The Apocalyptic Depression of the 21st century

Discussion in 'Chit Chat' started by Onlygold, Dec 3, 2009.

  1. Onlygold


    The Apocalyptic Depression of the 21st century
    The recent global financial meltdown and its severity is the first clear sign that an apocalyptic depression is coming and which cannot be prevented through mere bailouts and fiscal stimulus - an inevitability. The depression will be truly global and catastrophic forcing very fundamental changes to the world's economic systems and habits. These changes forced onto the world will be for the long term economic stability and growth for the entire world and not just for the benefit of some at the expense of the other. The current fall in the dollar and the rise in the gold price are further signs that the depression is unraveling and the world's stock markets will soon crash. A Gold Specie Standard will be adopted with gold as the main component of a basket of commodities as international reserve. The current global fiat monetary regime championed by the Fed and IMF centered on the US dollar as the reserve currency will end together with the Fed being finally abolished.

    There are many signs that such a global depression is coming and inevitable. They all finally converge to just one single identifiable issue - the increase in the worlds population (now 6.7 billion) and how to feed and house this increased world population. The current global economic system is incompatible to the new reality and only through very fundamental changes that the global economy may have stability for long term growth. The signs are in global economic imbalances, trade disputes, forex competition, derivatives, agricultural subsidies in industrialized countries, food and housing prices, the rising gap between rich and poor and global poverty in large parts of the world.

    Food and Agriculture
    The reason G8 became G20 is because the world had decided to accommodate (not eliminate) the increased populations from the developing countries. The increased population generally adds to the pool of the poor and is an economic burden to the world. Only a Gold Standard can reduce such a burden by letting the poor a better environment to look after themselves. The current fiat systems in all ways are biased against agriculture - an artificially low agricultural prices which discourage agriculture. The only way to face the long term food problem in countries like China and India is free market pricing and markets can only be free only under the Gold standard. So the "China factor" will be that China's current economic model had to self-destruct in order that its population do not add too much burden to the world. This can only be forced through a global depression - and natural laws have their paths and ways.

    The 'Fat Map': Putting World Hunger Into Perspective
    The above is a sign of the times that things must change. The reason why there are disputes about agricultural subsidies is because fiat money favors the industrialized world and penalizes agricultural based economies and agricultural goods. The farming communities have always been the poor and the only way they can hope to live decently is through the meager amount they can save in good times. Fiat money and fractional reserve banking will always manipulate conditions that penalizes savings and this will take away the "fall-back of last resort" of the poor, especially the farming communities. The poor becomes even poorer when money devalues over time.

    With the Gold Standard, the price between industrial goods and agricultural goods will not be as great as it is now. This indirectly imply the coming deflation of the the industrialized world - a deflation of manufacturing viz agriculture, an inevitable re-balancing act to indicate how far the world's resources have been abused and misallocated due to financial manipulations that prevented the working of free economic forces.

    Fiat money and fractional reserve banking do not work
    A fundamental economic principle that has long been forgotten is :
    Money does not have a price.

    In our current monetary order all monies have prices which mean they cannot work and must finally end. Timothy Geithner reiterated that the US wants a strong dollar. China too wants a strong Yuan. So do Russian, India, Brazil and all other countries of the world want a strong currency to buy as much of the good things in life as they could. Because it cannot happen that all currencies in the world be strong at the same time, they all must finally disappear. Money or currency is a unit of measure which must in itself be defined and cannot be "measured". The current world economic order cannot go on smoothly just through bailout and stimulus when there is no proper monetary unit to facilitate economic decisions and valuations.

    World Hunger
    The current monetary regime exacerbates the inequalities between the rich and the poor. It favors the financial sectors through manipulations of the money supply and interest rates. Only the Gold Standard can reduce the gap between the rich and poor and ameliorate the plight of the poor. A global depression is a natural final reaction against abuse and misallocation of natural resources.

    The Fed will be abolished.
    Many Americans may not think it ever would happen nor like the idea as it means they cannot have a strong dollar to buy the good things in life. Genghis Khan, the greatest conqueror of all times, created the Mongol empire and they finally conquered China - but its rule over China lasted less than a hundred years. The Fed is exceeding powerful, but it still can end when it is to end. It will not end if the US government can bring the US economy back to where Americans are satisfied they can provide for their family and security for their future. By now, every Americans have heard and experienced how jobs have been lost and powerful banks have been bailed out with fat bonuses - men may have a short memory and can easily forgive and forget as long as they have a future. The prospect that the US economy do not deteriorate further is slim. When Americans find their economic life sliding downward fast (which is the current prospect), they would call to have the Fed abolished. Ferdinand Marcos and Suharto were ousted by their people. The Soviet Union broke apart through peoples' power. China's economic emergence into the world was also forced through peoples' power.

    The Final Price of Gold
    What will be the final price of gold? Nothing. The global depression will be resolved only when the world begins with a new clean slate. This mean the US external debts will be settled in gold.

    The total world official reserves is currently about $9 trillion with 60% in US dollars. The US gold reserves is about 8100 x 32150.75 oz. If the US external debt is all settled in gold, it means the price of gold is $20735 per oz (9000000000000 * 0.6/8100/32150 = 20735). If gold is valued higher, say twice, then the US will retain half its gold reserves and the price of gold is $50,000 per oz.

    So the current gold price action is aiming for $50,000 per oz.
  2. And your angle is, to sell gold pans and shovels? You happen to own a gold buying/selling service?

    Gold bugs are a dime a thousand. Keep yelling that the sky is falling, and when something happens, crow that you predicted it.
  3. LMAO.
  4. Gold is only valuable while there is still an infrastructure in place where it can be used as a proxy for other items. In an "Apocalyptic" Depression, lead is far more precious than gold (in 9mm form).
  5. the1


    Great Post! I'm going long lead :)

  6. Onlygold


    Assume mankind come back from dead and markets bouncing back all over.
  7. it is obvious a new world currency is on the making.

    but i am not sure it will backed by commodities.

    it certainly looks like <b>a unified fiat currency system would fix most if not all of the economic imbalances that throw into poverty millions of people now</b>.

    on the other hand a gold backed monetary system would transform Australia and South Africa in the richest countries in the world out of the blue. and that doesn't make any sense and obviously would never be accepted by real economic super powers of today.
  8. Why do you laugh at a $50,000 prediction? Gold only has to rise the EXACT same way it has for the last 40 years and it will hit $50,000. (ok...not 50k, actually $42,500)

    Dont you think that if someone told you 40 years ago when gold was $35 per oz that one day it would be trading at $1200, they would've laughed?
  9. Onlygold


    A unified fiat currency is still based on trust and may be problematic. It is easy to trust an individual we know well but to trust the signature of a government may be difficult. I think hard specie like gold, silver will completely eliminate this distrust of trust and may work better. It is like exit strategy - you would be holding on to gold when the pact gets broken or when parties prefer war or do not pay up.

    About Australia and South Africa, I am not too sure there is no way that they do not get too much undue advantages. The gold they have is underground and the yearly amount they can dig up and use may buy something, but maybe not too disruptive a quantity - hope they would be just like the current $2 trillion dollar reserves of China which may be used only under approval.
  10. Onlygold


    Now I have a better timing of the midst of the coming depression - add 15/20 (40 years / 2) years. Things may be bad and ugly by 2015.

    About the stock market crash, I think very soon. Dubai is like a sign.
    #10     Dec 3, 2009