The question no one dares ask
To paraphrase Richard Nixon, "We're all Keynesians again."
Well, not you and me. But certainly among the Very Serious People who allegedly think Deep Thoughts about this credit crisis thing.
I got to musing about this when I read the news that Team Bush is contemplating "a roughly $40 billion proposal to help forestall foreclosures," according to the Wall Street Journal.
True, $40 billion is chump change compared to a $150 billion stimulus last spring, a $300 billion housing bill last summer, and a $700 billion bailout this fall. But still, non-Keynesian that I am, I asked, "Where the hell is the money going to come from?"
But hardly anyone asks that kind of question now. Even Nouriel Roubini calls for a Keynesian solution. A real kick in the teeth coming just days after uber-Keynesian Paul Krugman won the Nobel Prize for economics.
Like Nixon, even the "conservatives" are Keynesians again. They rally around John McCain, who's proposed a foreclosure-prevention program five times the size that of Team Bush. And they have the termerity to justify it by saying Barack Obama will bring about the onset of "socialism."
As I wrote a few weeks ago, before the fall of Lehman set off the most recent series of devastating dominoes, it's time to hunker down — reduce debt, keep the gas tank at least half-full, etc. And if you're out of debt, here's something else to give serious consideration.
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Anyone out there see inflation winning the battle against deflation? Despite all the governmental spending, I don’t given the massive deleveraging currently taking place. All this stupid governmental spending is but a drop in the bucket compared to the trillions that are being lost in the derivatives markets. So, what’s a gold bug to do? Hunker down for few months/years whilst doing what Mr. Gonigam wisely suggests? I suppose so. But I’m losing a lot what with my gold and gold mining shares now taking massive hits at they get caught up in the deleveraging/deflation mix.
Comment on October 23, 2008 @ 12:09 pm
Gold ain’t going nowhere, except to the pawnshops! It’s will get cheaper. Never in an economic depression has gold done well. There simply isn’t going to be buying power for luxuries like gold. Gold only does well in an economy where people are competing over who had the shiniest Rolex and inflation is a threat because of an overheated booming economy. That ain’t where we are heading ! We are heading for having the middle class living in tents and pushing shopping carts!
Comment on October 23, 2008 @ 1:22 pm
Gold is going nowhere? Gold is a luxury? I don’t think so.
We are getting ready to see US government spending soar. The dollar will continue to decline in real value, racing the other world currencies to the bottom. The greatest economic cataclysm in recent history is unfolding. When it is done, gold and silver will remain as a store of value, as it has done for thousands of years.
Comment on October 23, 2008 @ 1:56 pm
In spite of what Bernanke says about a determined government, deflation cannot be stopped in a fiat money system. Unless he is really prepared to provide massive amounts of non sterilized cash (trillions) deflation will take hold. In most countries where a serious economic crisis occurred, people had to sell their gold for cash to buy essentials. Those with cash would only offer 50 percent of the value for the gold, but people had to take it because gold doesn’t spend at the grocery store. I’m hanging onto my cash. Sold all my silver at 12 and took a small loss. You all will be selling me your gold at 400 if this gets serious. Cash will be king in tent city. I just can’t see Bernanke going on a Kamikaze run until it is far too late, and by that point we might as well go through the depression rather than risk becoming a zimbabwe.
Comment on October 23, 2008 @ 2:19 pm
Dude, that’s what many gold bugs seem to miss, to wit: the sterilization that the Fed can accomplish by mopping up, so to speak, the liquidity injected directly by it into the money supply. Bernanke mentioned this in his testimony before the House Budget Committee. The only problem is that I don’t understand this process; lots of folks talk about it but they don’t explain how it occurs. I’d like to hear your explanation as I truly cannot get my head around the mopping up mechanism.
Thanks.
Comment on October 23, 2008 @ 2:30 pm
Zimtran, gold got more expensive during the great depression. It went from 20 dollers an ounce to 35 dollars an ounce. Why do you think FDR made it illegal? Next time think before you speak. If you have gold can I buy it off you? All that http://www.kitco.com is selling is 400oz bars of gold and 1000oz bars of silver.
Didn’t the Fed say something about the printing press making deflation impposible? Start up those choppers!!!
Comment on October 23, 2008 @ 2:44 pm
I personally rather like my gold and I’ll keep it. It will have to get back under $300/oz before I’m losing FRN’s on it, there is no government record of it, and when/if we do get a hyperinflation, someone will probably be glad to give me 100k/oz in worthless FRN’s for it.
In other words, it is cheap insurance to pay off what few debts I have and always has value. My 12 ounces are easily concealed and don’t corrode or rot away- so what’s the problem.
And if the fiat money boys succeed in turning the tide- great! We’ll all be spared a literal bloodbath.
BTW- how are Social Security and socialized medicine’s promises going to be kept without printing money? I don’t see that there is any escape from that Faustian bargain except to inflate!
Keep the faith, everyone.
Comment on October 23, 2008 @ 3:52 pm
Walt,
Gold only went from $20 to $35 because that number was picked out of thin air by the feds. It wasn’t any kind of market price. If it hadn’t been outlawed, then the price would have fallen. Because in a real economic depression gold just isn’t important folks. People flee to gold at the start of an economic depression, but after several years of hard times gold just isn’t important anymore and price falls and falls. If we do go into a serious economic depression that’s exactly what you will see … gold in pawn shops getting cheaper and cheaper. Jobs! will be what everyone is looking for! Jobs and meals!
Comment on October 23, 2008 @ 4:25 pm
And inflation isn’t an issue when everyone is broke !
Comment on October 23, 2008 @ 4:26 pm
Sorry Zimtran your argument just does not hold water. Do you really think that policy makers just pick numbers out of thin air. There are plenty of jobs, people in the USA just aren’t willing to work at the wages offered. I bet you belonged to one of the many unions that forced the jobs out of this country huh?
I suppose that inflation is not an issue for the poor people in Zimbabwe. The people in Wilhelm Germany must of been rich then too eh? I am glad that you are not buying gold….stupid people deserve what they get.
Would you be one of the fools voting for Obama? (Not that McCain is any better)
Comment on October 23, 2008 @ 4:57 pm
Hey now ! I haven’t called anyone stupid, nor will I. No I’m a registered independent and always will be. I’d never join a union either.
I didn’t design my argument to hold any water, that’s for bath tubs. I just saying what I’m a thinkin’, which is …
- Look at what happened in the deep recession from mid 1980 to 1982. The price of gold fell by 60%. You could say I guess that this was because of Volcker’s tight monetary policy at the time. But I don’t think that was it. I just think that when the consumer isn’t consuming, prices fall … gold too.
- In the 30s FDR outlowed gold, then afterward artifically raised the price from $20 to $35 after the demonitization. This was done for international banking reasons that had nothing to do with the street value of the stuff, and also because FDR wanted a fiat currency so he could spend on government projects like the WPA. And because Eugene Black and Marriner Eccles were both advising him to do it. ref ‘Secrets of the temple’ -Willaim Greder.
- During a real economic downturn all prices fall ! Evrything falls because money disappears from the system, buying power evaporates. Jobs and what people want most but can’t get. Nobody will be thinking about gold. They will be thinking about cashflow and paying the bills. And millions will fail to keep up. Unemployment will rise, consumer prices will fall for everything.
- People will be selling gold not buying it. And they will be getting less and less for it as time goes on, and the prices will fall until the economy picks up and people feel a bit wealther. Could be years and years in a worse case.
- You won’t see hyperinflation because in a depression money is being destroyed via deflation much faster then it is being put into the system by the government. Look how much ‘money’ has been wiped out in the stock markets and real estate and comodity prices in the last 60 days. Imaging that process continuing just like that for 3 years. What would the economy look like then. It would be an economy where gold was selling for $2000+ an once by a long shot. No way !
Z———->
Comment on October 23, 2008 @ 5:22 pm
Sorry my spelling stinks when I have to type into a box the size of a post-it !
Comment on October 23, 2008 @ 5:25 pm
1. I figured I better answer all of your points to enlighten you (not that you will listen/understand reason)…my responses are bellow:
2.
3. Hey now ! I haven’t called anyone stupid, nor will I. No I’m a registered independent and always will be. I’d never join a union either.
I am glad to hear that you are an independent there is hope for you yet. I was calling you stupid because I say it as I see it. By saying stupid I was implying that will not feel sorry for you or people who think like you when you prove wrong. It is a dog eat dog world out there and only the strong survive. Good luck to you and may the best man win..
I didn’t design my argument to hold any water, that’s for bath tubs. I just saying what I’m a thinkin’, which is …
Holding water is a phrase look it up if you don’t know it but I am guessing that you are just being cute ïŠ
- Look at what happened in the deep recession from mid 1980 to 1982. The price of gold fell by 60%. You could say I guess that this was because of Volcker’s tight monetary policy at the time. But I don’t think that was it. I just think that when the consumer isn’t consuming, prices fall … gold too.
In the 1980 gold was coming off of a bull market I would have recommended buying stocks then. Any smart investor would use ratios to invest…like the Dow to Gold ratio etc.
- In the 30s FDR outlowed gold, then afterward artifically raised the price from $20 to $35 after the demonitization. This was done for international banking reasons that had nothing to do with the street value of the stuff, and also because FDR wanted a fiat currency so he could spend on government projects like the WPA. And because Eugene Black and Marriner Eccles were both advising him to do it. ref ‘Secrets of the temple’ -Willaim Greder.
Yes, you are right FDR wanted to inflate the currency and there was not enough gold to do that. That is precisely the reason that gold is such a great money it forces the recessions and depression that are important facet of fractional banking. (P.S. FDR was a criminal.)
- During a real economic downturn all prices fall ! Evrything falls because money disappears from the system, buying power evaporates. Jobs and what people want most but can’t get. Nobody will be thinking about gold. They will be thinking about cashflow and paying the bills. And millions will fail to keep up. Unemployment will rise, consumer prices will fall for everything.
Every thing falls huh? In relation to what…money? Gold is the one true money…dollars can be printed with ease. Gold has to be mined…much harder to do.
- People will be selling gold not buying it. And they will be getting less and less for it as time goes on, and the prices will fall until the economy picks up and people feel a bit wealther. Could be years and years in a worse case.
Bad money forces out the good. Good money, like gold goes into hiding and becomes scarce…For that reason I believe that the demand for gold will increase along with the price.
- You won’t see hyperinflation because in a depression money is being destroyed via deflation much faster then it is being put into the system by the government. Look how much ‘money’ has been wiped out in the stock markets and real estate and comodity prices in the last 60 days. Imaging that process continuing just like that for 3 years. What would the economy look like then. It would be an economy where gold was selling for $2000+ an once by a long shot. No way !
I agree that we won’t see hyperinflation, if the government leave everything alone that is. I don’t trust the government to do that. There were lots of smart people in Wilhelm Germany, but they were a welfare state that was in too much debt…their hands were tied. On a side note were the prices after the great depression for goods lower or higher then now?
Comment on October 23, 2008 @ 6:09 pm
Sorry my Formatting got screwed up
Comment on October 23, 2008 @ 6:14 pm
I don’t think the whole inflation/deflation question is really key to holding gold. I buy gold at whatever price when alternative investments perform worse and sell when such investments perform better.
Every argument against gold right now can be won by simply asking what alternative investment stands an mid- to long-term chance of outperforming gold. Stocks/bonds/housing/Ming vases? I can’t think of anything so my money keeps going into gold.
Comment on October 23, 2008 @ 9:45 pm
TO all GoldBugs (like me),
If detractors don’t want to believe in Gold’s power then just leave them alone.
Don’t convince them. Less people to compete in purchasing gold.
Comment on October 23, 2008 @ 10:09 pm
the problem is simple : fruad destroys any system. thieft kills off trust.
the best system in the world can be killed by rotten people and the worst system can be worked by good people.
Comment on October 23, 2008 @ 10:12 pm
HCN yields over 6 percent. Pfizer is over 7 pecent dividend. I think a lot of things are going to do better than gold over the next10 years. Gold used to be money. That’s why in past deflations everything deflated against gold and it’s paper representatives. Unless the government really screws up gold will not be money again. Besides it has alreay had it’s equivalent to the run from 20 dollars to 35 dollars during the great depression. It ran from around 400 per oz all the way to 1000 then is likely to settle around 750 for the time being unless all these newbies who panicked into gold panic back out again. That’s what my crystal ball says. I agree that govenment injections of money are a drop in the bucket, a few percent of a 14 trillion yearly economy. They aren’t brave enough to do what it takes to stop a real deflation and financial panic, monetize anything and everything now now now with unsterilized cash injections. They are always playing catchup and by the time they realize they need the zimbabwe option it will probably be to late.
Comment on October 24, 2008 @ 1:24 am
Word to the wise: Now might be a good time to pull a not insignificant amount of cash out of your bank. …all I’m sayin.
Comment on October 24, 2008 @ 9:18 am
Word to the wise: Now might be a good time to pull a not insignificant amount of cash out of your bank.
Comment on October 24, 2008 @ 9:19 am
David,
If that’s all you’re sayin’, then it doesn’t really help someone like me who wants to know why he should lose his measly 3% interest in a money market fund to earn 0% interest at the house. So, explain please.
Comment on October 24, 2008 @ 10:19 am
Walt,
Well it’s sad to find out that I’m not a hopeless case, as I was really hoping that I was hopeless and so it disconcerting to hear that there is hope for me yet. I guess that means my hopelessness is hopeless. But I digress, and besides my own logic is making me hopelessly dizzy.
Hey look, I’m not against anybody buying gold if that is what makes them happy, go for it! It’s a free country, more power to ya! Trade your dollars for it, bring it home, watch it shine, just don’t expect it’s price to head to the moon in a depression, that won’t happen. In fact don’t be so sure that it will continue to go up in price just because governments print money like crazed counterfeiting crackheads (which of course they do). Cuz if gold can be $1000 an ounce, well the way I see it, it could easily be $2000 an ounce, or $500 an ounce. There isn’t really much reason to the price, it’s just what it is, an accident of circumstance and a function of how much wealth people have handy to puty into it. In a real serious depression it’s price will fall because everyone will be less wealthy. So while I’m all for goldbugs buying as much of the shiny yellow stuff as they think they need to pursue there happiness, nevertheless, in a real economic downturn, it’s os not likely to be of much help, either in wealth preservation or getting wealthier.
Z—- Does that make me crazy ???!!!
Comment on October 24, 2008 @ 10:22 am
Walt,
Well it’s sad to find out that I’m not a hopeless case, as I was really hoping that I was hopeless and so it disconcerting to hear that there is hope for me yet. I guess that means my hopelessness is hopeless. But I digress, and besides my own logic is making me hopelessly dizzy.
Hey look, I’m not against anybody buying gold if that is what makes them happy, go for it! It’s a free country, more power to ya! Trade your dollars for it, bring it home, watch it shine, just don’t expect it’s price to head to the moon in a depression, that won’t happen. In fact don’t be so sure that it will continue to go up in price just because governments print money like crazed counterfeiting crackheads (which of course they do). Cuz if gold can be $1000 an ounce, well the way I see it, it could easily be $2000 an ounce, or $500 an ounce. There isn’t really much reason to the price, it’s just what it is, an accident of circumstance and a function of how much wealth people have handy to put into the market for it. In a real serious depression it’s price will fall because everyone will be less wealthy. So while I’m all for goldbugs buying as much of the shiny yellow stuff as they think they need to pursue their happiness, nevertheless, in a real economic downturn, it’s is not likely to be of much help, either in wealth preservation or getting wealthier.
Z—- Does that make me crazy ???!!!
Comment on October 24, 2008 @ 10:25 am
-Go back and read Hans Sennholz iteration of money and value. Then re-read what you’ve written here. What are material items that you place ‘value’ in; and how?;more importantly WHY?
This is different for all people in different places socially, economically, and geographically. There is no one ‘best-bet’ for all security. (gold, silver, cash, beef, bones etc)
Unless it comes to guns-n’butter; so I think we should all be well stocked in that…oh yeah, brains and heart don’t hurt either.
JB
Comment on October 24, 2008 @ 11:31 am
Zimtran and Walt:
Let it be said first that I am on the side of Walt for this in general. But, you are both missing a crucial point:
WE WERE STILL ON THE GOLD STANDARD DURING THE FIRST GREAT DEPRESSION. A $20 piece of gold was worth. . . $20. At that time, yes, you could still use a $20 gold piece (or a $5 piece or a $10 piece) to buy things. So, no, gold was not “useless” at that time, it was still friggin currency! Why do you think the federal govt wanted to confiscate it?! In relation to a $20 piece of gold, the price of everything else declines. Gold didn’t go down with it. We didn’t go off of the gold standard fully until 1971! And Zim, for your 1980 to 1982 reference. . . why do you think the consumer stopped consuming? BECAUSE of tall Paul’s tight monetary policy! He raised interest rates, that crimped borrowing and increased savings - in things like CD’s, T Bonds and Bills, etc, because they were guaranteed at something like 14 to 17%. It also put the brakes on inflation. The bull market in gold was instigated by the removal of the USD from the gold standard. Inflation ran amok. Gold went up to reflect this. They Volker tightened the spigot - lowering inflation and the expectations thereof, and smashing the gold price. It really had zero to do with consumer spending. What would ever draw you to the conclusion that those two are highly correlated?
Comment on October 24, 2008 @ 12:22 pm
Yeah but gold was priced at $1000 an ounce last spring, $690 this morning, same price as the fall of 1980. It was priced around $450 for most of the 80s. Sorry dudes, I’m just not seeing the empirical evidence that it’s going to be a real profitable trade. Too many people are saying things like “but it’s gone up 100% since 2002!”. That was the historic low not the mean historic trend price, you can’t use that as a good baseline. It just returned to the mean from those lows, overshot a bit to $1000, and now moving toward the mean again. I expect the estimates I’m hearing that it should stabilze around $500 to $600 are close to the mark.
Comment on October 24, 2008 @ 12:29 pm
Unless it is a speculative acquisition, the purchase of gold is generally predicated on the belief that it is money of the last resort.
I would have thought that a balanced portfolio, truly embracing the principle of negative correlation, should include some precious metals. How much depends on your risk tolerance.
I would think the inflationary outlook in the US is grim enough to justify strenghtening my own gold and silver holdings. Naturally an investment portfolio should take into account liquidity requirements and this means cash accounts in multiple currencies.
Comment on October 24, 2008 @ 1:24 pm
I was not advacating gold going up to 1k to 2k. Nothing is static…I don’t know what the future will bring. That is why I am putting 1/3 of my savings in cash like dollars…1/3 of my savings in the stock market…and 1/3 in metals.
I am planning on losing 2/3 of my savings but it is a cheap way to hedge my bets. After all saving is the riskest thing one can do with their money. I refuse to work all of my life and have nothing left to show for it in the end. I am a firm beliver in the saying you can’t cheat an honest man and the saying one man’s lose is anothers gain.
Comment on October 24, 2008 @ 1:56 pm
DiverCity:
I should be sensitive about what I say. I just shared some beers last night with a friend who manages the cash position for a certain large bank and let’s just say that first thing this AM I transfered all cash out of said bank and into a local credit union. Everyone should do the research on their banks.
Comment on October 24, 2008 @ 2:13 pm
Okay, how about this:
It’s been drilled into our heads (by STOCK BROKERS!!) to “invest for the long haul”, and “you’ll do fine if you have a long time horizon to smooth out peaks and valleys”.
When Nixon took us fully off the gold standard in 1971:
Gold:
Price then $40.80
Price now: $729.60
Annual compounded rate of return: 8.11%
DOW Industrial Average:
Price then: $910
Price now: $8378.95
Annual compounded rate of return: 6.18%
Tell me which is better. I’m really getting tired of people who shoot their mouths off and can’t put GOOD numbers to anything.
Comment on October 24, 2008 @ 3:16 pm
Oh, and BTW, if you didn’t see the DOW crash coming, I cannot take your thoughts of gold going back to $500 or $600 (and stabilizing?!?!) seriously.
Comment on October 24, 2008 @ 3:22 pm
I’m just saying $300 is too low to be the mean, and $1000 is too high, so roughly speaking the mean falls in between, near $500-$600. Obviously there is volitility around the mean.
Comment on October 24, 2008 @ 3:35 pm
All you boys,
Take note, no Empire has ever survived. All have bitten the dust, and they did because they chewed off more than they could eat. For Rome, it was territorial, same for the Spaniards and the Brits. Now it is Americas time to join this illustrious crowd. Sorry to rain on your parade, but the inescapable fact is that the US is broke. Not only the state, but its populuce and state goverements. Want proof; look around you; when was the last time your neighbouhood roads were repaired; how about the bridges, dams, sewers, power transmission line, nuclear reactors, schools, libraries. Need I go on? John Doe was able to refinance his house, but what is Uncle Sam going to do? He cannot refinance the country. The only He can do is print more money. But wait a minute, isn’t that called inflation? Aha; and what does inflation do? Exactly.
None of these things on the above list will ever see an improvement in our lives. Why; because there won’t be enough money. In the long run, the US dollar will loose its status as the world’s reserve currency. Gold will take its place again, until another fool will step up to the plate.
When the S..t will hit the fan, you will be wishing you had some gold.
Of course I could be completely wrong. I hope so too, but I will be hedging my bets.
Comment on October 24, 2008 @ 3:38 pm
People are bidding $900 - $910 for a 1 oz Gold Eagle last I checked. (about an hour ago.)
I would be nice if someone would track physical vs COMEX on a site.
Comment on October 24, 2008 @ 3:38 pm
“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929
There are a bunch of quotes like this. Very smart people are wrong all the time, for a little perspective.
Comment on October 24, 2008 @ 3:38 pm
…that would be on Ebay…
Comment on October 24, 2008 @ 3:40 pm
And first strike Buffalo coins are going as high as $1,250. Others are in the $950 range.
Comment on October 24, 2008 @ 3:47 pm
I’m investing in Iridium. It’s heavier than gold, rarer, shinier, and won’t go melting on you at a puny 1947 degrees fahrenheit !
Comment on October 24, 2008 @ 4:07 pm
guys look at HCN, pfizer, and some of the other blue chips. Some of the blue chips have over 100 quarters of stable or rising dividends. I heard one on TV say 300 and the CEO said he had no plans to be the first ceo in the history of the company to reduce the dividend. HCN invests in healthcare real estate, nursing homes, etc. This splits the nursing home license from the real estate and reduces liability. They can’t lose their real estate due to a lawsuit, and the government is not going to stop paying for nursing home care. It’s dividend at over 6 percent is about as safe as anything. The reason that gold is not going to go much higher, barring TEOTWAWKI (and everyone that has taken that bet has lost so far) is that their are some juicy dividends and future capital appreciation over the next ten years. Smart money is startint to nibble at stocks, and if S and P goes to 800 the smart money is all in. The only way to make money is to take risk, not try to hide from risk. Risk is always present. Make it pay for you by being a true contrarian and not a gold nut
Comment on October 24, 2008 @ 5:42 pm
Have you noticed that everyone was talking about gold this month and last month? We had the peak already if one has a contrarian perspective.
Comment on October 24, 2008 @ 5:44 pm
I find this all very amusing, fellas; however, I’m very much afraid that things are about to get a Hell of a lot worse before they get better. Once the rest of the sheeple wake up to what’s really happening with the Paulson/Fed/Congress bailout of their “ole boy budds” and the damage that’s been done to our economy and our currency thereby; once the foreclosures, lay-offs and personal/small business bankruptcies really kick in (possibly as early as next spring); once the government begins to tighten the screws(Obama, McCain…it doesn’t matter); the ‘Schumer’ will really hit the fan. Once that happens, it won’t be how much gold/silver you own, but how much guns, ammo, food, medical supplies, and trusted friends you have. The great decades old con game that’s damn near ruined the republic is about to be shown for what it is and then this country may very well come unglued. Buckle up, geniuses, the next 10 to 15 years are gonna be (as the Chinese curse goes), “interesting.” To quote Creedence Clearwater Revival, “Hope you’ve got your things together…”
Comment on October 24, 2008 @ 5:56 pm
See. This guy is betting on TEOTWAWKI. The history of that bet is a loss 100 percent of the time (in the history of the USA). We are not going to be bunkering down, bartering gold, and fending off the mutant zombie bikers with our guns. It didn’t happen in North Korea. It didn’t happen in Russia. It’s not going to happen here. Actually if you have a good government job and live in a city you will be far better off even if we get to near TEOTWAWKI conditions. Who starved in North Korea, China, and to a lesser estent in Russia? The country people. City folk with government connections or essential skills made out just fine.
Comment on October 24, 2008 @ 6:13 pm
Later those same city folk with government connections became the new millionaires by scooping up assets cheap from the near ruins of their economy while everyone else was still hoarding cash and hiding their vegetables.
Comment on October 24, 2008 @ 6:16 pm
Dude…You really should’ve paid more attention in History class (unless, of course, you received your “education” in the 1970s or later American college system. In that case, any further argument will be lost upon you. There more holes in your last two posts than there is dirt to fill them. I’m quite certain that city-dwellers in the immediate pre-Communist years in Russia and China fealt as you do. Millions in pre-Hitler Germany probably did as well. No doubt most Americans in the 1850s believed the idea of an American Civil War was crazy as well. As for who did or did not starve in North Korea: Who’s your news source, there? You and Kim drink’n buddies are ya? If even the CIA and U.N. can’t get an accurate assessment of conditions there, what makes your crystal ball so efficient? And, one more question: What special dispensation from (insert your religous/non-religous preference here) the universe does the United State have that makes you so certain “it can’t happen here”? I suppose I shouldn’t be surprized at this sort of attitude, though. I’s just one more example of the dumbing down of America that’s been proceding for th last 30 plus years.
Comment on October 24, 2008 @ 6:47 pm
And…no, I’m not betting on TEOTWAKI. Actually, I’m an optimist - in the long run. But, I have lived through riots and unrest, both in Detroit and L.A. and they were caused by events of much less import than what will happen if/when that big government welfare check in the sky bounces. I just believe in preparing for the worst, hoping for the best and being realistic about the fragility of civilization as we know it. There’s no guarantee we won’t go the way of ancient Rome. As somone previosuly pointed out, all empires fall. But, if you like, just keep on enjoying the present’s bread and circuses; and, good luck.
Comment on October 24, 2008 @ 6:54 pm
Daily Reckoning readers,
History is a valuable teacher, but not necessarily the best of choices for a new version of an old predicament. Surging populations and technology have rendered our social systems obsolete. Full stop. There isn’t any way a system built for a few million in a pre-industrial age can adequately address the problems of today. Deconstructing past follies for solutions will not break us from the cycles of the past.
We need to agree on and abide by worthy principals, teamwork, fresh ideas and sacrifice. Not for the state and their insiders, but for all the citizens. Our leaders should be creating meaningful jobs, not more paper “money” and consumer credit. We should only rescue the parts of our society worth saving.
I am not a conspiracy theorist in general, but I’m convinced we have all be thoroughly betrayed by our ruling elites. Lies and hypocrisy are the order of the day. It’s not difficult to be terribly frightened for our children’s futures. Good luck to everyone.
Comment on October 24, 2008 @ 9:47 pm
The sterilization Process.
Government through Treasury and the Reserve Bank has several instruments at his disposal in order to sterilize money.
It can increase the reserve requirements of the banks as well as the interest rates at which the same can borrow from the central bank ( banks can borrow and discount commercial paper) and, of course, it can also increase taxes, sell government bonds and gold. It can also cut its own expenditure and through a combination of all these things send the economy into a recession.
At the moment governments all over the world seem to be trying to inflate their economies in order to put a stop to the deflationary mood permeating now-a-days all aspects of the global economy.
If they fail, then the price of gold will certainly collapse and a new point of equilibrium will be found after the so call marginal mines (those operating at higher costs go bust). If they become too much successful then the price of gold will certainly go up.
A bet in gold at the moment is a bet in the governments’ ability to inflate the global economy a la Greenspan or in the total collapse of the current financial system and its replacement with some kind of gold standard.
Comment on October 25, 2008 @ 12:46 am
Trading promise backed FRNs for gold/silver is savings not investing. If the FRNs gain value then the debt burden on the Fed. Gvt. increases which is intollerable politically and financially. they can’t increase taxes in a serious economic slump so they must create more FRNs by borrowing more from the Fed. The FRN is a doomed money substitute. The “full faith and credit of the United States Corp.” is not worth spit. They must create more debt to get more FRNs which incurs more interest which requires more FRNs which requires more debt on and on and on forever. It is a ponzie scheme plain and simple. Only the fool hearty believe the fiction (FRN) will win over the real (gold/silver) in the end.
Comment on October 25, 2008 @ 8:33 am
Let me just remind some of the Christian folks here that the Book of Revelation predicts at some point, WORLDWIDE financial collapse, followed by a completely new economic system which is somehow made possible at point of sale through some sort of a mark on the hand or head.
Most people know enough from their bible school - or movies - that you don’t want to be part of that economic system at any price.
As uncomfortable as people are going into eschatology, (for fear of being viewed as a nut) the fact is that this is Orthodox belief if you are one of the earth’s one billion Christians.
I believe we are seeing at least the run-up to this situation at this time. This age is coming to an end. All Christians should understand what’s going on and where their priorities should lie.
Comment on October 25, 2008 @ 11:51 am
I don’t see why you shouldn’t buy gold after you’ve bought a six month supply of storables like detergent and toilet paper. Beats leaving money in the bank and waiting for the Argentine or Russian or whatever government from taking it away from you.
Don’t store your gold in a safe deposit box. The government has confiscated those before, during the last major economic crisis in 1933.
Comment on October 25, 2008 @ 7:01 pm
This forum is got some very very scary and paranoid people on it !
Comment on October 26, 2008 @ 1:42 am
zim,
I welcome each and every voice here. Paranoid? Have you looked at swings in asset values lately? “W” and Greenspan as neo-socialist point-men? We ARE living in a sort of volatile science fiction story. Some of the wierdest scenarios are showing up at the edges of the radar screen. We haven’t been at this moment before, as much as historical examples are suggestive. I am neither panicked nor reassured. My response is a composite of many views I have heard here.
Yes, modest government job in city, yes, lowering debt, keeping some cash reserve, stashing some food and firearms and basic living essentials, keeping some equities, and yes, cultivating and building up timeless religious values and superstructure in my own way, as a mental focal point, come what may. I will not hinge my mental health on dreams of yachts or department store sprees, or some kind of consumerist “escape.” That stuff’s dead and gone.
As the bank frauds sliced and diced their bogus securities, I need to have a sliced-and-diced, segmented personal portfolio and plan that addresses and hedges all possible scenarios. I’m not throwing it all into gold, nosiree. Can’t eat it or live in it, or pay my mortgage with it. Even a gun or canned fish I could trade for something anywhere, for sure. But I love the fresh air of vigorous discussion here.
Comment on October 26, 2008 @ 12:46 pm
There are some people (zimtram) who are comfortable having their heads planted in their @zzes. That’s fine. Don’t come knocking on my door when you’re starving and a million dollars worth of green paper can’t buy you a loaf of bread.
Comment on November 4, 2008 @ 3:10 am