Posted on 05/01/2010 10:33:11 AM PDT by Errant
It varies depending on who you talk to - but generally it would be considered a jump of 50% or greater per month in prices. That's not 50% annualized - that's 50% per month, or 600% annualized.
The world will be forced to settle on a new world currency. I think gold or precious metals make more sense than a new currency or basket of currencies and will be the preferred alternative to the dollar.
It would however be wise to have on hand other necessities of life since you may not find anyone willing to trade you theirs for all the gold in California.
Yes, very misleading. It should go back to include a couple of years before 07 and 08 when it was all the way up to $7/oz. Or better yet, include 2002 when it was around $4/oz. We wouldn’t want people to get the wrong idea about which direction silver has been trending this decade.
Same with Gold. How dare it triple in price over the last 7 years and then pull back a little bit. Sell, sell, sell.
P.S. I am willing to buy all unused gold and silver jewelry, coins, etc.. Just drop it in the convenient pouch and I will get back with you on how much I will pay you for it.
I would say that in terms of deficit spending as performed by the government, we are well past the point where it could be helpful. Borrowing money to pay back borrowed funds (not to mention to buy votes from otherwise unproductive citizens) isn't sound fiscal policy.
LOL!!
I wish you well with your precious metals.
There's no denying that those commodities have risen in price - primarily because the US dollar index dropped in value down to 72 at one point.
Don't ignore the deflation monster my FRiend. It only took hold in 2008 - and it will send you for a spin. US dollars are much better to be holding until the deflation storm passes, which could easily be another 10 years.
Or, when someone floods the market with that particular commodity.
But yes, given that other commodities dropped at the same time period, I would call that a deflationary wave. Housing prices certainly dropped at that time frame, and I'm several thousand dollars "poorer" for that (picked a bad time to relocate). But things have changed since then. Housing has apparently steadied somewhat (at least around here) at its new lower price point, and food and energy have jumped quite a bit in the last year or two.
agree,
I bet you don’t make a commission for selling gold, do you?
Re # 36 - Great post.
Well, the PPI is up (again), for one. And, as I’m sure you know, the government cleverly does not include food and energy (gas) in that figure any longer and it is also seasonally adjusted, so it is deceptively low. Also, the inflation rate (CPI) for March just came in at 2.31%. Reference here: http://inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asp
Major inflation has not hit yet, and I’m not really too worried about the inflation rate. There is a major flood of money building behind the dam from the newly printed money and TARP and stimulus spending.
The reason inflation has not hit yet is because the velocity of money is still so low. The velocity is low because businesses are not borrowing money. They are not borrowing money because they are accurately reading the economy and they know (as the Austrian school explains) that this is a very dangerous time to embark upon capital-intensive (long-term) programs.
But I think you are missing my primary point. And I really don’t like to argue about technicals or to get too deeply into the charts. I look at the fundamentals. I look at the politics behind what is happening economically. Even if we had a strong economy I would be fearful based upon who is running the country right now. I know they are anti-business, anti-prosperity, and favor subjecting the US to global powers. I believe part of their goal is to destroy the USD, to destroy our credit, and to destroy our business climate. Once they have achieved that and the people are reduced to a very low standard-of-living, the politician that promises to raise that standard-of-living by signing on to a global currency controlled by a global, central bank, will look suddenly very appealing.
My goal is to caution people that we are not in an economic recovery, that we are being lied to, that only half the data is being used to create that lie. I am telling people to prepare for the worst.
If it turns out I’m wrong and the economy takes off for a hundred years, I will be the first to admit that I was very, very wrong. But, whichever route our economy goes, I think we are headed for trouble. And any arguing isn’t going to change that until we have politicians who love this country and who want to save the economy because they understand that the very Republic is at stake.
The term "deflation" can be confusing and used in many different contexts. Maybe "economic adjustment" is more descriptive.
Check out the new Office of Economic Adjustment (OEA) at their ".gov" website.
Key word you're missing is "now". Inflation of food, energy, medical costs and other commodities may become a problem in the near future if the value of the dollar starts to decline from debt pressure and subsequent monetizing.
A thought on the “But a nation has to have either solid manufacturing or outstanding credit” - you have to have the locally made goods your own people will buy with the money and others may buy and thus keep the value in the currency, or the intellectual and technical capital to trade technology and expertise for money.
Have they?
I track all economic markets and the general public is being fed a charade.
The only reason that things "seem" to have "stabilized" is because the Federal government is creating new debt as fast as it can - to the tune of close to $2 trillion in just this fiscal year alone.
They have to do this in order to keep the M2 money supply from crashing, since international banks have closed off the "credit valve" that is usually used to create new money.
The Federal government is praying (actually probably bowing to gaia) that the banks will begin lending again - but the Federal government has absolutely no control over this.
Have you wondered why the Federal government is offering all of these incentive programs? It's to entice the public to create new debt with them - the government can't create debt fast enough just by themselves.
If the Federal government stops being able to create new debt then the cover will be lifted and citizens will realize just how up the creek we are with deflation. People will be economically destroyed in ways that they hadn't even thought of yet. It will make the 1930's seem rather tame in comparison.
Precious metals prices will come crashing down - as will the price of oil and other commodities. The US dollar will soar in strength. Those with cash will be sitting pretty, assuming they still have a job. Those with debt will be further devastated.
It is at this time that the Federal government will likely step in and nationalize retirement accounts to "protect" the citizens and to allow it to create even more debt through a new "trust" fund.
This is extremely serious. And most people are stuck in the inflationary mindset instead of understanding how economics truly works.
Let me ask one last question. Why did the Federal government pass Health Care? Was it about health?
No, it was a means to capture 17% of our GDP into a new "trut" fund so that the government can issue new debt against it.
Oh, I agree completely.
A lot of people are jumping on President Reagan for having been a “deficit-spender.” It is not a just comparison because he did so in a very targeted way (even though Dems controlled the congress), did so for a short-period, and, most importantly, he freed up business and investment by cutting taxes and encouraging the entrepreneurial spirit in America.
His successor, unfortunately, began the unwinding of the prosperity that President Reagan created. Slick Willy burned through it and slashed military spending to create the illusion of a booming economy.
Well, I should amend that last statement. Slick Willy actually did create a “booming economy” (as the Austrian school defines the term). He eased up lending and encouraged the tech bubble. When that bubble burst, rather than letting the economy correct itself, he enforced the Community Reinvestment Act and created the housing bubble, which President Bush inherited (along with the recession caused by the bursting of the tech bubble). President Bush contributed to the problem, especially during his last year.
Obamme the Commie, however, has put the problem on steroids. I believe he is intentionally destroying the dollar and our economy. No fool would do what he is doing and actually believe it is helping the economy.
:-)
I just keep trying to teach people about macro economics.
They keep focusing on what physical material is used for "money", instead of realizing that ALL of our "money" (including gold and silver) is actuatlly debt - and that debt is constituted by CLAIMS ON OUR FUTURE LABOR.
People don't understand that we don't have an economy based on COMPLETED LABOR. It's the "Wimpy" form of economics - "I'll gladly pay you tomorrow (claims on future labor) for the hamburger that I eat today."
I just don’t see any scenario where the dollar remains a currency, that is why I try not to look at the price of gold and silver in relation to dollars. There have been thousands of currencies over the centuries, but they have all been valued in relation to gold and silver. No matter what happens, things are going to get ugly, and the best investments have always been in the ability to grow food, the ability to defend yourself and your family, work skills, and gold and silver.
I think a new skill that will emerge is the ability to hunt down politicians and bankers.
“If the world dumps the USD as the world’s reserve currency, the dollar will be toast. Purchasing power will be crushed. Call it whatever you want, the dollar will be dead.”
I’ve been buying USD when I can. Yes, you are right that if this happens, this is the result, but the USD is the tall man among midgets.
There is considerable room for appreciation against the Euro. The real question is what happens to the Pound.The Euro is going to sink like a rock.
I follow and agree in principal with most of your post, but this paragraph stands out - I'm not following this. While I think that precious metals are high right now, I don't see a scenario where they will crash down along with other commodities if the government can no longer create debt (and that day will come). I see the dollar being devaluated significantly when the house of cards folds. I'm not sure that sitting on cash will be a good thing when/if that happens (though it never hurts to hedge just in case).
The Producer Price Index (PPI) measure the cost of materials for factories to build their widgets. The suppliers are in desparate need of revenue and have increased their prices somewhat to avoid bankruptcy. They will be forced to either go bankrupt or drop their prices when the amount of widgets sold drops to an unsustainable level.
Major inflation has not hit yet, and I’m not really too worried about the inflation rate. There is a major flood of money building behind the dam from the newly printed money and TARP and stimulus spending.
What newly printed money? Can you point me to it? Is the amount of physical currency circulating in our economy vastly different from what it was at the beginning of 2007? (The answer may surprise you). What's happening to our M2 money supply? Who's propping it up by creating vast amounts of new debt so that people don't realize the deflationary spiral that we're in? (Federal government anyone?).
The reason inflation has not hit yet is because the velocity of money is still so low. The velocity is low because businesses are not borrowing money. They are not borrowing money because they are accurately reading the economy and they know (as the Austrian school explains) that this is a very dangerous time to embark upon capital-intensive (long-term) programs.
They're not borrowing money because most of them can't get access to it (have you spoken with any companies over the last year? I have - and the stories are incredible). Many companies can't get access to commercial paper (short-term lending) anymore and were using that to bridge the gap on payroll while waiting for their accounts receivables to hopefully come trickling in. Many of those companies are either bankrupt or have had to reduce their fixed costs to a level (layoffs) to stave off bankruptcy for a little while longer.
But I think you are missing my primary point. And I really don’t like to argue about technicals or to get too deeply into the charts. I look at the fundamentals. I look at the politics behind what is happening economically. Even if we had a strong economy I would be fearful based upon who is running the country right now. I know they are anti-business, anti-prosperity, and favor subjecting the US to global powers. I believe part of their goal is to destroy the USD, to destroy our credit, and to destroy our business climate. Once they have achieved that and the people are reduced to a very low standard-of-living, the politician that promises to raise that standard-of-living by signing on to a global currency controlled by a global, central bank, will look suddenly very appealing.
Would you be surprised if I told you that the Federal government and the Federal Reserve have totally opposite goals? The Federal government desires inflation in order to keep its debt interest as low as possible. The Fed allows moderate inflation for a "season" and then shuts off the "credit valve" and uses the resulting deflationary catastrophe to steal all of the underlying assets from the loans that they gave at, and which have now defaulted.
My goal is to caution people that we are not in an economic recovery, that we are being lied to, that only half the data is being used to create that lie. I am telling people to prepare for the worst.
We agree on that.
If it turns out I’m wrong and the economy takes off for a hundred years, I will be the first to admit that I was very, very wrong. But, whichever route our economy goes, I think we are headed for trouble. And any arguing isn’t going to change that until we have politicians who love this country and who want to save the economy because they understand that the very Republic is at stake.
We both agree that the economy is in dire straits. We just disagree as to why.
Well the supply of beef, pork and chicken that was in the supply AFTER they slaughtered tons of it, has been used up, and meat prices are already SOARING. Which means eggs, milk cheese, yogurt etc as well. Inflation is up highest in over a quarter of a century. And Obama’s kneejerk reaction to the little criticism he got for the oil spill, was to announce to the world no more new oil leasing or drilling, expect $5-7 a gallon gasoline. EVERYTHING will be going up drastically in price.
And they tried to convince us we ‘are in recovery’.....YOU LIE.
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