by mannfm11 » Thu Jul 28, 2011 7:51 am
John, I have looked at gold and recognized the price to be around $500 in real terms. Things are so crazy that I don't know if it will revert or not, but it should. It is merely one more bubble at the end of many, just as sovereign finance is a bubble. Devaluing the dollar is going to be more difficult than many assume. The world needs the US market or it all falls apart. Also, the dollar is bank money, not government money as is supposed. The Roosevelt government only decreed it as legal tender for all debts, public and private. The world can't abandon the dollar because the world has used it so that they can have their investments and their money too. Banks love treasuries, whether foreign or domestic for the same reason. They are accepted as collateral for all kinds of trades, so you can own treasuries and own a like amount of stocks or treasuries and junk bonds at the same time, leveraging your money. This is why they are all upset about the debt limit not being raised. Otherwise they would have to invest in less liquid securities and thus not have as much leverage. They are the money behind the money, not only for Wall Street, but for China, Europe and most other countries around the world. This unique property of US debt isn't going away without some kind disaster beyond the US governments debt being too high. Look at Japan, which has lost its top rating years ago, is twice the US in debt and still trading at 1.5% on a 10 year basis.
There will be an adverse reaction to Bernanke's policies. It will be deflationary, as the market will force Bernanke's hand. His reasoning for the Great Depression is a tale told by an idiot. The Bubble that Broke the World tells what happened. What happened was another's debt was the creditors money and they used Ponzi financing to keep the game going, to avoid taking the loss. Something eventually broke and those with money suddenly didn't have it either. If the system of treasury collateral broke down, every one in the world would suddenly go broke. The US won't default any time soon (in the next 90 seconds as some people state) merely because its debt is used as the money for the world. There isn't any system where the world could refuse the business of the US because of this fact. The same holds true for the oil producers, because sans the US, there isn't an oil market.
Back to gold. Rich people never sell anything, they merely loan it out. The average Joe is buying gold from G. Gordon Liddy and others on the TV. The average Joe will have to sell to eat first. Rich people create markets where they can sell on the way up. Tons of gold sold at $500 an ounce. The sellers look stupid right now, but they were the ones with the gold at $250, so they made 100% from that price. But, what they sold at $500 was very little compared to what they had. They are still selling. The central bankers are starting to buy. Are they buying for security or buying their buddies out at the top, just like they sold at the bottom? Just like they are doing in other facets around the world in putting money out there so the bankers can continue to loot?
I won't wait for $500 to buy this time around, even though I suspect it is going there. Once in awhile, I have the urge to buy some at these prices, because it does look like a total collapse coming. My fear at times is that the rest of the world gets so many dollars, they decide the US is getting their stuff for nothing and just decide to stop. But, this isn't Wiemar Germany, which was a country in ruins from the war and had its substance taken from it to the point they could only print bills in an effort to stay afloat. Bernanke is buying collateral out of the economy, to put money into the system to keep the banks and prices from collapsing. His trade can be unwound.
John, I have looked at gold and recognized the price to be around $500 in real terms. Things are so crazy that I don't know if it will revert or not, but it should. It is merely one more bubble at the end of many, just as sovereign finance is a bubble. Devaluing the dollar is going to be more difficult than many assume. The world needs the US market or it all falls apart. Also, the dollar is bank money, not government money as is supposed. The Roosevelt government only decreed it as legal tender for all debts, public and private. The world can't abandon the dollar because the world has used it so that they can have their investments and their money too. Banks love treasuries, whether foreign or domestic for the same reason. They are accepted as collateral for all kinds of trades, so you can own treasuries and own a like amount of stocks or treasuries and junk bonds at the same time, leveraging your money. This is why they are all upset about the debt limit not being raised. Otherwise they would have to invest in less liquid securities and thus not have as much leverage. They are the money behind the money, not only for Wall Street, but for China, Europe and most other countries around the world. This unique property of US debt isn't going away without some kind disaster beyond the US governments debt being too high. Look at Japan, which has lost its top rating years ago, is twice the US in debt and still trading at 1.5% on a 10 year basis.
There will be an adverse reaction to Bernanke's policies. It will be deflationary, as the market will force Bernanke's hand. His reasoning for the Great Depression is a tale told by an idiot. The Bubble that Broke the World tells what happened. What happened was another's debt was the creditors money and they used Ponzi financing to keep the game going, to avoid taking the loss. Something eventually broke and those with money suddenly didn't have it either. If the system of treasury collateral broke down, every one in the world would suddenly go broke. The US won't default any time soon (in the next 90 seconds as some people state) merely because its debt is used as the money for the world. There isn't any system where the world could refuse the business of the US because of this fact. The same holds true for the oil producers, because sans the US, there isn't an oil market.
Back to gold. Rich people never sell anything, they merely loan it out. The average Joe is buying gold from G. Gordon Liddy and others on the TV. The average Joe will have to sell to eat first. Rich people create markets where they can sell on the way up. Tons of gold sold at $500 an ounce. The sellers look stupid right now, but they were the ones with the gold at $250, so they made 100% from that price. But, what they sold at $500 was very little compared to what they had. They are still selling. The central bankers are starting to buy. Are they buying for security or buying their buddies out at the top, just like they sold at the bottom? Just like they are doing in other facets around the world in putting money out there so the bankers can continue to loot?
I won't wait for $500 to buy this time around, even though I suspect it is going there. Once in awhile, I have the urge to buy some at these prices, because it does look like a total collapse coming. My fear at times is that the rest of the world gets so many dollars, they decide the US is getting their stuff for nothing and just decide to stop. But, this isn't Wiemar Germany, which was a country in ruins from the war and had its substance taken from it to the point they could only print bills in an effort to stay afloat. Bernanke is buying collateral out of the economy, to put money into the system to keep the banks and prices from collapsing. His trade can be unwound.