Doomsday Scenario for U.S. Economy?

[LittleSoldier]

The sky is not falling

God bless,
Ed

That’s because it already fell. At least for some of us.

 

[CPA2]

Who is selling gold is my question, as well. I have seen you on a couple of threads here, and you present a very consistent message. Your posts all directly or indirectly recommend that people transform much of their savings into gold. In my opinion, that is neither responsible advice, nor appropriate for this forum.

Converting 5% to 20% of your liquid assets into gold or paper gold (GLD) is a very prudent move! King Solomon, the greatest financial advisor, owned lots of gold.

 

[stinkcat_14]

Converting 5% to 20% of your liquid assets into gold or paper gold (GLD) is a very prudent move! King Solomon, the greatest financial advisor, owned lots of gold.

Assuming of course that gold doesn’t lose three quarters of its value like it did from 1980-2000. If that happens it would not be prudent. We had fiat money during those times as well.

 

[TMC]

Converting 5% to 20% of your liquid assets into gold or paper gold (GLD) is a very prudent move! King Solomon, the greatest financial advisor, owned lots of gold.

Silly me, I was unaware that Soloman was considered a financial advisor! He also had lots of horses and mules. So I’m thinking of putting my 401K into mules, and then maybe going back for some gold. Would that make sense?

Seriously, please stop trying to use biblical imagery to advance your viral marketing hokum, we’re not buying it.

 

[Ridgerunner]

Who is selling gold?

The people who bought it for less than it’s priced at now and think it might be at, or near, its peak.

For every buyer, there’s a seller.

That might be, but to “gold bugs” probably won’t be, instructive.

 

[CPA2]

Silly me, I was unaware that Soloman was considered a financial advisor! He also had lots of horses and mules. So I’m thinking of putting my 401K into mules, and then maybe going back for some gold. Would that make sense?

Seriously, please stop trying to use biblical imagery to advance your viral marketing hokum, we’re not buying it.

Mary says that ALL answers are in the bible. I suggest that you read about Solomon’s financial advice in the bible.

Any investment in something of value, even mules, would be a better inverstment than the dollar. A dollar is an IOU nothing. This socialist government in Washington is creating dollars out of thin air. The socialist government is STEALING from all of us who hold dollars!

P.S. Put some of your 401k money into GLD on the stock masrket.

 

[Ridgerunner]

Silly me, I was unaware that Soloman was considered a financial advisor! He also had lots of horses and mules. So I’m thinking of putting my 401K into mules, and then maybe going back for some gold. Would that make sense?

Seriously, please stop trying to use biblical imagery to advance your viral marketing hokum, we’re not buying it.

Solomon had lots of women, too. Is it possible to have women in a 401K??

 

[stinkcat_14]

Mary says that ALL answers are in the bible. I suggest that you read about Solomon’s financial advice in the bible.

I don’t necessarily disagree totally with this, I do believe there is much financial wisdom in the bible. However, I think that the bible is silent on the advantages and disadvantages of various monetary systems.

Any investment in something of value, even mules, would be a better inverstment than the dollar. A dollar is an IOU nothing.

In 2008-2009 having dollar bills under your mattress was a better investment than stocks and real estate. Also dollar bills under the mattress where better than gold from 1980-2000. So there are times when gold actually is a bad investment.

This socialist government in Washington is creating dollars out of thin air. The socialist government is STEALING from all of us who hold dollars!

How is this socialist governments stealing any worse than say, Reagan’s stealing of our dollars when he created them out of thin air as well under his socialist government?

P.S. Put some of your 401k money into GLD on the stock masrket.

Hoping of course that gold prices don’t go down.

 

[Ridgerunner]

Hoping of course that gold prices don’t go down.

It has been floating around the $1200 mark for quite a long while, as investment trends go. Might be a bit “toppy”, as some of the market gurus say.

In any case, for every buyer who thinks gold is going to $2,000, there is a seller who is persuaded that it’s more likely to go down from $1200.

 

[stinkcat_14]

In any case, for every buyer who thinks gold is going to $2,000, there is a seller who is persuaded that it’s more likely to go down from $1200.

Not only that, but they sell them for dollars!

 

[Ridgerunner]

Not only that, but they sell them for dollars!

Yup.

I recall my grandfather, who lived through the Depression and survived it, saying “It doesn’t matter if a hamburger costs 25 cents if you only have 24 cents, and it doesn’t matter if a hamburger costs $10 if you have $11.”

 

[CPA2]

“Why gold has been accepted as money for several thousand years cannot be appreciated without looking at the unique role performed by gold as money and the alternatives to gold….Ancient gold coins were widely accepted in primitive times because of the weight of gold they were known to contain. It was the physical qualities of gold, the known content of gold of a particular fineness, the fact the coinage could not easily be expanded in supply or debased and counterfeited, the durability of gold, that made gold universally accepted (Sutton).”

Milton Friedman, Nobel Prize-winning economist, had this to say about the American dollar: “…each accepts them because he is confident others will. The pieces of green paper have value because everybody thinks they have value, and everybody thinks they have value because in his experience they have had value. Paper money “is a social convention which owes it very existence to the mutual acceptance of what from one point of view is a fiction.”

The Federal Reserve debases and counterfeites the American dollar. The Federal Reserve steals from everyone who holds dollars. If gold is not real money, I do not know what is real money.

 

[stinkcat_14]

“Why gold has been accepted as money for several thousand years cannot be appreciated without looking at the unique role performed by gold as money and the alternatives to gold….Ancient gold coins were widely accepted in primitive times because of the weight of gold they were known to contain. It was the physical qualities of gold, the known content of gold of a particular fineness, the fact the coinage could not easily be expanded in supply or debased and counterfeited, the durability of gold, that made gold universally accepted (Sutton).”

You have posted this quote before, I am not sure what the point of posting the same things over and over again is? But if you merely want to point out that gold has been used as money in the past, you will get no argument from me.

Milton Friedman, Nobel Prize-winning economist, had this to say about the American dollar: “…each accepts them because he is confident others will. The pieces of green paper have value because everybody thinks they have value, and everybody thinks they have value because in his experience they have had value. Paper money “is a social convention which owes it very existence to the mutual acceptance of what from one point of view is a fiction.”

This quote is also entirely accurate as well, but it tells us nothing about whether or not we should buy gold. In fact, people even accept these fiat dollars for gold!

The Federal Reserve debases and counterfeites the American dollar. The Federal Reserve steals from everyone who holds dollars. If gold is not real money, I do not know what is real money.

How does the Fed counterfeit the dollar? Of course, there is some inflation that occurs in our monetary system, but as any good student of macroeconomics knows: inflation is only a problem if it is unexpected. That is, unless you fall victim to the economic mortal sin of money illusion.

 

[TenBobNote]

How does the Fed counterfeit the dollar? Of course, there is some inflation that occurs in our monetary system, but as any good student of macroeconomics knows: inflation is only a problem if it is unexpected. That is, unless you fall victim to the economic mortal sin of money illusion.

I strongly disagree! When the federal reserve prints money it gets distributed to industries closest to the government (banks, medical, etc) they obviously now have a higher purchasing power because the inflationary effects have not run through the system of this newly created money. Now as the money trickles down to your common worker the inflationary effects have taken place (prices now rise) yet the common laborer’s pay check is the last to rise due to the inflation.** Inflation benefits the rich and takes from the poor. **

And that is just ONE problem of many that the federal reserve creates by inflating. I am not even getting into the moral hazard of politicians having the ability to dish more money on the warfare/welfare state.
Nor I am not even talking about the bubble economy it creates.

 

[TMC]

“Why gold has been accepted as money for several thousand years cannot be appreciated without looking at the unique role performed by gold as money and the alternatives to gold….Ancient gold coins were widely accepted in primitive times because of the weight of gold they were known to contain. It was the physical qualities of gold, the known content of gold of a particular fineness, the fact the coinage could not easily be expanded in supply or debased and counterfeited, the durability of gold, that made gold universally accepted (Sutton).”

Milton Friedman, Nobel Prize-winning economist, had this to say about the American dollar: “…each accepts them because he is confident others will. The pieces of green paper have value because everybody thinks they have value, and everybody thinks they have value because in his experience they have had value. Paper money “is a social convention which owes it very existence to the mutual acceptance of what from one point of view is a fiction.”

The Federal Reserve debases and counterfeites the American dollar. The Federal Reserve steals from everyone who holds dollars. If gold is not real money, I do not know what is real money.

Gold has value for exactly the same reason that paper dollars have value - because people believe it has value and are confident others will believe the same. Gold is not “real money.” It is a commodity, just like silver, corn, oil or any other commodity. Investing in gold is highly speculative and extremely risky.

 

[stinkcat_14]

I strongly disagree! When the federal reserve prints money it gets distributed to industries closest to the government (banks, medical, etc) they obviously now have a higher purchasing power because the inflationary effects have not run through the system of this newly created money.

You want to explain how the health care industry gets this newly printed money from the Fed? That is a new strategy that I have never heard of. Usually the Fed changes the money supply by buying and selling bonds. When the Fed buys bonds, bond sellers may well get a bit of a premium on their bonds because the price is driven up. On the other hand, when the Fed sells bond, the price is driven down which hurts the sellers.

Now as the money trickles down to your common worker the inflationary effects have taken place (prices now rise) yet the common laborer’s pay check is the last to rise due to the inflation.** Inflation benefits the rich and takes from the poor. **

The answer to your question really depends on how flexible wages are. If you are a keynesian and believe that wages are sticky, then workers may well be harmed by inflation. On the other hand, if you believe that the market is effective at setting prices, then workers wages will adjust for inflation due to the interaction of supply and demand.

And that is just ONE problem of many that the federal reserve creates by inflating. I am not even getting into the moral hazard of politicians having the ability to dish more money on the warfare/welfare state.

Just how does the Fed distribute money to the poor?

Nor I am not even talking about the bubble economy it creates.

And of course there were no bubbles before the creation of the Fed?

 

[CPA2]

Gold has value for exactly the same reason that paper dollars have value - because people believe it has value and are confident others will believe the same. Gold is not “real money.” It is a commodity, just like silver, corn, oil or any other commodity. Investing in gold is highly speculative and extremely risky.

I disagree. The dollar has no intrinsic value. Gold is a monetary metal. Gold is money because the world has been saying that it is money for the past 5,000 years.

Belief in the dollar as money will end soon enough. The common man will be the last to know and understand the government’s little secret.

There will be a new American currency. ALL paper currencies that are not backed by any thing of value become worthless. That is the lesson of history. The American dollar is NOT exempt.

 

[TenBobNote]

You want to explain how the health care industry gets this newly printed money from the Fed? That is a new strategy that I have never heard of. Usually the Fed changes the money supply by buying and selling bonds. When the Fed buys bonds, bond sellers may well get a bit of a premium on their bonds because the price is driven up. On the other hand, when the Fed sells bond, the price is driven down which hurts the sellers.

Health care providers may not be as great of an example as banks, however they do reap the benefits of inflation(compared to the common wage earner). Any business who can pass their costs down to the consumer will benefit from inflation because they will always increase prices before they increase the wages of employees.

The answer to your question really depends on how flexible wages are. If you are a keynesian and believe that wages are sticky, then workers may well be harmed by inflation. On the other hand, if you believe that the market is effective at setting prices, then workers wages will adjust for inflation due to the interaction of supply and demand.

The market is effective at setting prices but it is not instant. The worker’s wages adjust but they are the last to adjust.

Just how does the Fed distribute money to the poor?

The same way the fed distributes money to war, through politicians. When politicians have an urge to do something, they need money. When they don’t want to tax because taxing is unpopular they go to the fed. Inflation is harder to complain about because it’s harder for the public to see. It’s the politicians best friend! Thus, the welfare/warfare state.

And of course there were no bubbles before the creation of the Fed?

Are you referring to bubbles created by the central bank in (1781–1836), our first central bank? Or the 2nd central bank (1816–1836)? Or from the government setting a set ratio between gold/silver?

I do not say there would be no bubbles in a free market, only that they would be small and they would correct themselves quickly.

 

[CPA2]

Gold has value for exactly the same reason that paper dollars have value - because people believe it has value and are confident others will believe the same. Gold is not “real money.” It is a commodity, just like silver, corn, oil or any other commodity. Investing in gold is highly speculative and extremely risky.

For someone so well versed in economics, I am surprised that you do not catch on that your rhetoric about gold is the same as the government for the past 40 years. Come on. I recognized that the government’s rhetoric about gold were lies in 1971.

The United States government has been claiming that gold was a “barbaric metal” for a very long time. In other words, gold was just another commodity, just as you claim.

In 1946 a member of the FED claimed that they were so good at regulating the economy, that they did not even need taxes. In the 1960s the economic text books written by Paul Samuelson and other socialists claimed that the FED could “fine tune the economy.” Just like drugs, those FED tools are no longer working.

Do you remember Clinton’s slogan, “It is the economy, stupid!” People believed that the government was in control of the economy. That false illusion is being shattered today. Those people who believed that lie are just beginning to wonder, “What happened?”

We now know that the emperor (government) has no clothes. The United States government is a drug addict and their drug of choice is debt. The dollar and all the fiat currencies of the world are nothing more than a representation of debt, an IOU nothing. Gold is a monetary metal, unlike other commodity metals, that represents NO DEBT.

 

[TMC]

For someone so well versed in economics, I am surprised that you do not catch on that your rhetoric about gold is the same as the government for the past 40 years. Come on. I recognized that the government’s rhetoric about gold were lies in 1971.

The United States government has been claiming that gold was a “barbaric metal” for a very long time. In other words, gold was just another commodity, just as you claim.

In 1946 a member of the FED claimed that they were so good at regulating the economy, that they did not even need taxes. In the 1960s the economic text books written by Paul Samuelson and other socialists claimed that the FED could “fine tune the economy.” Just like drugs, those FED tools are no longer working.

Do you remember Clinton’s slogan, “It is the economy, stupid!” People believed that the government was in control of the economy. That false illusion is being shattered today. Those people who believed that lie are just beginning to wonder, “What happened?”

We now know that the emperor (government) has no clothes. The United States government is a drug addict and their drug of choice is debt. The dollar and all the fiat currencies of the world are nothing more than a representation of debt, an IOU nothing. Gold is a monetary metal, unlike other commodity metals, that represents NO DEBT.

Why is gold not a commodity like other metals? It has less inherent value than most commodities. You can’t eat it. You can’t build a shelter out of it. You can’t clothe yourself with it. If there were a real economic meltdown in America, one would expect the value of the kinds of pure luxury items made from gold to plummet. If one were expecting an apocalyptic economic event (and I am not), one should stock up on things that are inherently useful, not stock up on pretty metal that no one will want when their stomachs are empty. That gold was used for money at many times throughout history means nothing. So was silver and copper, and paper. All money - whether mettalic money or paper money - bases its value on the beliefs and expecations of those that trade that money. Gold is no different.