Danger Time for America

The Economist ^ | Jan 12, 2006

[nopardons]

You could at least try to read what I post. or else you could get someone else to explain what I've written means. *sigh*

You want the exact time periods? Okay, I'll get them for you. Far be it from me, that I tell you X hours and it's actually Y. LOL

Oh yes, in the midst of a melt down, you absolutely, positively, must, must, MUST divest yourself of your holding? Did you do that on 9/11; did you even try to?

Gold, in 1963 was worth $35 dollars an ounce. Even adjusted for dollars then V dollars now, no, gold is NOT worth the same amount of money at all!

Good grief! You have no idea what you're posting! LOL

Take a stock that was around in 1963 and is still listed today and look at the history of it. Then, get back to me. You are better off just reading fiction and posts by people who give you tingles... you ignore facts, don't know any history, and should educate yourself about things that you are involved in. Nothing I post will help you "get it"; I see that now.

Here's the short answer...you can sell your stock, AFTER the stop has been taken off. Since you didn't ask me, I wont tell you how that would end up. LOL

[Lurker]

In 1963 a decent suit cost around $35.00, same as an ounce of gold. Today a decent suit costs around 500 bucks, just about the same as an ounce of gold. Therefore in around 40 years gold has neither gained nor lost any purchasing power. That's what I meant by 'worth'.

The difference between the long term prospects of gold is that it will still be here long after Acme Widgets has expired and its stock become worthless.

Now since you insist on not doing the one thing I asked you to do (answer my rather simple question) and continued to do the one thing I asked you not to do (POST TO ME IN ALL CAPS AND THEN BOLD THEM LIKE YOU'RE SCREAMING AT AN 8 YEAR OLD) I'm becoming convinced that you're unable to do either of them.

I'm not stupid sir or ma'am, and to tell you the truth I really don't have a dog in this fight. 95% of my investment dollars are in the market right now, and I have maybe a couple of thousand put back in precious metals just because I like having some 'real money' around the house.

Since it's apparent that you don't actually know how these 'triggers' and 'cooling off' periods work or how long they last you are obviously an unreliable source of information on these subjects.

That makes me wonder why I should put any 'stock' (forgive the pun) in what you have to say. If you can't tell me how they work or how long they last or what the effect on my holdings would be, then why the he** should I care what you have to say on the subject?

HAVE A REALLY NICE NIGHT-I'M OUTTA THIS THREAD!!

L

[Toddsterpatriot]

In 1963 a decent suit cost around $35.00, same as an ounce of gold. Today a decent suit costs around 500 bucks, just about the same as an ounce of gold. Therefore in around 40 years gold has neither gained nor lost any purchasing power. That's what I meant by 'worth'.

Brilliant!! If all you buy are suits, gold is a perfect store of value.

If you buy anything else, let's say a house, then gold isn't as good. In 1980 the median house was about $71,000 (about 90 ounces of gold) in 2005 the median house was about $253,000 (about 500 ounces of gold). But you're right, gold is the only real money. Hasn't gained or lost any purchasing power.

Sorry if I made you cry. Capiche?

[verity]

"You are my friend so keep your eye on US debt and keep your eye on gold."

I appreciate being called your friend and for the advice.

[verity]

Thank you for letting me know where we can easily access gold if we need it.

[expat_panama]

We were doing just fine without the Federal Reserve, as prices were stable for 150 years before that monstrosity was illegally established.

While I grant that you certainly have a right to your own opinion, please remember that you have no right to force on us your own Bizarro parallel universe.

OK, please forgive my coming on with an exasperated tone, but it doesn't matter that how many times gold bugs say that we had no inflation before the FRB, saying it will never make it true.   The worst inflation we ever had was back then and it was even over 20% --for years.   What made it even worse was that it would never stay there --without warning it would plummet to double digit deflation --and then back up again.

We're not talking just numbers here.   That kind of market environment was pure hell.  People starved and died.

We've posted historic inflation data several times on these threads, and often some goldbug will say (again without looking it up) that the wild price fluctuations were only during times of crisis --Civil War, WW I, etc..  That's when we bring out a comparison of the inflation records of the past two decades superimposed on the last 20 years before WW I.   Again, before the FRB prices were all over the place then and today's inflation looks well, boring.

Probably whenever a bunch of gold bugs get together it's easy to make up numbers without fear of anyone's scientific honesty getting in the way, but out here in the real world the rest of us are forced to actually look these things up.  We need to feed our selves without asking others to pay our bills, and we can't afford to get it wrong.

[dennisw]

Yeah right. I'll bet at least 10% of expat's net worth is in gold

[alrea]

90% of what the writer says depends on home equity drying up, which it isn't. But even if it did, the effect is not what is asserted. The article is B.S.

The magazine should be called the Socialist Economist. The growth engine in the U.S. is small companies. Lower taxes cause growth, job creation and wealth creation.

Bureaucracies have a harder time tracking small companies and thus they are not discussed in the Economic textbooks. Greenspan is celebrated as a great bureaucrat. His greatness was driven by the technology boom Reagan tax cuts lit a fire under.

[expat_panama]

"I'll bet at least 10% of expat's net worth is in gold..."

You caught me flat-footed --the honest truth is that I have been doing quite well (thank you) with gold mining stocks.  These past few years gold has been terrific --not for owning of course, but for selling to gold bugs.   Then again, if you really believe that "gold is real money" and paper isn't, then let me know when you're throwing away all your paper money.   I'm willing to come by and pick it up for "recycling".

You don't need to thank me, that's just the kind of guy I am.

[dennisw]

Good for you Señor gold bug. Gold has done good by you. Stop being cynical.Thou doth protest too much. Gold is real money


I certainly understand that gold fluctuates greatly since it's commodity traded on exchanges same as sugar crude pork bellies S&P

[alrea]

Sorry but don't be sucked in by "The Economist". Great cover, great puns for captions, it looks slick but it's free traitor all the way. Brit arrogance, don't bet on what they print

Absolutely. Why does their great republic have double digit unemployment?

[alrea]

The Economist is "leftist?"

We have a tough time defining leftest sometimes, but the Economist is usually seeking to verify the Keynesian European Socialist State that competes with the U.S. slightly freerer Keynesian economic model. Those European states with their grand double digit unemployment and free healthscare.

Leftist should mean any further growth of government in the U.S. since such a high percentage of income(revenue streams, cash flow) are sent to the Government(including legal related costs and payments).

[Mulder]

Trading is halted if the exchanges go up or down too much in a day. (It doesn't seem like a free market, when the "powers that be" can dictate when you can and cannot trade.)

The stops were put in place after the mini-crash of 1987, where the market lost 25% in a single day. Interestingly, however, the markets recovered and were up slightly for that particular year.

Now that "controlled trading" is in place, you get to lose 60% of your money in 3 years (2000-2002) instead of 25% in a single day.

[television is just wrong]

we aren't. It is just periods of adjustment.

[Mulder]

And yes, it has outpaced the value of gold

According to Travis's chart of the 100-year Dow vs. gold, the market hasn't outperformed gold over the last 100 years, except for a few time periods where equities were in a bull market.

Also, the "dow" in his graph is sort of cheating, since the same stocks in 2005 aren't the same ones in 1900. As companies go under, or new technoglies emerge and replace older ones, the composition of the Dow Jones average changes. What would be really interesting is to see a plot of the original Dow stocks in 1900 plotted against gold. (Do any of those companies still even exist??)

[Mulder]

In 1980 the median house was about $71,000 (about 90 ounces of gold) in 2005 the median house was about $253,000 (about 500 ounces of gold).

Why are you using the peak of the gold bull market in 1980, and then the peak of the housing (credit) bubble in 2005 as your points for comparison?

A 100-year chart of gold vs. housing would be more instructive.

[agrarianlady]

Consumer spending is not fueled by home equity loans. Have you taken out a home equity loan to buy things like plasma TVs?

Do a little research and get back to us. Consumer spending has absolutely been fueled by home equity loans.

[Mulder]

no inflation before the FRB, saying it will never make it true. The worst inflation we ever had was back then and it was even over 20% --for years. What made it even worse was that it would never stay there --without warning it would plummet to double digit deflation --and then back up again.

Looking at your graph, it appears that high inflation rates corresponded to times of war. 1812. War between the States. WWI (or more accurately, JP Morgans war). Then you had deflation after the wars. So things averaged out close to zero.

Compare that to today, where we have inflation during times of war. And then we have more inflation during times of peace!

We're not talking just numbers here. That kind of market environment was pure hell. People starved and died.

More people starved and died because technology (agricultural and medicinal) wasn't what it is today.

wild price fluctuations were only during times of crisis

From your chart, there were price flutctuations. But keep in mind our nation was rapidly expanding during the 1800s. Perhaps those fluctuations were simply a function of that, not unlike how a small growing business has more volatility than a large establised corporation. But the important thing, is that despite these fluctuations, if you held dollars over the long term, you maintained wealth. We had "honest money" back then.

Again, before the FRB prices were all over the place then and today's inflation looks well, boring

Inflation is running about 6-10% today, depending on who's numbers you believe. That isn't "boring", it's "criminal".

We need to feed our selves without asking others to pay our bills, and we can't afford to get it wrong

So if you had to choose between leaving 500 one-dollar bills, or one ounce of gold to your great-grandchildren for 100 years into the future, for them to "feed themselves", which would you choose?

[vrwc0915]

You can lead sheep to water but you can't make them drink :)

Everything is great why I will always have a paycheck and access to easy credit. China is our friend and most favored trading partner. Venezuela and Iran would never disrupt our oil supply and if so we could take them out in 24 hours with "smart bombs" Islam is a religion of peace. Those undocumented workers are just here to take the jobs that lazy Americans wont do. And paper money and stocks could never just become worthless paper. I am going to go refinance with an interest only loan take the equity out and buy a plasma TV, trade in my paid off cars for some 60k SUV's and start providing some undocumented workers employment by mowing my lawn and taking care of tasks that I am able to do but are beneath me. I think I will invest all my money in mutual funds as those bankers surely have my interests at heart. And hey socialist security will always be there for me. And why worry about supply disruptions if there is no food on the shelves why FEMA will deliver hot meals to my home. Well since everything is so great I better log off and find the most expensive cable package so I can see what I have been missing out on

If anyone did not get that this was sarcasm please seek medical attention

[TexanToTheCore]

The ones that don't dabble into politics. Economist had a front page cover "Embattled President"... 'nuff said. They should stick with their socialist economic reporting.

Good to see another ex-reader of The Economist checking in...