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Canuck57[_9_]

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.

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