Jayford I appreciate your response. What, then, is the best course if the dollar were systematically displaced as the reserve currency. Is there a currency that would weather that best? I wish you would review this information I have here, it could be very important to the welfare of your family. I'm not sure if you are familiar with Forest Mimms III - Editor of Citizen Scientist Magazine and Chairman of the Environmental Science Section of the Texas Academy of Science Listen to what he has to say this first link - And watch Money Masters the last (take the time) - Research Cecil Rhodes round table - and the Fabians http://www.prisonplanet.tv/audio/030406mims.htm http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=55601 http://www.elitetrader.com/vb/showthread.php?s=&threadid=144021
That WorldNetDaily article is ridiculous imo. The Fed works for the banks and the last things the banks wants is a deep recession and depression. Just look at the big banks charts: they generally make money year in, year out EXCEPT when there are disasters. Nor does the government want a depression which would destroy their tax base! Congress wants a nice big tax base so they have plenty of cash to buy votes and piss dollars into the Great Lakes, Mississippi and every other tributary in these here great states. You've got to be very careful about the Doom and Gloom stuff, which I assume all this is. A beautiful illustration is a guy name Gary North if you've heard of him. I used to sometimes read his stuff and he's a good writer, sounds logical but was HORRENDOUSLY wrong over and over again. You have to remember that Central Banking, although not perfect, has improved incredibly since the 20's and 30's. It's been refined and 50 years from now it will probably be even better. I think their biggest obstacle now is derivatives: they have not regulated that and so it is COMPLETELY out of control. Lehman, AIG (and of course LCTM) almost unraveled everything. That's probably the next thing on their agenda, cuzz these guys aren't stupid. Gold is another great illustration. All the Doom and Gloom guys are, "Buy gold and buy lots!" But the truth is that it's really not that great of an investment, never has been and it probably never will be...
The article was titled Expect Fed to lower Dow to 8,000 Back when the DOW was what - 12,000 + The Dow has pushed 8000 The numbers don't lie. Corsi's understanding may or may not be right. but the numbers don't lie - Just as a bunch of intellectual elites applauding genocide tells volumes - I wouldn't expect you to swallow anything in those links if you even bother to give the information fair hearing - however, it is times like these to think the unthinkable - http://www.shadowstats.com/article/292
by the way I thought this response thoughtful. I agree gold would sell off, as long as the deflationary spiral was orderly. If you look at the last link which predicts a brief deflation followed by rapid extreme hyperinflation, precisely because they will print enough cash and more. Under those conditions, at that tipping point between deflation and hyperinflation, it seems logical gold would have bottomed and be very popular -
This has a high degree of possibility imo. Its what I am looking for actually. We are going to spend like there is no tomorrow to avoid "depression" (whatever that actually is), and get the economies of the World going again. Many things can effect this however. Even with massive spending, a recovery may be slow due to the mountains of debt that need to be cleared. If spending is curtailed once the global economy stabilizes, then you won't see hyper inflation imo. Its not the amount of debt that is an issue so much as the velocity of money that leads to inflation. I personally do not see anything on the horizon that leads to rapid global expansion either. Since the tech boom, growth has been almost entirely a monetary/debt fueled phenomenon. A Green Tech revolution would do it, or maybe a nano tech breakthrough. Other than that, without the ridiculous debt engine, we are going to see slow global growth for possibly decades, although no one can foresee even a few years out it seems. I just believe this is probable. Purely just opinion. Finally, even though the US is going to spend like a drunken sailor on steroids, so are most other countries. Currency valuation is always a case of one currency situation vs another. So this situation may not hammer the dollar as you expect. For example: The USA has a large budget deficit and is in recession, but the UK has an even larger budget shortfall (% of GDP), and expected to contract even more than the US. So even with the spending, and bleak outlook in the US, one would expect the dollar to appreciate vs the Pound. This is all text book crap however. In the real world there are many other factors. The reverse carry trade is such an example. Few people saw that coming ahead of time. Maybe the best bet is to just be a pure trader. For a long term outlook, look at monthly charts!
Germany's stock market zoomed in the early 20's. Of course in any other currency the shares and profits were worthless. After having their currency go worthless twice in the last 100 years, it explains why the German Bundesbank (equivalent to our Fed) refuses to sell its gold. They will NEVER allow it to go worthless again. Anyway, you get to pay tax on those profits you imagined you made, too. Its pretty tough to get ahead of that game when the money you are measuring goes worthless. The only thing holding the dollar up is that China is sitting on too many of them that they can't easily dump without admitting that if those dollars are worthless, then they are bankrupt, too, because most of their reserves are in US Dollars. As I see it, over the next few years they will try to quietly reduce their exposure, and then allow the Yuan to rise more rapidly.
Wrong. China is indeed helping to prop the dollar, but not because they hold so many of them. China needs the dollar to remain tenable so that the US can continue to buy their stuff. There are two main engines in today's global economy. The US consumption engine, and the Chinese production engine. If the US goes south, so does China. Roubini, the only economist that I know of who correctly predicted this mess, believes that China could actually implode if their "growth" remains below 8% for at least two years. China NEEDS growth above 8% just to employ its additional 24 million entering the work force each year. They have massive excess capacity already, and are currently laying off large numbers of workers in various industries throughout the south. The last thing China wants is a Yuan appreciation. Little they can do about it in the long run however. They will do all they can to keep the dollar strong.
The only reason why the Chinese need to sell to the US is to get USD currency. And the only reason why they need USD is because it is accepted as the standard for goods exchange. If the USD is no longer the standard currency, why would they sell to the US anymore?? To accumulate a much less valuable currency? In fact the chinese do not need to sell to the US to survive. They could easily sell to resource rich countries like Brazil, Russia, Canada, and make it. What they need is natural resources, which the USD buys for now - they don't need the USD just for the sake of holding the currency, especially if it is worth much less. The only reason why they are still trading for it is because of a temporary lack of substitute/alternative to it.
Some owners deserting factories in China http://www.latimes.com/news/printedition/front/la-fi-factory3-2008nov03,0,360088.story