Community Feeds
I am trying something completely different, on the right-most sidebar you will notice two new links: “Peter Schiff” and “Marc Faber”. On those pages there will be a list of links maintained by you, the readers. If you want everyone to read an article about either of these two men, or watch an interview, or something else relevant — post it. I will add more economists and other topics if this proves to be popular and successful. Please leave any suggestions in the comments of this post. You will notice I have also added a list of the last few forum topics just above the list of comments in the same sidebar. The forum is a much easier place to carry on long term discussions. The bubble in US government bonds
The President-elect has already warned the world to expect massive deficits in the coming years. For the purpose of this post, I won’t discuss whether the spending surge will be productive or inflationary, I will merely ask the question – where will the money come from? The road to hyperinflation
Today The market for discretionary goods is very large and volatile. There are certainly many things people can do without, but spending will never go to nothing. The performance of the market is irrelevant to our need for food and shelter. People may frequent restaurants less often and moderate their living conditions, but they will eat something, wear something and live somewhere. Homes will be heated, electricity will flow, cell phones will transmit and some form of transportation will still be required. As unemployment grows people will flock to reasonably priced entertainment. Prices may adjust as usage is moderated but these things will never go away. We have a real forum!
I’ve been a bit overwhelmed with the comments to a few posts, that feature of a blog is really better used to comment on the post itself rather than to carry out a longer-term discussion. So please use the forum when you get the urge. There is a link at the top right of the page. Why the world has money
Why the Venus Project must destroy humanity to create a perfect world for humans Dollars are money, but money is not dollars. Gold is money, but money is not gold. How do I explain these apparent contradictions? Simple, there is a one-to-many relationship between money and things we use for money. Referring to dollars as a form of money is technically accurate, but referring to money as dollars is not sufficient to describe all the properties of money — it limits the definition to dollars. Money is anything we use to trade for what we want. It’s a store of purchasing power. It’s something people either want, or will accept, in exchange for their property or labor. Sometimes money is a physical object, sometimes not. Not all forms of money are equal. Should the government try to stabilize house prices?
What if the government was actually able to create some magic program to target the bulk of its money printing effort towards the residential real estate market and suddenly inventories started to drop and house prices stabilized, would it even matter? The stock market would probably rally, the airwaves would probably be filled with people forecasting the next long bull market, every government official would credit his brilliant economic policy, but would it last? The coming liquidity trap
A liquidity trap occurs when people give up on long term investments due to excessively low returns (interest rates) and maintain hoards of cash in checking accounts or paper instead. I keep a sizeable amount of cash for deflation protection, just in case, and the interest on my savings account is so pathetic I began withdrawing my savings on a regular basis a few months ago. I doubt I’ll take it all out, and it’s spread across several institutions, but I want enough to live for 3-6 months without a bank. The interest return just isn’t enough to compensate me for the risk of failure or bank holiday. I would rather keep the cash in a safety deposit box. Cash that sits outside the system is cash that will not be leant (times 10, look up fractional reserve banking) and cash that will not circulate. This is bad for the economy, but good for people with cash. Holding gold and silver is similar, but it also provides a bonus inflation protection, just in case. I have found that I’m always about 6 to 12 months ahead of everybody else, so I will play Gerald Celente and predict this will be a growing trend in 2009. Gold awareness campaign
I do my own non-scientific research to determine the future potential upside for gold. Here’s how it works — I tell everyone who will listen that I’m buying gold and silver, not just mining shares and exchange traded funds, but actual physical metal, then gauge their reaction. The more ridicule I get, the bigger the potential upside remaining in the gold bull market. I’ve been doing this for about 18 months and I still don’t know a single other person who has begun to accumulate metal, but I can definitely see the tide turning. People aren’t laughing as much anymore, they still aren’t buying, but they are listening. When owning gold to preserve capital is as common a practice to these ordinary people as it is to me, that will be the appropriate time to start exiting the market. Gerald Celente predicts the collapse of 2009
Legendary trend analyser and the man who predicted most major events of the past several decades is now warning Americans (and the world) to prepare for a broad economic collapse, potential bank holidays, ghost malls, civil unrest, food riots, and possible revolution by 2012. The only possible salvation is a new technological innovation as revolutionary as fire or the wheel.
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