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bizzle
Joined: 22 Mar 2009
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 Posted: Sat Apr 11, 2009 3:52 pm Post subject: |
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The US will not default because all of their debt is US dollars, which they can just print more of. Unlike, say Iceland which had tons of foreign currency debt.  |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Apr 12, 2009 6:52 am Post subject: |
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| bizzle wrote: |
| The US will not default because all of their debt is US dollars, which they can just print more of. Unlike, say Iceland which had tons of foreign currency debt. |
Inflating out of debt is considered to be default by other means.
If foreign governments continue to slow down their acquisition of US debt, there is a very strong risk of a sudden shock, where new inflows of foreign public money ends. This would force Obama to hyper-inflate or cut 60-70% of spending, defaulting on social security etc in the process. With the deficit now likely to hit 3 trillion this year, and same for next, I believe this is what will happen. I've been off 'team hyper-inflation' for a long while, but I'm back on. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Sun Apr 12, 2009 7:14 am Post subject: |
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| mises wrote: |
| bizzle wrote: |
| The US will not default because all of their debt is US dollars, which they can just print more of. Unlike, say Iceland which had tons of foreign currency debt. |
Inflating out of debt is considered to be default by other means.
If foreign governments continue to slow down their acquisition of US debt, there is a very strong risk of a sudden shock, where new inflows of foreign public money ends. This would force Obama to hyper-inflate or cut 60-70% of spending, defaulting on social security etc in the process. With the deficit now likely to hit 3 trillion this year, and same for next, I believe this is what will happen. I've been off 'team hyper-inflation' for a long while, but I'm back on. |
I wish you a sad "welcome back."
And, to everyone else ...
Get rid of your fiat currency denominated assets ASAP.
When the dollar hyperinflates to miniscule values or crashes completely to zero, the rest of the World's fiat currencies will fall as well. Many, including the Korean Won and every other Asian currency will fall along with the dollar. Many minor currencies will fall to zero even if the dollar maintains some miniscule value ... $6000/oz of gold .... $10,000/oz of gold ... and in your lifetimes, if you're young ... $100,000/oz of gold.
It's possible that of few countries with some significant gold reserves will see their currencies survive at some level of value.
The best we can hope for is that the dollar will maintain a value of a few pennies relative to today.
Of course, since the dollar has already lost 98% of its value since 1913, this will mean that the dollar will have lost about 99.8% of its value. Yeah, not quite zero ... yet.
Thanks to the failed, Ponzi economics, the fascist-socialist economics of Wilson, FDR, LBJ, Nixon, Bush ll, Obama, the Federal Reserve, the IRS, JM Keynes, and all the people who support any of the above. |
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Pluto
Joined: 19 Dec 2006
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| Posted: Sun Apr 12, 2009 8:13 am Post subject: |
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| ontheway wrote: |
And, to everyone else ...
Get rid of your fiat currency denominated assets ASAP.
When the dollar hyperinflates to miniscule values or crashes completely to zero, the rest of the World's fiat currencies will fall as well. Many, including the Korean Won and every other Asian currency will fall along with the dollar. Many minor currencies will fall to zero even if the dollar maintains some miniscule value ... $6000/oz of gold .... $10,000/oz of gold ... and in your lifetimes, if you're young ... $100,000/oz of gold. |
Well, I was never a big fan of the 'bird in the hand theory' to begin with. Meaning you shouldn't have all your money in currency nor should you have all of your investment in gold. I realize that gold is a favorite 'straw poll' when measuring inflation. The price of gold and the dollar don't move in complete opposite directions; they're not perfectly inversely correlated. They are inversely correlated, but at [ρ(gold, $) = -.38]. Also, in recent months gold and the dollar have been moving more in tandem (positive correlation). I don't know, the recent movements in the gold/dollar relationship are probably just a temporary fluke. Point is, I am not sure how good the price of gold is to measure inflation. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Sun Apr 12, 2009 8:51 am Post subject: |
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Over the long term gold maintains its value. It does not rise or fall. This has been true for thousands of years. That is why it makes good money and a terrible investment. It is therefore wise to have some gold (and silver) to use as money, but you should invest in things that have some productive use and can produce some income.
During volatile times such as today, we see stocks and money bouncing around in value. Keep in mind that it is really the dollar and the other currencies that are bouncing around.
Gold is the ONLY good measure of inflation that we have over long periods of time. |
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