Inflation, deflation, gold and currencies

[vincecate]

My view is that when the US stopped redeeming dollars for gold in 1971 we moved to Breton Woods II for international finance. This system is using the dollar like gold but without any limit on the number of dollars that the US can produce and spend around the world. This is a core flaw. Theoretically the US could print money and buy up assets all around the world. And in fact money is flowing out to buy things all around the world.

Now even Bernanke admits the system has a structural flaw. He says the problem is caused by China pegging their currency to the dollar. This is silly. But the fact that he is talking about it could let others, like China, talk about the structural flaws more.

I think sometime soon people will realize that the dollar is not like gold, because the US can print as much as they want. This makes it bad for the rest of the world to hold dollars as reserves, like they did gold. It is a system where the US gets to cheat. People will flee this system at some point, and we are closer to that point now than ever before.

http://globaleconomicanalysis.blogspot. ... ional.html

[Higgenbotham]

My view is that when the US stopped redeeming dollars for gold in 1971 we moved to Breton Woods II for international finance. This system is using the dollar like gold but without any limit on the number of dollars that the US can produce and spend around the world. This is a core flaw. Theoretically the US could print money and buy up assets all around the world. And in fact money is flowing out to buy things all around the world.

Now even Bernanke admits the system has a structural flaw. He says the problem is caused by China pegging their currency to the dollar. This is silly. But the fact that he is talking about it could let others, like China, talk about the structural flaws more.

I think sometime soon people will realize that the dollar is not like gold, because the US can print as much as they want. This makes it bad for the rest of the world to hold dollars as reserves, like they did gold. It is a system where the US gets to cheat. People will flee this system at some point, and we are closer to that point now than ever before.

http://globaleconomicanalysis.blogspot. ... ional.html

People have known this system is terribly flawed since 1971. It let the derivatives genie out of the bottle and they have spread like a poison gas, permeating the entire world financial system. This is 40 years of hyperinflation in the reserve currency. France and Nixon knew the dollar was not like gold in 1968. China and the rest of the world that was isolated from the West went on the dollar of their own free will. They could have remained isolated and told Nixon to go back home. Instead, they took him into the country and even gave him a little panda bear, as I recall. Nothing is free and China has taken advantage of this system. Despite their complaints, they were disappointed when the crash of '08 came. The real loser is the American middle class.

I like to go to used bookshops and look at old books on finance. Mostly I read and discard them, but one book I saved is called "Death of the Dollar" (How the money managers are savaging your dollar and what you must do to protect yourself in the coming collapse) by William F Rickenbacker, published in 1968. I bought the book in a used bookshop in 1983 for a dollar.

[vincecate]

Mish can now see a solid case for hyperinflation in Japan. It is only a matter of time before he realizes that after Japan gets hyperinflation the US will follow.

http://globaleconomicanalysis.blogspot. ... -hell.html

[vincecate]

On my blog I look at how many golden geese $1 trillion per year represents:
http://howfiatdies.blogspot.com/2010/11 ... geese.html

[at99sy]

Interesting interview with Charles Nenner regarding Deflation and has ties to GD.
http://finance.yahoo.com/tech-ticker/de ... LD,UUP,EWJ


sy

[vincecate]

This video is fantastic. This year Bernanke on 60 minutes says he is not printing money and last year with the same interviewer on 60 minutes he said he was printing money. It is just harder to lie these days when people keep old video around and laugh at you on the Internet.

http://www.thedailyshow.com/watch/tue-d ... ank-theory

[Morgan]

Hi to All.....
The article is very informative and i am searching kind of information on the web when i came across this forum and now i am quite satisfied to become the member this forum. this explains the perfect relationship between the inflation , deflation and the gold , oil prices.

[CrosstimbersOkie]

On the other hand, I'll add this: There's going to be a major war
pretty soon, and when that happens, the price of gold WILL spike up
for a while. However, you'll have to sell at that time, because even
that spike will be only temporary.

I started reading this thread until my head began to hurt. Then I started skimming and got a headache. I never get headaches... And I can't get to any booze right now.

I didn't see that the above issue was addressed. Maybe it's obvious to some, but it isn't to me. What is it about the conditions of major war that will cause a spike in the price of gold, and other precious metals possibly?

I don't want to argue, I simply want to understand when I need to start unloading the gold and silver I have. Thus far I've made about $500 an ounce on gold, and $20 an ounce on silver. Today gold closed at $1393.40 an ounce and silver at $34.19 an ounce. They have been pretty good investments in my book, and I want to keep it that way by not losing my ass.

[vincecate]

What is it about the conditions of major war that will cause a spike in the price of gold, and other precious metals possibly?

Wars are hard on fiat money, so gold and silver do well. During wars governments print lots of extra money to finance the war, diluting the value of each unit. The fiat money for countries that lose a war may lose all value, so holding fiat money becomes more risky. Fiat money loses all value if the government that created it ceases to exist, but gold coins are still fine in that situation. In some wars people made counterfeit fiat money to hurt the enemy (like British in US revolutionary war) and this hurts anyone holding that fiat money. With the right equipment, gold counterfeiting is not an issue. If a country wants to buy weapons gold is always good, while some fiat money may be accepted during the war. Refugees traveling from one country to another are much better off holding gold, which works the world over. For 5,000 years gold and silver have been money, fiat currencies come and go, particularly in wartime. So for many reasons gold is in demand during war.

[CrosstimbersOkie]

So, would you sell in the High after the war? Or when the outcome of the war looks to be decided, the crisis Climax? It seems to me that the countries who prevail in such a war will be the only game in town and their's will be the new reserve currency. What then will be the value of metals then?