Posted on 08/19/2011 6:38:25 PM PDT by Razzz42
Per the article: NIA is not in favor of Bachmann, not in favor of Perry, NIA likes Ron Paul.
Covers quite of bit of ground, arrived in my e-mail.
CPI up 3.63 percent but still no COLA for Social Security people and federal and postal retirees. Government needs that money to buy more votes.
Because you can’t manufacture or grow gold, it is a confidence indicator and a place to store wealth in troubled times as you can only fit so many cows in your kitchen.
Since June/2002 gold has risen over 450% in US dollar pricing.
Once the dust settles, and it still could take years and years more, you exchange gold for whatever paper currency is in vogue. Provided you have any gold to exchange.
Gas prices declined in July.
Inflation will not be a bigger concern in 2012 than unemployment. It is at least 16% now and will get worse next year. That will be the most important economic concern.
Gold is a speculative venture. Speculative ventures rise and fall for reasons of their own not just predictions of inflation. At one time in the Netherlands there was a wild speculative mania which hit in TULIPS. Single tulip bulbs were bid into the thousands of dollars even tens of thousands. That is what we are seeing with gold.
I tend to agree with you, but there are some very interesting undercurrents. First, headline inflation is being touted as the U3 number which is 9.1%. That is high enough, but few people understand the U6 number. Unemployment should be the bigger concern, but the reporting of data is skewed away from reality.
Second, many people I talk to don't buy the 3% inflation being touted because the necessities they must buy, such as food, are rising much more than that. People see the direct impact to their budget on a weekly basis, which is a strong reminder.
To the unemployed, unemployment will be a key concern. To the employed, whose 401Ks and IRAs are taking a hit because of the economic panic, the concern could go either way.
Either way, there is plenty of economic worry that will be around in 2012.
Just because I post certain things doesn’t mean I whole heartily believe in what is being presented or put forth.
Mainly I use my post for review of the past and present for understanding the future (events) as what I post never is via the mainstream media. While some well founded points are scattered amongst mainstream media news articles, they are far and few between. Most of my posts contain a concentration of facts almost to the point of knowledge overload.
Everything cycles as nothing moves in a straight line. Gold is in a bull market cycle, started 10 years ago and at this rate could run another 10 years since politics never get anything right (lending to a lack of confidence).
Just a thought....
Cheer up! The worst is yet to come!
“CPI up 3.63 percent but still no COLA for Social Security people and federal and postal retirees. Government needs that money to buy more votes.”
If you work in the private sector, the concept of COLA does not exist. The company I work for has not given wage increases in six years.
Many, if not most, people are insulted from the full impact of inflation because home prices are dropping not rising and rents are falling. Homeowners have their largest expenditure fixed so that reduces inflation impact.
I see no possibility for high inflation rates because home prices are going the other way. One consequence of this is the collapse of the construction industry which increases unemployment. Therefore, another characteristic of inflation, rapidly escalating wages, is not going to be a problem.
However, even homeowners are worried about unemployment since they do not view their jobs as secure.
We can hardly get too many articles about economics and finance, two critical subjects which are ignored by the vast majority and understood by a tiny minority even here.
The Roman Empire thrived on the gold standard. So could we.
Another intersting point you alluded to is that it is not inflation unless it is a rise in both prices and wages. What we really are seeing is a lowering in our standard of living since wages are not keeping pace with prices.
There is no definitive definition of ‘inflation’ that’s why it gets confusing intermixing each others perception of anything rising (or not rising).
Usually there is debt to payoff so printing of money takes place leading to repercussions with the value of the currency being used. Then this starts affecting prices/wages/taxes/confidence/attitude and just about everything else if spending gets out of control.
As the mere fact of printing does not start inflation but a series of conditions must be in place where it seems in the end that only the things you need go up in price and things you don’t need are cheaper to buy.
In the end, it is confidence in the currency in use that gives it value whether gold or bright shiny beads.
Unfortunately, I do see us as being on the edge of a depression. One of the virtues of Keynes’ theories is recognition of the psychological aspects of capitalism. That psychology is almost destroyed by the Obama regime. This psychological change is one reason that (in my view) the velocity of circulation has dropped, in addition to the typical drop during recessions.
Another point of interest is that, since we have gone onto a floating exchange rate international monetary system, it becomes possible for us to export much of the inflation as long as foreigners are willing to hold dollars. Under the fixed exchanges trade imbalances would be translated into gold transfers which would reduce the domestic money supply and slow economic activity and thereby lower imports. That mechanism is gone now.
Excellent observation! The psychology goes well beyond the consumer. Small businesses are naturally slow to hire, but so are big businesses. The rules for Obamacare and the Financial Reform Bill are unknown, so the risk for employers to hire are currently unknown. So, why hire?
The Roman Empire thrived on slavery and war. It stole gold wherever it could find it and destroyed whatever stood in its way. We aren’t going to start attacking nations and looting them. But it was not on a gold standard in any case but was bi-metallic at best.
And it was only in the best of times that there was any kind of stable metallic standard. Most of the times the coins were washed, clipped and adulterated far short of their claimed weight.
The simple fact is gold and silver supplies do not grow rapidly enough to keep the economies from deflating. The economy must grow by 3% per year in order to lower unemployment. Gold and silver supplies have grown at under 2% per year for the last 500 yrs. And that includes the hoards taken from the Incas and Aztecs, something that will not be repeated.
With rapid growth in the industrial and jewelry uses of these metals we will be lucky to see expansion greater than 1% per year. Permanent recession would be the result of going to a gold standard.
I thought your entire post was thought provoking, but I don't fully agree with the above quote. At a high level, there is a very good understanding of inflation, "too many dollars chasing too few goods." Drill down and there have been many good measures used that are inflation indicators. One of the problems that adds to the perception problem that you assert (and I do agree with) is that these measures change definition too frequently. The longer the time span that they are used, the less accurate a measure they become.
Most living Americans do not understand the difference between credit and money. Perhaps they are about to find out.
Defend the paper fiat system. We are seeing its demise right now. My GOLD is up. Way up. Stocks? PFffeww. Weimar Republic here we come.
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