The Fuse is Lit: European Perils

mrearlygold

The Fuse is Lit: European Perils

ricko

The fuse has been burning for quite some time.... eventually it will reach the powder keg... Cheers, RickO

derryb

It is now officially recognized that there is a world-wide personal and sovereign debt problem. Let the money printing accelerate.

Of course this will take a coordinated effort so that all currencies fall together - thus the G8 summit. Can't have one currency hitting bottom before the others.

cohodk

Of course this will take a coordinated effort so that all currencies fall together - thus the G8 summit. Can't have one currency hitting bottom before the others

Is gold a currency?

derryb

<< <i>Of course this will take a coordinated effort so that all currencies fall together - thus the G8 summit. Can't have one currency hitting bottom before the others

Is gold a currency? >>


only if it can be printed to demand.
The dollar is right where it was in 2005. Gold is 400% higher than it was in 2005. Ability to print the dollar explains the difference. I expect them to turn up the presses, worldwide, shortly. Ink might be a good investment.

Again, central banks will make the mistake of viewing a solvency crisis (due to extreme debt) as a liquidity crisis. Confusing liquidity with solvency will continue to strengthen metals while all other forms of money become dilluted.

pf70collector

Unfortunately, this is the kind of debt that can' t be forgiven. Inflate, devalue, end of U.S. Dollar as the world's reserve currency...... How long can they keep this up? Another 10 years?

Baley

The dollar is right where it was in 2005. Gold is 400% higher than it was in 2005. Ability to print the dollar explains the difference

If this were true, if it was as simple as this, wouldn't everything cost 400% more than it did 7 years ago?

More likely, IMO, much of gold's rise beyond general price inflation (which, I agree, is largely due to monetary expansion) has been due to 1) central bank repurchases, 2) foreign purchases, mostly by Indians and Chinese who have few wealth preservation/investment alternatives and a strong historical/cultural bias), and 3) Gold ETFs, and 4) first-time buyers getting their first gold bullion because of the hype by the media, newsletter writers, and bloggers. Maybe the bloom is off the rose now, and gold prices have overhead resistance?

derryb

<< <i>The dollar is right where it was in 2005. Gold is 400% higher than it was in 2005. Ability to print the dollar explains the difference

If this were true, if it was as simple as this, wouldn't everything cost 400% more than it did 7 years ago? >>


Yes, if it were made of gold.

Baley

let me rephrase: if the price of gold has quintupled soley due to dollar printing, why hasn't the price of bread, milk, eggs, rent, cars, televisions, etc also quintupled?

there's a flaw in the premise somewhere. intentional obtuseness will not answer the question

derryb

<< <i>let me rephrase: if the price of gold has quintupled soley due to dollar printing, why hasn't the price of bread, milk, eggs, rent, cars, televisions, etc also quintupled?

there's a flaw in the premise somewhere. intentional obtuseness will not answer the question >>


Because all the newly created money is not getting into the hands of the people that buy bread, milk, eggs, rent, cars, televisions, etc. The fact that it is not reaching the buyers of the these products does not mean that it eventually won't. Gold is saying it will. Gold naysayers are saying it will not.

At some point the FED will lose control of artificially low interest rates and the banks will take all of this newly created money out of their small interest bearing accounts with the FED and make better interest putting it into the economy in the form of loans. Guess what happens when everyone at an auction is suddenly given twice the amount of money they walked in with? Realized prices will pretty much double.

Baley

so my house will double in value too? and my used cars i want to sell, will sell for double? And my salary too?

wooo hoooooo! I don't follow your logic, but either way, how can we lose?? Sounds like a paradise

derryb

Not such a paradise - Even though you were paid twice as much for your personal property, you have to pay twice as much when you spend it (if the money supply hasn't tripled by then).

No guarantee of wage increases - the only guarantee with an increase in the money supply is that the money is there for those willing to pay the cost to borrow it. Your employer may or may not be one of them.

doubling the money available in the marketplace to make a purchase will double the price a buyer is willing to pay. It is not a matter of one person having twice the amount of money - all persons competing for the purchase have access to twice the amount of money.

InYHWHWeTrust

<< <i>... Again, central banks will make the mistake of viewing a solvency crisis (due to extreme debt) as a liquidity crisis. Confusing liquidity with solvency will continue to strengthen metals while all other forms of money become dilluted. >>



the first statement was one of the first Econ 101 principles I had to get my pea-brain around, before understanding why the CBs do what they do/ continue to do.

I don't think I really want J6P to understand this all at once anymore, though it is coming in one form or another. 10 to 15 years ago, it would have been a lot less painful, but pain nonetheless. and that is not a political option. so we'll have to have it the hard way. Math, like gravity, can be doubted, but the principles do not change. And Wile E Coyote always go splat in the end.

golfer72

<< <i>

<< <i>let me rephrase: if the price of gold has quintupled soley due to dollar printing, why hasn't the price of bread, milk, eggs, rent, cars, televisions, etc also quintupled?

there's a flaw in the premise somewhere. intentional obtuseness will not answer the question >>


Because all the newly created money is not getting into the hands of the people that buy bread, milk, eggs, rent, cars, televisions, etc. The fact that it is not reaching the buyers of the these products does not mean that it eventually won't. Gold is saying it will. Gold naysayers are saying it will not.

At some point the FED will lose control of artificially low interest rates and the banks will take all of this newly created money out of their small interest bearing accounts with the FED and make better interest putting it into the economy in the form of loans. Guess what happens when everyone at an auction is suddenly given twice the amount of money they walked in with? Realized prices will pretty much double. >>

Great explanation Derryb. Thanks

Tomohawk

I've noticed several key items going up in price...basic meat is skyrocketing, milk is going up, cereal is double where it was just a few years ago, and doggone it, my favorite Bailey's 32oz creamer is $5 a bottle!! Core staple items are moving-I have to agree with DerryB-in a direction that might catch up with gold's 400% increase.

Although, I do feel some of gold's rise is due to market forces (demand, hype, woulda-coulda's, etc.). But not all of it...

derryb

How dare you mention Bailey and inflation in the same post. Blasphemy!