I'd buy gold if I could leverage it ten to 1, let someone else pay the interest on the leveraged portion so I could hold it indefinitely, have my holdings in gold increase over time and gain a tax deduction for the depreciation of the gold while I own it.
Stop gloating over declining home prices - it hurts
- Thread starter wilburbear
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I'd buy gold if I could leverage it ten to 1, let someone else pay the interest on the leveraged portion so I could hold it indefinitely, have my holdings in gold increase over time and gain a tax deduction for the depreciation of the gold while I own it.
I think you're dead on right. There's 3 ways the gov't can get out of the twin deficit mess 1-Raise Taxes 2-devalue the dollar slowly over time 3-cut spending
Everyone hates 1, people won't stand for 3, so that leaves 2. Devalue the dollar slowly over 20 years, so people don't feel it and don't really understand what's happening. Its sad it comes to this, but it will hurt each and every one of us as our money becomes worth less and less over time at a faster rate.
I wasn't alive when the gold standard was still in place and I realize that it is not perfect either, however it is perfectly clear why it existed. The current experiment has been tried over and over again and it ALWAYS fails. It seems like we are getting closer to that moment.
I like that solution - that means up here (in Canada), we'll be able to import your goods even cheaper....devalue away!
Hate to be the bearer of bad news RM, but like any borrower, your Gov has little or no effect over the outcome.
It will be China and Japan who decide the value of the dollar and it will be well inside your 20 year best guess.
Also, while on the subject(s) of bad news, the US RE is in the first year of a correction likely to last 4 years.
With mortgages at 9.33T ( up from 4.4T seven years ago) and consumer credit up 50% to 2.4T, you would expect both figures to be slowing dramatically.
Well they are not because they just cannot.
Credit is being drawn down from both sources to meet interest demands and there is still over 1T in ARMs up for a reset over the next 12 months.
This is a runaway train heading for the end of the line and and all the heroes
have been used up.
Not so fast. There are a few of us in the reserve unit just waiting to be called into action.
The global community has just not quite figured out America's new economic strategy. You see as part of our new economic detente program of assured mutual economic destruction we convinced the global community to give each other a good portion of each others nest eggs to hold for safe keeping. Each trading country has foreign factories and companies and carries each other's debt.
We lead the way in this avante guarde thinking by creating our biggest new export - our debt. Essentially what has been engineered is a complex web of global economic co-dependency. the concept of "nation" is passe and is replaced by the nation-less global corporation (all eventually becoming privately owned by the wealthy elite by the way during M&A activity). Nations defer to this global corporate mechanism in exchange for tax and employment of their serf class. If a single country gets out of line and threatens the co-dependency relationship by threatening to dump a particular country's currency or to circumvent trade agreements etc. then the offended county starts busting up what foreign economic eggs they carry as insurance in their own country. That in turn causes a ripple effect among other countries as they in turn rush in to parley new deals favorable to their own self interests during the transitory conflict; after all a busted egg implies opportunity for another since there is room in the basket for another. Its all designed to foster cooperation and competition and to tame inflation by tapping into excess global capacity, production and raw materials. Its not exactly the same thing as extortion. But I would imagine that we now have sufficient critical mass to have quite nearly created what is essentially an economic doomsday device.
That said it should be apparent that the old adage "so goes America so goes the rest of the world" rings true. If the US gets too much in trouble I suspect that "the system" will precipitate some unlikely and unexpected friends. Such will suddenly materialize "just in time" to aid the US by importing even more debt. This kind of "just in time" friendship comes of course through self interest at the realization that a nation's own production infrastructure investments and economic well being are highly dependent on the US appetite for cheap import goods. The whole thing is dependent on cheap oil which has a different tensioning dynamic which I will not go into just just yet. And believe it or not the system does have a runway exit ramp but its never been tested beyond theory.
Here is how that safety mechanism works. If a cabal of competing foreign interests comes together in an attempt to bully the US and drum us out of our own system then the US reverts back to an isolationist posture. Frankly I personally am hoping for this since I see grave danger from emerging demographic trends in the middle-east and European region that are not our problem to deal with. Note that this manner of economic and social conflict would only emerge naturally at a time when the global situation was near a natural inflection point in global dominance. As such this systemic response of isolationism would be a natural consequence of the world situation and cause the US to contract into a fetal position as a survival mechanism. Quite simply we would let the rest of the world suffer the economic train wreck and gear grinding alone while we shifted to a domestic program and wait until the smoke cleared.
No doubt we would have to look south and integrate South America's cheap labor and resources more intimately within our own system to compensate for the Asian goods. But this would keep cash in the hemisphere and predictably we would soon have an "American" continental empire (which somehow the US managed to leap frog the natural course when WWII came along).
By the way, given humanity's very predictable nature I do expect the anti-American cabal to attempt to manifest itself soon. It's easy to predict who the new club players are likely to be (China, Iran, Russia, Venezuela, parts of Middle East, France, N. Africa). But I am also anticipating the old truism that "there is no honor among thieves (nor religious zealots)" to dominate the social pattern. So I expect that this flash in the pan marriage of convenience will soon self combust over different ideological and social issues (just when the world thought ideology was a dead topic). Reason being none of these has a large police force (except China) to impose order and keep trading agreements above board. When the smoke clears the American empire emerges as the new heir apparent.
Voila - the day is saved after all.
TS
"Prices were highest in Tokyo's Ginza district in 1989, with some fetching over US$1.5 million per square meter ($139,000 per square foot), and only slightly less in other areas of Tokyo."
America may be expensive but a Japanese style "bubble"? Get serious.