefit. Again, the masses? Not so much. Pitiful for the long term prospects of the country.

 

[BLADEMDA]

Many Washington politicians and particularly Socialists live in a dream world. These Socialists, including President Obama, do not understand free market capitalism or Economics 101. Obama and his Socialist pals in Congress actually think they can just continue trillions in deficit spending each year with no consequences. It is important to note that the highest amount ever added to the National Debt, in any given year by President George W Bush, was $400 billion, which was thought to be alot at the time. A certain Senator Barack Obama said of President Bush that he was completely irresponsible for adding to the National Debt. We see now that this was chump change. Obama has added $5 trillion to the National Debt in less than 3 years in office. It is as though Obama is intentionally out to bankrupt our country to "transform" it into a Socialist nation more quickly. We just can't let this happen because it will mean a lower standard of living for all Americans.

 

[BLADEMDA]

The US now only owes the equivalent of 340,000 tonnes of gold – still more than the total sum of gold ever mined (twice as much, in fact, according to best estimates) and way above the 8,113.5 tonnes the United States Treasury says it holds between Fort Knox and the New York Fed.

But why would gold demand rise – pushing the gold price higher – in response to the growth of national debt?

Like money itself, debt – whether a personal loan or the kind racked up on our behalf by our elected representatives – represents a claim on resources, otherwise known as wealth. At some point in the future, the debtor is expected to hand some wealth back to his or her creditor, ideally the principal plus some level of profit. Trouble is, debtors don't always follow the script.

Now, when it comes to resolving its national debt, the US government has five options:

#1. Economic growth – The economy produces more real wealth. The government, through taxes, takes a slice of this growing pie, and pays back the bondholders from whom it has borrowed in the past;

#2. Raise taxes – The economic pie doesn't need to grow. Uncle Sam could simply raise the rate of taxation, and use that bigger sum of cash to repay its debt;

#3. More borrowing – As interest or debt repayments fall due, the Treasury simply goes back to the bond market and borrows from Peter to pay Paul;

#4. Default – Just don't pay. Tell the creditors to get lost;

#5. Pretend to pay – The US Dollar is the world's No.1 reserve currency, giving foreign central banks (especially in fast-growing Asia) little choice for where they might store their burgeoning savings. The US Treasury borrows in Dollars. The Federal Reserve has the power to create Dollars. The more Dollars there are, the less each one is worth – but when you're handing them over to someone else, who cares?

 

[pgg]

Take a good hard look at the X-axis on the chart, i.e. how many years we are talking about. Now, does it take a genius to suspect that maybe the some time in the next few years the direction of the Y-axis is more likely to me more negative than positive. When, I can't say. Might the Y axis go lots more vertical? yup. But with every other commercial on CNBC, FOX, and Bloomberg advertising investing in gold, my guess is soon. Where were those commercials ten years ago?

Yes, I was arguing that the runup in gold prices is just as irrational as the runup in real estate prices was. Two years, up 80%? Five years, up 300%?

With the exception of other precious metals, essentially nothing else has tracked the price of gold, so this argument that "gold's value is constant, it's your dollars that are worth less" is demonstrably false.

Inflation isn't really the official/manipulated/understated almost-0%, but it's not 40-60% either.

People buying gold at $1900 may be predicting that in 5 years, that's what its fair value will be, and they may be right. But they are by definition speculating, and speculators are sometimes wrong. Especially when they're convinced that "this time is different" ...

 

[pgg]

#2. Raise taxes – The economic pie doesn't need to grow. Uncle Sam could simply raise the rate of taxation, and use that bigger sum of cash to repay its debt;

#5. Pretend to pay – The US Dollar is the world's No.1 reserve currency, giving foreign central banks (especially in fast-growing Asia) little choice for where they might store their burgeoning savings. The US Treasury borrows in Dollars. The Federal Reserve has the power to create Dollars. The more Dollars there are, the less each one is worth – but when you're handing them over to someone else, who cares?

#2 and #5 are essentially the same thing. Inflation is the ultimate (regressive) flat tax, siphoning wealth from all savers and reducing the value of wages. The irony and danger is that short term it will be politically easy because the people it screws the most (the poor masses) will be the ones clamoring for it the loudest, while the wealthy will have both a larger cushion to its effects, and better options for wealth preservation.

The masses want their bread and circus the way junkies want their heroin.

 

[GoodmanBrown]

#2 and #5 are essentially the same thing. Inflation is the ultimate (regressive) flat tax, siphoning wealth from all savers and reducing the value of wages. The irony and danger is that short term it will be politically easy because the people it screws the most (the poor masses) will be the ones clamoring for it the loudest, while the wealthy will have both a larger cushion to its effects, and better options for wealth preservation.

The masses want their bread and circus the way junkies want their heroin.

PGG, I'm not sure I follow. Are you saying the general populace will want a higher tax rate on the rich, or that they'll want the US to inflate its way out of debt to avoid a higher tax rate?

 

[pgg]

PGG, I'm not sure I follow. Are you saying the general populace will want a higher tax rate on the rich, or that they'll want the US to inflate its way out of debt to avoid a higher tax rate?

I'm saying I think the general populace (poor and middle class) will favor continued QE rather than tax increases or spending cuts that immediately, directly, and visibly affect them.

Ultimately the effect of that continued QE can only be inflation, which is functionally equivalent to a flat tax on everybody because it reduces the purchasing power of every dollar. Flat taxes are regressive and disproportionately affect the discretionary purchasing power of poor people.


I'm saying the general populace will hurt itself more via the easy and disguised cost of continued QE (which ultimately solves nothing) than they would by simply raising their own taxes and cutting spending that benefits them.

 

[Quirk11]

I think it's much simpler.

"In its 2009 Investment Returns Yearbook, Credit Suisse noted that from 1900-2008, "the best performing markets tended to be resource-rich, New World countries." ......
According to the Credit Suisse report the top performing markets over that 108-year period were Australia, Sweden, South Africa, the U.S., and Canada. Other than Sweden, all of these countries were former colonies, had vast natural resources, open trade policies, and managed to avoid the destruction war brings to industrial developments."

http://www.fool.com/investing/international/2011/02/07/why-you-should-bet-on-australia.aspx

Hence, that is the formula for long term success.
1) Development of real resources (oil, gold, minerals, lumber etc)- think Texas and North Dakota (two bright spots in America), Dubai, etc around the world

2) Trading and Not Fighting Wars

3) Sane Fiscal Policy / Stable Banking and Finance Structure - this does require some degree of regulation and government involvement.

We can try and trade tulip bulbs, beanie babies, or other falsely valued things, but its not sustainable in the long term. Ultimately, those countries linked with real resources industries (oil, minerals, etc..) will do much better and will do really well if they have a "sane" fiscal / legal structure / political structure.

PS Blade, the future of this country is a one party system for quite some time. The demographics are in favor of the Democratic party. Regardless of your views on politics and immigration, when citizenship rights are extended to everyone here, there will be a Democratic supermajority, perhaps even in states like Texas.

 

[deleted126335]

I think it's much simpler.

"In its 2009 Investment Returns Yearbook, Credit Suisse noted that from 1900-2008, "the best performing markets tended to be resource-rich, New World countries." ......
According to the Credit Suisse report the top performing markets over that 108-year period were Australia, Sweden, South Africa, the U.S., and Canada. Other than Sweden, all of these countries were former colonies, had vast natural resources, open trade policies, and managed to avoid the destruction war brings to industrial developments."

http://www.fool.com/investing/international/2011/02/07/why-you-should-bet-on-australia.aspx

Hence, that is the formula for long term success.
1) Development of real resources (oil, gold, minerals, lumber etc)- think Texas and North Dakota (two bright spots in America), Dubai, etc around the world

2) Trading and Not Fighting Wars

3) Sane Fiscal Policy / Stable Banking and Finance Structure - this does require some degree of regulation and government involvement.

We can try and trade tulip bulbs, beanie babies, or other falsely valued things, but its not sustainable in the long term. Ultimately, those countries linked with real resources industries (oil, minerals, etc..) will do much better and will do really well if they have a "sane" fiscal / legal structure / political structure.

PS Blade, the future of this country is a one party system for quite some time. The demographics are in favor of the Democratic party. Regardless of your views on politics and immigration, when citizenship rights are extended to everyone here, there will be a Democratic supermajority, perhaps even in states like Texas.

And if the world economy slows down, those "resource rich" countries will get crushed doubly, both their currencies and their earnings.
Roll the dice, move your mice.

 

[cfdavid]

Yes, I was arguing that the runup in gold prices is just as irrational as the runup in real estate prices was. Two years, up 80%? Five years, up 300%?

With the exception of other precious metals, essentially nothing else has tracked the price of gold, so this argument that "gold's value is constant, it's your dollars that are worth less" is demonstrably false.

Inflation isn't really the official/manipulated/understated almost-0%, but it's not 40-60% either.

People buying gold at $1900 may be predicting that in 5 years, that's what its fair value will be, and they may be right. But they are by definition speculating, and speculators are sometimes wrong. Especially when they're convinced that "this time is different" ...[/QUOTE]

This last statement is what makes me extremely cautious about taking on long positions and then letting the market do what it would. Again, dudes, I think this is a time to be cautious, even when making bold moves (i.e. don't hold positions for too long because the news flashes that are driving markets can change too rapidly).