see The Appeal of Conspiracy Theories by Anthony Gregory http://www.strike-the-root.com/4/gregory/gregory9.html "By now, itâs widely accepted by many that Roosevelt provoked the Japanese to attack on Pearl Harbor, pinning the blame on two innocent military officers, all to open a back door for U.S. entry into World War II. " Yhis is widely accepted now, but was a "theory", widely discredited, at the time. and "Whether the U.S. government went to war with Iraq to protect the value of the dollar against the Euro seems less relevant than the fact that it did go to war, it did kill 10,000 innocent people, and it currently maintains an occupation with no hope of instituting American-style democracy or freedom among a population that wants neither." Does it really matter?
Buying CDS on US debt from counterparties of likely lesser viability (err.. banks and other hedge funds?) makes absolutely no sense. The US government will never default on its debt. Instead, it will just print. So if you want to bet against the value of US debt in real terms, the only trade that makes sense is gold (without doing research to see what currencies are not credit economy levered).
I agree with you but the market does not agree with us. http://online.wsj.com/article/SB123353655770137847.html "The same catch could apply in a market where prices have soared 759% in a year: credit-default-swap protection on U.S. government debt. The annual cost of insuring $10 million of five-year Treasurys is about $66,000, up from $7,680 a year ago, according to Markit." 02/02/09
Gold may have made sense when there were only a few hundred million cash-using people around. Now there is not enough Au to go around. There have been rumours (conspiracy theories) that if 81 year old Volker lives long enough, he will be tapped to institute gold certificates again. But since there isn't enough to go around, unless it's several million dollars per ounce, the gold certificates can have only fractional backing, no better than Bank of America's fractional reserves. A run based on doubt would still bring the house of cards crashing down. Fiat currencies MUST be based on the constant equivalent of a basket of ManHour jobs and what they pay, either world-wide or in an agreed set of nations. I (seriously) propose ER nurse and garbage truck tail men.
Someone still needs to explain why the Japanese yen didn't depreciate significantly when their bubble popped. With that example sticking out I am not going to jump on the gold bandwagon just yet.