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7 things about the economy
"Canuck57" wrote in message
... On 24/01/2010 6:35 PM, nom=de=plume wrote: wrote in message ... On 24/01/2010 3:57 PM, wrote: On Sun, 24 Jan 2010 15:02:26 -0500, wrote: Chinese are tightening their credit. I thinks Obama's problems just got worse. Especially if China wants some of that maturing US debt paid off. What happens if the USA just says, "No"? Just curious. Short answer ... The dollar would be devalued and oil would cost more, among other things. Good answer, hyper inflation due to currency devaluation. And I really think that is the liberal game plan. Has been for over 2 years as nothing else explains the mad-hatter direction of government other than pure insanity, which may be true all the same. Here goes my view on how government is thinking on this depression. Government does not sees the problem as people not having money, they see homes in a recession pricing. It makes it attractive for a family to toss the keys to the banks and walk. Growth is needed to hide losses and screw ups. Part of the plan is getting people to put all the money in seemingly safe places, T-bills, money market, cash places. At ultra low interest rates. Now lets say let the dollar fall by say 75% in a rapid period of time, too fast to move out of cash and sell t-bills etc. Just stop honoring debt, just like Iceland just did. Who knows, they could be the pilot group. So if one woke up and oil went from $80 barrel to $320 a barrel, the government just devlaued it's $12 trillion dollar debt by 75%, as people get wage increases in the inflation cycle, and money is stuck in low interest, the currency debt and fiscal debt becomes depreciated on the backs of people with money. It is why I am in pure cash (can buy gold/stock/real-esate etc) on a click. But will not touch a morgage mutual, t-bill or cd/gic with a 10 foot poll. I view lending right now as toxic. Even if it is lending to government. The only way I would lend to government is with an infation clause and 5% premium without taxation. Otherwie a brick of gold looks pretty good. Lets take a scenario, person A buys $1000 of oil, say 12.5 barrels of it. Person B buys a T-bill at a meaningless interest rate. Then the dollar plumets as debt isn't honored against the currency itself. Person A still has 12.5 barels of oil worth $4000. Person B has $1000.10 that now can only purchase 1/4 of what it did not too long ago. Value currency depreciation. More people will get jobs if it goes far enough as then US goods become cheap like Chinese ones. Hyper inflation as coffee goes from $10 a tine to $40, but government doesn't give a damn about retired and people, they are just to milk for statism. Wages will not keep up. How this addresses housing is simple. If a home is $200K to build today, but is selling for $180K, and has a $200K morgage, after inflation it changes to perhaps $500K to build and $400k to buy. No idiot will oss the keys for that sweet deal. To understand government policy, it becomes easy once you realize they are the biggest meanist delinquent dysfunctional debtors going. A debt monger mindset and plent of self denial. Time will tell, but in 2010 some time we should see a big move down in USD value. Big move actually. Probably in the later hald as the mini recovery bubble pops. If you think hyperinflation is coming, claiming that you've got all cash isn't exactly where you want to be. You should be complete in a precious metals, since you may not be able to "click" and get it done, as the SEC would shut down the exchange. Also, you'll need to have the gold or whatever in your possession to be safe. Oh, and you're not too bright... if that wasn't obvious. No, I prefer stuff like coal, oil, natural gas and things we will need in a prolonged depression to live. Gold is at a value peek, might go higher. But not knowing gold markets I tend to stay away. People making real money at gold bought in 3 to 5 years ago. I don't even own any Walmart, even though I love the company as I see another round of household spending cuts coming. Middle class is starving for cash they don't have. This will reduce discretionay spending even further. But at the right time, after the big collapse, might find myslef buying shares Walmart. You're going to keep coal, oil, and NG in your back yard... eww... -- Nom=de=Plume |
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