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Started By
Message
re: It appears the dollars is going down
Posted on 4/14/11 at 9:58 pm to GumboPot
Posted on 4/14/11 at 9:58 pm to GumboPot
quote:
Speaking of silver, it hit its highest price since 1981 (not adjusted for inflation).
Goodbye silver at $42...
Just a matter of time before JP Morgue bites the dust.
Here's a quote from National Inflation Association on February 18, 2011.
quote:
Silver reached a new 30-year high today of $32.87 per ounce up 89% since NIA declared silver the best investment for the next decade on December 11th of 2009 at $17.40 per ounce!
25% increase in less than 2 months. Probably oversold and could see a significant correction. Just don't tell that to the Chinese, Indians, Russians and the <1% of Americans buying silver.
2
Posted on 4/15/11 at 5:18 am to goodgrin
Don't waste your time on these people who are pushing paper for various reasons. The dollar is slowly losing it's status but an enormous economy does not collapse overnight and will continue to slide into oblivion as the Fed continues to increase it's balance sheet with T paper that no foreign soverign wants. Power/wealth is shifting to the East and they are buoying the PMs using ever more useless dollars. Physical PMs will offer some measure of protection as the dollar continues to slip but do not think it is going to be a quick apocolyptic fall and a Mad Max scenario. The future will be a slow grinding depression, much as the great depression was, and will probably result in deflation followed by inflation followed by a great war. There is no way to assure anyone will survive unscathed but some, that ignore calls for more paper investments, might be lucky enough to play again on the other side of the collapse and introduction of a 'new' dollar. Be a good boy scout and be prepared. Any form of paper investment will be a loser.
Posted on 4/15/11 at 6:38 am to kfizzle85
quote:
I saw that iShares is about to release a floating-rate bond etf. Pretty interesting to me, good way to get exposure to stuff for people who wouldn't normally be able to.
Check out FCT, First Trust Senior Floating Rate ETF. That is what we have been using in tandem with TBT.
Posted on 4/15/11 at 7:27 am to RasinCane
quote:Do you classify ownership in a cash generating, profit making business that pays regular cash to the owners as a "paper investment" which will be a loser?
Any form of paper investment will be a loser.
quote:Who are "these people" who are "pushing paper" who you are referencing?
Don't waste your time on these people who are pushing paper for various reasons.
Posted on 4/15/11 at 9:56 am to LSURussian
quote:
Do you classify ownership in a cash generating, profit making business that pays regular cash to the owners as a "paper investment" which will be a loser?
In a true SHTF scenario it would be due to the collapse of judiciary authority. But Rivers did just say that wouldn't likely happen, in which case you don't actually need physical possession and paper is just fine. Even during the Great Depression paper stock certificates were honored, after all.
Posted on 4/15/11 at 10:00 am to foshizzle
quote:
Rivers
That nutbag is back with a new name? Oh joy.
Posted on 4/15/11 at 5:59 pm to goodgrin
The big silver shorts are being run over by a secular locomotive. They don't recognize the loco cause they have never seen one like it before. Don't feel too sorry for them, the Fed is printing the money to fund their shorting escapades and that will continue until it doesn't. Never forget: That which cannot be continued will not be.
For you dopes that still do not see what is going on with the PM markets; think macro, get out of your Amerocentric thinking and you will easily see what is happening. The Chinese are using gold for a hedge against losses in dollars. It's that simple, duh. Do you see it Doc? Your 'fair valuation' of gold means nothing, it's a construct that you wish were true, but it is not. Since the Chinese are using dollars to purchase gold they are creating, without Fed help, a dollar tied to gold. This requires a little thought but it's not rocket science.
The remainder of the large purchases of PMs are coming from SE Asia, India and the Mid East. All places where PMs have been money traditionally and places that have witnessed many fiat failures. The only way commodities/PMs are going to stop going up in dollars is if the Fed stops printing tons of dollars and monetizing the debt. Any paper you are holding that is denominated in dollars is going to get destroyed if the Fed continues on present course.
For you dopes that still do not see what is going on with the PM markets; think macro, get out of your Amerocentric thinking and you will easily see what is happening. The Chinese are using gold for a hedge against losses in dollars. It's that simple, duh. Do you see it Doc? Your 'fair valuation' of gold means nothing, it's a construct that you wish were true, but it is not. Since the Chinese are using dollars to purchase gold they are creating, without Fed help, a dollar tied to gold. This requires a little thought but it's not rocket science.
The remainder of the large purchases of PMs are coming from SE Asia, India and the Mid East. All places where PMs have been money traditionally and places that have witnessed many fiat failures. The only way commodities/PMs are going to stop going up in dollars is if the Fed stops printing tons of dollars and monetizing the debt. Any paper you are holding that is denominated in dollars is going to get destroyed if the Fed continues on present course.
Posted on 4/15/11 at 6:56 pm to RasinCane
Wow! What a unique and refreshingly new post! We haven't had a post like this one since, well...since you wrote one just like it a few days ago......
This post was edited on 4/15/11 at 7:00 pm
Posted on 4/15/11 at 6:56 pm to IbalLSUfaninVA
quote:
Where is a good place to put your money a a buffer?
I've done ok transfering some cash into Canadian dollars. You can do it at any Compass Bank branch.
This post was edited on 4/15/11 at 6:57 pm
Posted on 4/15/11 at 10:11 pm to LSURussian
get off his nuts fool 
Posted on 4/16/11 at 6:46 am to TuDog
Thanks but don't concern yourself with russian and his choir of 'all is well cheerleaders'. They are now irrelevant. Their misinformation on everything from 'velocity of money' being meaningless to 'money holding it's purchasing power is meaningless so put it into assets quickly' are all hooey. Disregard anything they say or risk losing the purchasing power of your sinking dollars. And, notice that their replys to my posts are nothing but attacks on the messenger, devoid of relevant information. They post nothing that is of use to anyone that wishes to protect themselves from the sinking dollar. They don't want to discuss the price of stocks priced in inflation adjusted dollars. They don't want to discuss real inflation vs baloney gov inflation numbers. They don't want to criticize the Fed in any way. They don't want to admit that the Wall St banks have been bailed out with tax payer money while Main St has been thrown under the bus. And, they don't want to admit that the Keynesian version of capitalism is dead as a door nail. So they are dinasaurs, living in a system that is staggering on like a punch drunk fighter that is out on his feet. If they say nothing of relevance, ignore them. If they spin come back and point out that which is hooey in their posts. Simple.
Trading one paper asset, say dollars, for another paper asset, say equities, is a losing proposition when all paper assets denominated in dollars are sinking in value because the dollar is sinking in value.
China now has over $3Trillion in various US Paper. $3Trillion is enough to buy the entire country of Italy lock, stock and barrel. China is hedging it's US Paper with commodities and especially Gold/Silver. The US will either default on it's debt to China or attempt to devalue the purchasing power of the dollars owed to China. China sees what the US is doing and is hedging it's US Paper with Gold purchases with dollars and consequently is building a ever higher floor under gold denominated in dollars.
Consider what China is doing and then decide what you should do to protect yourself. Good luck.
Trading one paper asset, say dollars, for another paper asset, say equities, is a losing proposition when all paper assets denominated in dollars are sinking in value because the dollar is sinking in value.
China now has over $3Trillion in various US Paper. $3Trillion is enough to buy the entire country of Italy lock, stock and barrel. China is hedging it's US Paper with commodities and especially Gold/Silver. The US will either default on it's debt to China or attempt to devalue the purchasing power of the dollars owed to China. China sees what the US is doing and is hedging it's US Paper with Gold purchases with dollars and consequently is building a ever higher floor under gold denominated in dollars.
Consider what China is doing and then decide what you should do to protect yourself. Good luck.
Posted on 4/16/11 at 8:08 am to RasinCane
Dude, you are becoming more and more of an asshat.
You have no room to call people out for not understanding economics when the best you can do is rip off incorrect wikipedia entries.
You have no room to call people out for not understanding economics when the best you can do is rip off incorrect wikipedia entries.
Posted on 4/16/11 at 9:50 am to TheHiddenFlask
What part of his post is incorrect? Watch 'Inside Job' and you'll be enlightened.
Posted on 4/16/11 at 10:03 am to RasinCane
quote:
Don't waste your time on these people who are pushing paper for various reasons. The dollar is slowly losing it's status but an enormous economy does not collapse overnight and will continue to slide into oblivion as the Fed continues to increase it's balance.... Physical PMs will offer some measure of protection as the dollar continues to slip but do not think it is going to be a quick apocolyptic fall and a Mad Max scenario. The future will be a slow grinding depression, much as the great depression was, and will probably result in deflation followed by inflation followed by a great war. There is no way to assure anyone will survive unscathed but some, that ignore calls for more paper investments, might be lucky enough to play again on the other side of the collapse and introduction of a 'new' dollar. Be a good boy scout and be prepared. Any form of paper investment will be a loser.
RasinCane, while I don't disagree with your statement that the US Dollar is losing its value, I still believe that "some" paper equities will be profitable in the future (Specifically stocks in precious mining, oil companies, Potash companies, uranium companies, alternative energy companies, et al). Yeah, it'll still be valued in worth(less) fiat paper currency, but I would rather have lots of it than have it stay stagnant in a savings account, money market account, CDs, bonds, T-bills, which will all be losers as inflation spins the U.S. economy into the ground.
It looks like the USD is on its way to losing its status as the world's reserve currency, which will wreck our cozy standard of living that many of us have come to enjoy over the past decades. With that being said, physical precious metals will offer a LOT of protection against likely hyperinflation, not just SOME protection. This scenario will be self fulfilling if the current administration continues its monetary policies that will all but ensure that the U.S. will default on its debts, which I doubt the Fed will just allow to happen. The Fed will allow QE3, 4, 5, 6.... until the end game which could be $5,000 gold per ounce and $500 silver per ounce. Those lucky individuals would be able to continue to pay for their hyperinflated goods and food while the have nots begin to starve or don't receive their government funded subsidies. We might witness great riots in America coming soon to a major city near you in 2014 or 2015.
Posted on 4/16/11 at 10:18 am to TuDog
quote:
What part of his post is incorrect?
1) Their misinformation on everything from 'velocity of money' being meaningless
Many of us on here have posted numerous times about how the low velocity of money is what is holding back the recovery from the recession. The difference between our posts and River/RaisnCane is that we KNOW what "velocity of money" means. Rivers has no clue what it means. He just parrots the term because he read about it on ZeroHedge.
2) to 'money holding it's purchasing power is meaningless
Not a single poster on here has said that inflation is meaningless. Rivers just likes to appear he is the only person in the world who understands inflation
3) so put it into assets quickly' are all hooey.
Several other posters have specifically written that in a high inflation environment, one strategy is to buy assets quickly. Rivers ignores those posts.
4) And, notice that their replys (sic) to my posts are nothing but attacks on the messenger, devoid of relevant information.
Absolutely untrue. Factual rebuttals have been given. The references to Rivers' ignorance only follow when he has no argument (or, "argue ment" as he once corrected me) to back up his silly claims.
5) They post nothing that is of use to anyone that wishes to protect themselves from the sinking dollar.
Many suggestions have been made by posters on what can be done to protect an investor's purchasing power in an inflationary period. Senile Rivers ignores those posts. (So do you apparently.)
6) They don't want to discuss the price of stocks priced in inflation adjusted dollars.
I've started at least three threads which do exactly that. And I've shown how stocks have beaten inflation over the last 40 years. Again, Rivers ignores those threads or even worse, denies the facts in them.
7) They don't want to discuss real inflation vs baloney gov inflation numbers.
This issue has been raised numerous times on this board. Rivers is lying about that.
8) They don't want to criticize the Fed in any way.
This is just an outright LIE. Many of us, including me, have written that the Fed contributed to the real estate bust by keeping interest rates too low for too long and then completely missed the boat when it came to the garbage mortgages being issued. Rivers will never have credibility on this board as long as he lies about what others have posted.
9) They don't want to admit that the Wall St banks have been bailed out with tax payer money
Another lie. Many on here have been very consistent in their criticism of how the TARP funds were used to bail out certain connected institutions.
It's apparent that both YOU and Rivers only believe what you want to believe. For you to even ask "what part of his post is incorrect" just shows how uninformed you are.
When are you going to post something substantive rather than just sucking Rivers' nuts?
Posted on 4/17/11 at 2:50 am to LSURussian
Bankers are theives and liars period. Here is an excellent summary from Jesse on the current sorry state of the US Economy now and some likely outcomes of the train wreck. No amount of 'feel good' blather will change the facts.
"A Review on Where We Stand with Regard to Deflation, Hyperinflation and Stagflation
Well, the good news for everyone is that nothing seems inevitable here, that there is almost always a choice, but it is often wrapped up in a nice looking rationale, with all the compulsion of a necessity, for the good of the people. Us versus them in a battle for survival and all that. And clever leaders on the extremes provide the 'them' to be dehumanized and objectified. The leftist wishes to murder the bankers, and the fascist the lower classes and outsiders. The extremes of both end up making life miserable for almost everybody except for a privileged few.
And so I reiterate that in a purely fiat currency, the money supply is indeed fiat, by command.
People like to make arguments about this or that, about how so and so has proved that the Fed does not or cannot do this or that, that banks really create money only by borrowing, that borrowing must precede this or that.
It's mostly based on a fundamental misunderstanding of what money is all about, with a laser beam focus on hair-splitting technical definitions and loquacious arguments more confusing than illuminating, lost in details. In a simple word, rubbish.
Absent some external standard or compulsion, the only limiting factor on the creation of a fiat currency is the value at exchange of the issuers bonds and notes, and currency which is nothing more than a note of zero duration without coupon.
If I had control of the Fed, unless someone stopped me I could deliver to you hyperinflation or deflation without all that much difficulty from a technical standpoint. The policy reaction of those who might be in a position to fire or lynch me is another matter. The Fed not only has the power to influence money creation in the private banking system. It has the ability to expand its balance sheet and take on existing debt of almost any type at will and at any price it chooses.
But that is the case as long as the Fed has at least one willing partner in the primary dealers, and the Treasury is in agreement. And even that requirement for a primary dealer is not all that much of an issue given the amounts of existing sovereign and private debts of which the Fed might avail itself for the forseeable future.
So at the end of the day, a thinking deflationist is almost reduced to the argument that 'the authorities will not allow it' or 'will choose deflation rather than inflation' And this is technically correct. However, let us consider my earlier statement about those who might fire or lynch one for making a highly unpopular choice.
It is economic suicide for a net debtor to willingly engage in deflation when they have other options at their disposal, and especially when those decisions involve people outside the system.
That is not to say that the deciders could not opt for economic suicide, but the people designated to suffer and die for that choice and cause might not take kindly to it. Deflation favors the creditors significantly, and those creditors tend to be a minority of domestic elites and foreign entities. Both the extremes, hyperinflation and deflation, are choices best implemented in autocratic governments.
There are those who observe that Franklin Roosevelt 'saved capitalism' by his actions in the 1930's and I believe they are correct. If one considers the various other outcomes in large developed nations to the Great Depression, whether it be Italy, Germany, Russia, or Spain, the US came out of it fairly intact politically. People conveniently overlook the undercurrent of insurrection and violence that was festering amongst the suffering multitudes, and the growth of domestic fascist and communist organizations. There were several plots to overthrow the elected government by military means, although the history books tend to overlook them.
So it is really about making the best choice amongst bad choices. This is why governments choose to devalue their currency, either with quantitative easing, or explicitly against some external standard as the US did in 1933. Because when the debt is unpayable, it must be liquidated, and the pain will be distributed in a way that best preserves the status quo.
Hyperinflation and a protracted deflation are both very destructive choices. So therefore no rational government will choose either option.
They *could* have those choices imposed upon them, either by military force, political force, or by economic force. Economic force is almost always the cause of hyperinflation.
So you can see why a 'managed inflation' is the most likely outcome at least in the US. The mechanism has been in place and performing this function for the last 100 years.
The problem or twist this time around comes when the monetary stimulus does not increase jobs and the median wages, because of some inherent and unreformed tendency in the economy to focus money creation and its benefits to a narrow portion of the populace. The result of this is stagflation which although not indefinitely sustainable can be maintained for decades. Most third world republics are like this. A vibrant and resilient middle class is sine qua non for a successful democratic republic, and this has strong implications for the median wage. The benefits and the risks of growth and productivity must be spread widely amongst the participants. Oligarchies tend to spread only the risks, keeping most of the benefits to themselves.
This is essentially the reasoning that occurred to me when I looked at the US economy and monetary system in the year 2000.
The one point I remain a little unclear on is how 'hard' the law is regarding the direct monetization of debt issued by the Treasury. I am not an attorney, but I am informed by those familiary with federal statutes that this is a gray area in the existing law but currently prohibited. But it is easily overcome as I said with the inclusion of one or two amiable primary dealers who will allow the debt issued by Treasury to 'pass through' their hands in the market, on its way to the Fed at a subsidized rate. For this reason, and for purposes of policy matters, and occasional economic warfare, countries may tolerate TBTF financial institutions with whom they have 'an understanding.'
I have also come to the conclusion that no one knows the future with any certainty, so we must rely probability and risk management to guide our actions.
So really absent new data the argument is pointless, a matter of uninformed opinions. The dollar will continue to depreciate, and gold and silver and harder currencies appreciate, until the fundamental situation changes and the US economic system is reformed.
I think there are other probable outcomes that involve world government and a currency war, and this also is playing out pretty much as I expected. Fiat currency can take on the characteristics of a Ponzi scheme, whose survival is only possible by continuing growth until all resistance is overcome.
"A Review on Where We Stand with Regard to Deflation, Hyperinflation and Stagflation
Well, the good news for everyone is that nothing seems inevitable here, that there is almost always a choice, but it is often wrapped up in a nice looking rationale, with all the compulsion of a necessity, for the good of the people. Us versus them in a battle for survival and all that. And clever leaders on the extremes provide the 'them' to be dehumanized and objectified. The leftist wishes to murder the bankers, and the fascist the lower classes and outsiders. The extremes of both end up making life miserable for almost everybody except for a privileged few.
And so I reiterate that in a purely fiat currency, the money supply is indeed fiat, by command.
People like to make arguments about this or that, about how so and so has proved that the Fed does not or cannot do this or that, that banks really create money only by borrowing, that borrowing must precede this or that.
It's mostly based on a fundamental misunderstanding of what money is all about, with a laser beam focus on hair-splitting technical definitions and loquacious arguments more confusing than illuminating, lost in details. In a simple word, rubbish.
Absent some external standard or compulsion, the only limiting factor on the creation of a fiat currency is the value at exchange of the issuers bonds and notes, and currency which is nothing more than a note of zero duration without coupon.
If I had control of the Fed, unless someone stopped me I could deliver to you hyperinflation or deflation without all that much difficulty from a technical standpoint. The policy reaction of those who might be in a position to fire or lynch me is another matter. The Fed not only has the power to influence money creation in the private banking system. It has the ability to expand its balance sheet and take on existing debt of almost any type at will and at any price it chooses.
But that is the case as long as the Fed has at least one willing partner in the primary dealers, and the Treasury is in agreement. And even that requirement for a primary dealer is not all that much of an issue given the amounts of existing sovereign and private debts of which the Fed might avail itself for the forseeable future.
So at the end of the day, a thinking deflationist is almost reduced to the argument that 'the authorities will not allow it' or 'will choose deflation rather than inflation' And this is technically correct. However, let us consider my earlier statement about those who might fire or lynch one for making a highly unpopular choice.
It is economic suicide for a net debtor to willingly engage in deflation when they have other options at their disposal, and especially when those decisions involve people outside the system.
That is not to say that the deciders could not opt for economic suicide, but the people designated to suffer and die for that choice and cause might not take kindly to it. Deflation favors the creditors significantly, and those creditors tend to be a minority of domestic elites and foreign entities. Both the extremes, hyperinflation and deflation, are choices best implemented in autocratic governments.
There are those who observe that Franklin Roosevelt 'saved capitalism' by his actions in the 1930's and I believe they are correct. If one considers the various other outcomes in large developed nations to the Great Depression, whether it be Italy, Germany, Russia, or Spain, the US came out of it fairly intact politically. People conveniently overlook the undercurrent of insurrection and violence that was festering amongst the suffering multitudes, and the growth of domestic fascist and communist organizations. There were several plots to overthrow the elected government by military means, although the history books tend to overlook them.
So it is really about making the best choice amongst bad choices. This is why governments choose to devalue their currency, either with quantitative easing, or explicitly against some external standard as the US did in 1933. Because when the debt is unpayable, it must be liquidated, and the pain will be distributed in a way that best preserves the status quo.
Hyperinflation and a protracted deflation are both very destructive choices. So therefore no rational government will choose either option.
They *could* have those choices imposed upon them, either by military force, political force, or by economic force. Economic force is almost always the cause of hyperinflation.
So you can see why a 'managed inflation' is the most likely outcome at least in the US. The mechanism has been in place and performing this function for the last 100 years.
The problem or twist this time around comes when the monetary stimulus does not increase jobs and the median wages, because of some inherent and unreformed tendency in the economy to focus money creation and its benefits to a narrow portion of the populace. The result of this is stagflation which although not indefinitely sustainable can be maintained for decades. Most third world republics are like this. A vibrant and resilient middle class is sine qua non for a successful democratic republic, and this has strong implications for the median wage. The benefits and the risks of growth and productivity must be spread widely amongst the participants. Oligarchies tend to spread only the risks, keeping most of the benefits to themselves.
This is essentially the reasoning that occurred to me when I looked at the US economy and monetary system in the year 2000.
The one point I remain a little unclear on is how 'hard' the law is regarding the direct monetization of debt issued by the Treasury. I am not an attorney, but I am informed by those familiary with federal statutes that this is a gray area in the existing law but currently prohibited. But it is easily overcome as I said with the inclusion of one or two amiable primary dealers who will allow the debt issued by Treasury to 'pass through' their hands in the market, on its way to the Fed at a subsidized rate. For this reason, and for purposes of policy matters, and occasional economic warfare, countries may tolerate TBTF financial institutions with whom they have 'an understanding.'
I have also come to the conclusion that no one knows the future with any certainty, so we must rely probability and risk management to guide our actions.
So really absent new data the argument is pointless, a matter of uninformed opinions. The dollar will continue to depreciate, and gold and silver and harder currencies appreciate, until the fundamental situation changes and the US economic system is reformed.
I think there are other probable outcomes that involve world government and a currency war, and this also is playing out pretty much as I expected. Fiat currency can take on the characteristics of a Ponzi scheme, whose survival is only possible by continuing growth until all resistance is overcome.
This post was edited on 4/17/11 at 3:13 am
Posted on 4/17/11 at 3:14 am to RasinCane
Continuation of Jesse's comments:
"This is the conclusion I came to in 2000. I admit I was surprised by the Fed's willingness to create a massive housing bubble, and the willingness of the US government to whore out the middle class in their deals with mercantilist nations; their hypocrisy knows no bounds.
So that is the basis of much of my thinking and I wanted to take a moment to share it with you in a compact, highly condensed format.
I remain a little unsettled on the issue of hyperinflation, because there is the possibility that a large bloc of countries could join together to repudiate the dollar. Since so much dollar debt is held in these foreign hands, that is the kind of exogenous force that could trigger a bout of what might be termed hyperinflation. I don't see the dollar going to zero in this, but rather the dollar having a couple of zeros knocked off it, with a new dollar being issued. I have read John Williams case for hyperinflation several times now, and see nothing more compelling in it.
Indeed I think the reissue of the dollar with a few zeros gone is inevitable. It is the timing of that event that is problematic. It could be one year, or it could be fifty years. There is a big difference there for your investment strategy.
And yes, the government could just get medieval on your asses, and seize all the gold and silver, force you to take the value of the dollar at whatever they say it should be. They could also seize all the farm land, all the means of production, and tell certain groups of people to get on freight trains for resettlement in Nevada. I think we can stipulate that governments can do this, and the people can accept it to varying degrees. If you wish to make this the dominant assumption in your planning then by all means.
For those who simply say "I disagree" or "Go read so and so he has proved this or that" I say that people believe lots of things, and can find data selectively to support almost any outcome they prefer, But the market is the arbiter here, and the verdict so far is beyond all question. The Fed is doing exactly what they said they would do, so there should be no surprises. And they have more in their bag of tricks.
If there is new data I would certainly adjust my thinking but absent that I now consider this settled to my satisfaction, and wish to turn instead to more thinking on what changes need to occur to prevent the system breaking down, and restoring it to some semblance of reasonable functionality."
LINK
"This is the conclusion I came to in 2000. I admit I was surprised by the Fed's willingness to create a massive housing bubble, and the willingness of the US government to whore out the middle class in their deals with mercantilist nations; their hypocrisy knows no bounds.
So that is the basis of much of my thinking and I wanted to take a moment to share it with you in a compact, highly condensed format.
I remain a little unsettled on the issue of hyperinflation, because there is the possibility that a large bloc of countries could join together to repudiate the dollar. Since so much dollar debt is held in these foreign hands, that is the kind of exogenous force that could trigger a bout of what might be termed hyperinflation. I don't see the dollar going to zero in this, but rather the dollar having a couple of zeros knocked off it, with a new dollar being issued. I have read John Williams case for hyperinflation several times now, and see nothing more compelling in it.
Indeed I think the reissue of the dollar with a few zeros gone is inevitable. It is the timing of that event that is problematic. It could be one year, or it could be fifty years. There is a big difference there for your investment strategy.
And yes, the government could just get medieval on your asses, and seize all the gold and silver, force you to take the value of the dollar at whatever they say it should be. They could also seize all the farm land, all the means of production, and tell certain groups of people to get on freight trains for resettlement in Nevada. I think we can stipulate that governments can do this, and the people can accept it to varying degrees. If you wish to make this the dominant assumption in your planning then by all means.
For those who simply say "I disagree" or "Go read so and so he has proved this or that" I say that people believe lots of things, and can find data selectively to support almost any outcome they prefer, But the market is the arbiter here, and the verdict so far is beyond all question. The Fed is doing exactly what they said they would do, so there should be no surprises. And they have more in their bag of tricks.
If there is new data I would certainly adjust my thinking but absent that I now consider this settled to my satisfaction, and wish to turn instead to more thinking on what changes need to occur to prevent the system breaking down, and restoring it to some semblance of reasonable functionality."
LINK
Posted on 4/17/11 at 10:46 am to RasinCane
quote:
a compact, highly condensed format.
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