This house in Detroit was built for hundreds and hundreds of years. Now look at it. What killed it, and its city? Politics.
Be very afraid.
Posted on 01/11/2009 4:56:28 AM PST by markomalley
In the current recession, people are looking for safe places to put their money as a "store of value."
Treasury securities -- "treasuries" -- are direct government obligations offering interest and 24-hour liquidity. Insulating their owners from theft and bank failure, some regard treasuries as the safest form of cash. In 2008, there was a massive flight to the safety of treasuries. It was a year of bumper gains for those invested in them.
In 2009, however, treasuries are increasingly at risk of becoming the next asset bubble to burst.
Worse still, if the U.S. dollar is devalued as a result of increasingly massive deficits and foreign sales of treasuries, dollar cash could crash.
(snip)
The brunt of ridicule, old-timers often kept gold coins in shoeboxes under their beds. It might not be such a joke by 2010.
(Excerpt) Read more at pittsburghlive.com ...
Real property will hold the value of its true worth. Other than that, there are no totally safe investments.
At some point, the ability and desire for others to loan capital for us to squander on "programs" diminishes to zero, for reasons outlined in the article. China is already saying they may not be inclined to buy much more US debt. At that point, it becomes an upside down flat spin (think aviation here) for the economy and the US government. Which is why I'm stocking up on cereal and ammunition.
Cash can, indeed, crash. See Zimbabwe. China is reaching the end of its financial rope as exports decline to the US. When that line is hit they will stop buying US bonds because they have no more resources with which to buy them. A little while after that China will have to begin selling off the dollars it already has in order to continue to operate. That will gain China little as the current market value of those dollars will collapse as they flood into the market at which point the Chinese economy goes from “slowdown” to collapse and the US economy gets a dose of sudden Weimar.
http://market-ticker.denninger.net/archives/722-Obama-You-Need-To-Fire-Everyone.html
Be very afraid of this guy.
Yes but what is the real value of property? Property that can provide food has value and a house on a piece of property has value. Beyond that property values become as shaky as any other investment.
Farm land itself, once you strip away government participation, has about the same security as commodity prices, but commodity prices are some of the most volatile investments known. Land does not react as fast as commodity prices, but its value can soar and bust just like any other investment.
Rental real estate in many ways is worse. Its worth is controlled by externalities (does a local factory close etc).
Property also requires a functioning state to maintain your rights to the property. Absent that it requires enough folks with guns capable of keeping civil order and preserving property rights in your area.
Unfortunately land is not portable (unlike for example diamonds) and it is subject to the whims of the state. Lots of folks in the world have found out their ownership rights are meaningless. The state does not even have to directly seize it, they can rig the property tax code to take the land away from you in slow motion.
A dying state looks to find cash to keep going anyplace that it can.
Real goods which you need have value (food, clothes, energy such as coal or heating oil, transportation, and guns which can provide food and defense).
I don’t see how land is a less risking investment than, lets say, Treasury Inflation Protected Securities. In both cases you are relying on the state to continue functioning in some rational fashion. While you can have the inflation rate gamed by the state, it has served as a surrogate for the inflation rate quite well in the past. Otherwise you are assured of a modest real return on your investment (3%).
In addition, by selling dollars for renminbi (Chinese currency) they will be increasing the value of the renminbi and consequently hurting their exporting business, which is very important to China.
Correct. You defined property's real value fairly well. But remember, land is not the only property that has value.
I don’t see how land is a less risking investment than, lets say, Treasury Inflation Protected Securities. In both cases you are relying on the state to continue functioning in some rational fashion. While you can have the inflation rate gamed by the state, it has served as a surrogate for the inflation rate quite well in the past. Otherwise you are assured of a modest real return on your investment (3%).
At what point in history has land been worthless? Never. Of course your point about the rule of law or greater strength being required to maintain it is true, but that applies to everything. The plus of land over treasuries is that you only require the rule of law, not a solvent government.
Hyper-inflation leads to bartering, because as I said, real things have real value.
Hmmm.. maybe we should ask someone who might know - someone get Zimbabwe on the phone please...
another msm article pushes gold. that usually means it’s sell time
In the early 80’s, Reagan warned of an enormous deficit, which I believe was $30 billion at the time. Now we are talking trillions. How is that different from Zimbabwe?
This house in Detroit was built for hundreds and hundreds of years. Now look at it. What killed it, and its city? Politics.
Be very afraid.
That sucks. What a beautiful structure it was.
“the insane clown posse”
that about covers it.
create money out of thin air, criminalize the owning of property or money, play around with the election process and say it’s for the good of the country, say the constitution is a living breathing document.
really cool.
IMHO
Relax.
America is precisely one week, from an historic economic recovery.
No, I’m not joking, and that’s not sarcasm. The mess we’re in is *entirely* a problem of public confidence. It’s media created, and the media will be working 24/7 to spin an “0bama recovery” from day one.
Not that a recovery is a bad thing. Unlike liberals, this poster does not want America to lose wars or crash economies, for partisan political gain.
Besides, 0bama will be simple enough to defeat next time around. He’ll make Jimmy Carter look like an intelligent leader by that time.
The economy though, will improve.
Given the amount of compression built into the oversold conditions right now, it could be quite spectacular.
That is just saying the same thing from the other end.
What is true worth? Government can rezone it, government can tax it, sometimes punishingly. Government can seize it to give to someone they think is more worthy. Government can destroy the value. What's the real value of a house in Detroit? The average selling price for houses in Detroit is $18,000. Is that the "true worth" of that house? Probably now, but so was the $100,000 plus someone paid for it 30 years ago. It doesn't seem to have held its value very well.
liberals constantly speak about equality and economic justice and economic morality.
they now have conditions whereby they can erode the dollar so that everyone will be equal; everyone will have nothing and therefore be the same.
to those who voted for the this crop of foul-mouthed socialists, it is hoped that you and you alone bear the fruits of their irresponsibility.
IMHO
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