yup going back thru all empires, fiat currencies have typically lasted only 40 yrs the level of our federal debt is indeed lower than japan (plus we don't have the current radiation nightmare hanging on us); but when you also account for state/municipal debt and especially unfunded liabilities (medicare + SS) then there's actually no comparison and we far exceed japan in debt %......also japan's been able to get away with their essentially doubled-up debt % for all this time because their own citizens hold the very large bulk of their debt (while ours is mainly in foreign hands) the only way out for us is and has been inflating away our debt and essentially making it seem smaller with cheaper dollars. this is the whole point of QE1, QE2, and later this summer QE3. i dunno what the real ramifications of this will be on the overall economy. but obviously with regard to the currency, anyone holding dollars or assets denominated in dollars loses. this includes the working stiff who has to buy food at much higher prices as well as thadeus' rich who get, nominally speaking, a haircut on their holdings
Well you can't forget that our unfunded liabilities don't have to be funded on their current stated terms. Retirement ages can go up, Medicare can cap it's growth, effective tax rates can go up, etc. Also if I remember correctly the total wealth of America and Americans relative to all liabilities held by us is actually still at a very reasonable level. Of course we can't complacently allow our govt to run up huge debts from deficit spending, but we do have time and resources. Finally, how much of this inflation we are seeing in commodities is actually related to Fed policies? Chinese demand, govt ethanol subsidies, and natural disasters certainly seem to be contributing to a large portion of the commodity price moves. I'm not a huge fan of the Fed, but I am genuinely curious what percent the commodity inflation can be directly attributed to them. Further, I am curious how much of a role the physically backed ETFs have had to play in some of the commodity moves.
one can only hope. but as you already mentioned, politics are an obstacle to all this coming to fruition the great black cloud is the edifice of governmental debt. individuals and especially corporations are doing ok (as indicated by the equity mkts) so the private sector still alive. the public sector is what is already bankrupt and the interest on all the debt is unserviceable. it is a financial black hole imo, QE's by central banks worldwide are largely guilty not just for commodity inflation, but also stock market and fine art and investment grade diamond and even red tibetan mastiff dog inflations. capital flows to tangibles when currencies are debased. regarding ETFs, all they've done is make it more convenient to allocate capital to the physicals. one could argue that online trading propelled stock bubbles in this same line of thinking as well. but nonetheless commodities have been in a decade long bull market already, while most of the ETFs have only been issued in recent years
Not really. There are a few very practical reasons why gold is one of the few elements suitable for use as a "currency". In this podcast, a professor of chemical engineering breaks it down for you. EDIT: Here's a transcript:
Actually, the debt is currently (today) at $46,000 per citizen. This increases by the minute. It isn't managable, it isn't going to be paid back and it is going to be a major problem in the next decade...probably sooner than we think.
I think Gold has more to do with the "ooooo shiny" factor than it's chemical properties. 5000 years ago, I highly doubt mankind was thinking "oh man I guess we have to settle for gold since lithium explodes your face off".
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Already addressed. Take any other item that doesn't depreciate if you want a better example. If you believe gold price is somehow a useful measure of value, are you saying currencies all become worth significantly less in the late 1970's and then just as suddenly all gained significant value in the early 1980's? Evidence?
Except, as "money", it's only worth what anyone else is willing to pay for it. So your precious money could be worth half as much in a year if the gold market - which is driven by any number of things - comes crashing down as it has done many times throughout history. It's a "store of value", but not one that's based on any rational reasoning. It stores value just like paper currency stores value.
Except we haven't had any notable inflation - in fact, inflation is running at rates lower than it was 3 or 4 years ago. And, despite all the debt accumulation, we pay less in interest today than we did 12-15 years ago because everyone loves buying US dollar denominated debt. Food prices are going up worldwide in every currency. They are going up because demand for food is increasing - if we traded in your precious gold, they'd be going up in gold too. Food & oil prices are demand and supply driven problems, not inflation. You have a massive global economic boom, especially in high population emerging countries like India & China, which creates substantially higher demand for food and oil. You don't have any major increase in supply. Thus, prices for food and oil go up. That's the reason why very little else you buy is going up in price, and why overall inflation hasn't gone up, despite people screaming about impending inflation doom for the last 2 or 3 years. QE1/2 is not nearly as inflationary as you believe it to be. Food may be costing people more, but the overall basket of things people buy isn't going up in price.
On a side note, in dollar terms, gold prices were lower in 2004 than they were in 1980. Based on that - if gold is the true value of money and actual prices are irrelevant - are we to assume there was 0 inflation in that period, and that if you were making the same amount of money in 2004 as 1980, you were equally rich and successful?
this and your previous posts on this page all continue to miss the point. gold is gold no matter what the dollar is doing. gold is not an exact barometer for inflation, and in fact i largely agree with a previous assertion of yours that gold is more a barometer of fear. and it is such exactly because it is a store of wealth/value. and as u also mentioned this may or may not be rational for any legit reasons at all but that is irrelevant. gold will still be gold long after the dollar goes extinct in any case. and focusing on income and trading in and out is for small pikers missing the big picture. instead of harping on short term 2-year inflation figures or even those over 24 yr spans, instead acknowledge that the dollar has lost 97% of its value in the past 100 years and in that same timeframe one ounce of gold has risen from $20 an ounce to $1500. if that's not a store of value then i dunno what it is.
People were earning $ 2 a day a hundred years ago. Each dollar may be less than it was back then, but we're earning more dollars, and earning more over all value. Unless you're willing to argue people had a better standard of living 100 years ago. Gold may be worth more dollars compared to a hundred years ago, but I doubt how much stuff you can actually get with a gold bar has drastically, drastically changed compared to back then.
Wondering about this lately: What do you folks think will happen to the dollar when Social Security flips from being a net buyer of bonds into a net seller of bonds out of the upcoming boomer retirement flood?
the gold bar cost $20 back then. and the same gold bar will buy you a lot ****ing more than $20 will today. ergo, the gold bar has held its value. this is entirely different from your point of bringing up standards of living, cost of living adjustments, etc. my post to which you've just replied asked to stop focusing on income. and i also replied to you in a prior post to stop looking at gold in terms of gains and investing as well. you don't hold gold to make gains and certainly not for any sort of income. gold is simply a store and preservation of already-built up wealth. gold is money, and nothing else (this is a direct quote from lord rothschild). i hope this finally clarifies my point on this
Except the dollar has only lost value in nominal terms. You can put a dollar in a bank and earn interest and have it keeps its value. You can't earn interest on gold. So yes, I agree that stuffing dollars in your mattress is a dumb idea - I would imagine everyone does. But since no one does that, it's sort of irrelevant when using the dollar as a measure of value and wealth. At the end of the day, I'd much rather have more actual useful buying power than have a metal that only has value based on the whims of the people that want to buy or sell it. And since our adult lives tend to run about 40-60 years, I'd be much more interested in the effect on my wealth over 24 years than 100.
Has it? That $20, invested in long term bonds at just 5% annually - a fairly easy bar to clear historically - would be worth $2600 a hundred years later.
i understand the point of the article, it still does nothing however which i think is qball's point and was valued because its pretty and rare. which is really both points. the industrial revolution has really diminished the value of gold, going back to major's examples on ipods. 1000 years ago there was truly a finite value on wealth because man was able to produce a limited amount of products. today wealth grows at a staggering rate because of the products we produce, the value we add to those natural resources. if there is a breakdown of all social order I can see where gold will take its place again as king of all trading instruments.
