neorichieb1971 wrote:Doug Hunt, Peter Schiff etc always talk about putting at least 50% of your portfolio into gold. According to them the dollar will crash this year or next and will definitely crash before next Presidential election.
I wouldn't recommend listening to libertarians.
neorichieb1971 wrote:1)
http://www.usdebtclock.org/ - The US in the past 10 months has spent more than $800 billion than it received in taxes. What this essentially means that anyone who is not working in the USA is spending foreign money or printed money that the Fed printed out of thin air.
Let's iron out the facts here. Essentially all money is "printed money that the Fed printed out of thin air", whether or not the government budget is in surplus or deficit. Secondly, the government spending more than it taxes is what allows for the private sector to grow. Government surplus = taking more money out of the hands of the private sector(and the economy) than is put in, government deficit = putting more money into the hands of the private sector(and into the economy) than is collected. It's generally a good idea not to deprive the private sector of spending power, which would cause a collapse in demand and hurt economic growth, except maybe in times of high inflation where you may actually want to reduce demand.
neorichieb1971 wrote:2) USA has no GOLD. The Germans decided a year or two ago that they wanted to repatriotize their gold. Since WW2 they asked the USA to look after it. Within the past 2 or 3 years it disappeared. The USA agreed to send it back with a quota which was not reached. Apparently 5 tons was sent back to Germany but the experts are saying this was probably mined gold. What is interesting is that Ukraine recently sent the USA all their gold for safe keeping. Pundits are saying that gold will go straight to Germany. This equated to 33 tons.
Unless you're a speculator in the gold market the chances of this having any impact on your life are near zero.
neorichieb1971 wrote:3) According to reports China is buying up 1300 tons of Western gold every year. Western bank vaults have never seen a bar of gold that had a Chinese code on it. Therefore it has been suggested they are harvesting all their gold for themselves.
See above.
neorichieb1971 wrote:So taking gold to one side for a moment, why is this scary? Well, China wants to hold the global reserve currency and has not made it a secret. Russia and China and 21 other countries have reported to stop using the US$ for trade as a global reserve currency. This is where it gets interesting. Putin is reported to be holding the USA at financial gun point because it is said that if China had to choose Russia or the USA it would choose Russia. Between Russia and China they have an awful lot of US$. If they dump it, the US$ will die a quick and painful death. Or in other words it would like cost upwards of 3x 4x for anything you buy with it compared to todays US prices.
Wrong. Let's get the events in proper order. China produces some sort of good, let's say Barbie dolls. People in U.S. want to buy those Barbie dolls, therefore the U.S. increases in trade deficit and gains a product which China is then credited with otherwise worthless pieces of paper called Treasury Bills. What happens if China abandons the dollar? Well, all those otherwise worthless pieces of paper we sent them become in a matter of fact worthless pieces of paper, we keep the Barbie dolls. Meanwhile China loses its biggest source of demand for its products(although it's not like there aren't foreign exchange markets anyway), not to mention it isn't like you couldn't produce those same products in Vietnam or elsewhere. China would have plenty to lose from such a move.
You're confusing two separate things. As far as the U.S. dollar being the standard in global trade, sure that could change. What impact that actually has is pretty questionable. In terms of the energy market, a move away from the U.S. dollar could lead to an increase in prices for the U.S. in energy products, but it's not likely. Most of the major energy producers in the Middle East are de-factor under U.S. control, and moreover, the U.S. dollar has proven to be much more stable than any alternative. The Chinese economy has significantly more inflation problems, and moreover we heard the same type of stuff 20 years ago with Japan. It was wrong then, it's probably wrong now, but even if it wasn't, it would not lead to a collapse in the U.S. economy or some other nonsense. The dollar also remains strong anyhow, and foreign exchange markets are not going anywhere. The fact that particular global standards are based on the U.S. dollar is about 90% a minor convention and only matters for a few specific things. It used to matter much more during the "Bretton Woods" era when international energy prices were based heavily on U.S. cartels, but those days are long gone.
neorichieb1971 wrote:Most amazingly the US government is being accused to lying through its teeth about everything to its own nation. Apparently your economy is in tatters, nobody can find jobs. The jobs that there are pay diddly squat. All commodity shares have apparently been tampered with and your Fed is printing money until the trees run out. So this is why the other countries are losing faith in the USA.
If anything other countries are clamoring for the fed to print more money, but this is all irrelevant. There's nothing inherently bad about "printing money," this is typical libertarian fear-mongering.
neorichieb1971 wrote:Meanwhile, Saudi Arabia is losing patience with the USA and that is where all the oil is coming from fueling your big V8 trucks. Petro dollars are what is keeping the USA afloat as it is. Without it your currency would also die.
What evidence is there of a change in policy towards the U.S. from Saudi Arabia? None. It would make no sense for them either. Also, Canada is the largest energy supplier to the U.S. While Saudi Arabia is a major oil producer for the U.S., U.S. net energy imports have actually been going down and the U.S. will increasing become a natural gas producer. It's also probably not the case that if imports from Saudi Arabia were to decrease(they're not) imports from Venezuela or the other countries in the Gulf couldn't increase. In any case I fail to see anywhere it being established that Saudi Arabia taking some sort of hostile stance towards the U.S. benefits them in any way. A Saudi decision to halt oil supply to the U.S. would at best(for Saudi Arabia) hurt Saudi Arabia as much as the U.S. Besides, with all of the radical groups around Syria and Iraq in particular, the last thing Saudi Arabia wants to do is start making enemies of its closest allies not to mention risk creating unrest by weakening the domestic economy. Let's not also forget that one could easily turn this around and ask what would happen if the U.S. stopped exporting cars and meat to Saudi Arabia? The fact of the matter is, arbitrarily reducing trade does not benefit anyone. Not even China or Russia, which should be obvious. Why do China and Russia trade so much with the U.S.?
Supporting links:
http://www.eia.gov/dnav/pet/pet_move_im ... mbbl_m.htm http://www.eia.gov/forecasts/aeo/er/ear ... uction.cfm
neorichieb1971 wrote:Then we have interest rates. If you take the debt clock at point 1. The USA can only afford to pay off its debt at the lowest interest rates. If it raises by a percent or 2, your currency will take a nose dive.
The U.S. can afford to pay off as much debt as it likes since its creates the money and sets the interest rates.
neorichieb1971 wrote:One thing that really irks me is that places like Greece have recently suffered a lot of pain for literally going bankrupt. Why does the USA seemingly go over budget, into bankruptcy and nobodies life seems to have changed not even a tiny bit?
Greece went "bankrupt" because they're a member of the Eurozone, which is to say they have no control over the money supply in their country, they have no equivalent to the Federal Reserve. The U.S. does, so the comparison is worthless. Why not compare Japan as well, debt is over 200% of GDP, has increase for years, yet somehow you don't seem masses of people scavenging for food out of the garbage or youth leaving the country in large numbers like you do in Greece. In fact living standards have only increased. Why? Same reason as with the U.S., they have control over their currency and therefore are not subjected to bond vigilantes or to some other governing body which limits what they can do economically. The level of debt in a country is not a particularly useful metric for anything.
neorichieb1971 wrote:Where is the fairness in the world when one country is allowed to feel the pain and another isn't?
Blame the Eurozone.
BryanM wrote:If you're producing just as much or more, with less people, is that not more efficient?
Not if it shrinks domestic demand enough. There's no use in producing stuff if people aren't going to buy it. Moreover, it's not as if you can't have both increases in productivity and increases in employment.
Devil Soundwave wrote:It's not so much that China will demand it's money, it's more that China are holding a shit-ton of US dollars and can flood the market at any time, pushing the buying power of the dollar down.
That's funny because usually the complaint is that China takes on so many dollars as a way to strengthen the dollar and weaken the yuan. That's usually the complain when people talk about China's currency manipulation. In any case, for China to "flood the market" there has to be someone accepting the dollars, and usually massive currency moves on one side are accompanied by massive currency moves by another. In any case, such a move would undoubtedly strengthen the yuan and make people stop buying all that stuff China produces, which in the present state would lead to mass unemployment in China since they're such an export heavy economy and still have massive amounts of poverty(not to speak of other problems) which limit consumption power.
Devil Soundwave wrote:Ed - issuing more greenbacks and coins would not fight inflation, that IS inflation, i.e. a general increase in prices and fall in the purchasing value of currency due to an inflated currency supply. Inflating the currency supply only exacerbates the problem, which is why quantitative easing is a bloody stupid idea, as is not having the global currency pegged to something of value.
This abstract concept of "value," in reality only reflects agreed upon standards. You can have value based on grain production, on gold, or on accounting numbers in a computer. It is all arbitrary and created. The benefits of not basing your agreed standard of exchange upon things like grain production or the supply of minerals should be obvious. For transport reasons alone it's much more convenient, but it also doesn't suffer from the type of real resources constraints that are only exacerbated when you have those resources being
wasted in doing things like making simple exchanges.
It's frankly a stupid idea to need some supply of gold so you can exchange other things, it only creates arbitrary constraints. The whole point of having a means of exchange(rather than just having a barter system) is that it allows the development of the sort of dynamic activities that so-called markets develop out of(you don't get that when everyone's trading based only on basic necessities). But if those dynamics are limited arbitrarily by the supply of gold you're creating unnecessary and useless restrictions. Why should an economy's ability to produce products not made from gold be limited by its supply of gold? No reason whatsoever. The only way anything has a commonly accepted "value" is if some authority enforces that value, it is all just an agreed upon standard. Perhaps you should ask yourself, "why is gold valuable?"
Also, there is not a one-to-one relationship between the money supply and inflation, I have posted on this before, but the QE example should be clear enough by itself because with all the increase in the money supply there has not been an increase in inflation. In Japan it's even more comical because they went through over a decade of QE and got the opposite, deflation. In a more common sense way, to have inflation clearly you need someone to actually
spend money, and an increase in the money supply does not mean an increase in spending. As I've said before, it more often leads to excess reserves. Or, what Warren Mosler has called a "placebo."
It should also be said that among advocates of the gold standard there is this historically ignorant idea sort of implied that the gold standard is the "natural" way of things and that's been around for a long time. In matter of fact it came very late from a historical perspective, and didn't last very long(certainly not when compared to standards based on agricultural products or something), mostly because it was a stupid idea as the Great Depression attested to.
CMoon wrote:The sky isn't falling, unless we're talking about climate change, biodiversity or the human population.
+1
system11 wrote:This is why I don't give a shit about 'green' measures.
It's because they don't give a shit about addressing the root cause of all the problems - humans. Human population has proveably been responsible for extinctions looking at centuries of data, and every time someone raises the question of population control they're automatically dismissed as insane/evil. I was born in 1974, the population was 4 billion, now it's over 7 billion. Three billion more mouths to feed, millions of acres of land needed for housing, three billion more people generating waste, consuming resources of all kinds. Apparently millions more worshipping fucking sky pixies and firing rockets at eachother.
Every other world problem you care to name is absolutely insignificant compared to the damage being caused by our species outsmarting natural selection, disease, the food chain and so on. It's the elephant in the room and precious few people are talking about it at all. Eventually there won't be elephants in any rooms, because they will all be dead, and it will be our fault. That article while nearly getting it right warns of effects on human health, despite human health being the cause.
The control freak solution is ineffective. Contrary to what some people think, you can't control the lives of entire populations, and you CERTAINLY cannot do it efficiently. China today or the Soviet Union when it was around are examples of more controlling societies, and frankly they suck at it. The Soviet Union created environment disasters left and right and collapsed, China's efforts to control financial speculation have been comically ineffective, even their one child policy was basically a failure. Not to mention how many of those dead elephants can be blamed on Chinese "medicine," which the country hasn't successfully done anything about. You don't have to be a far left type, only to be realistic to recognize that things like education and higher living standards are more effective in dealing with population sizes than some sort of government control fantasies. Moreover, whether or not, the population grows, "green" measures are going to be necessary. There's a case to be made for government regulations of certain activities for environment purposes(not like this isn't already done in the Western world, just not as effectively as needed and not enough), but in terms of population, I don't think there's that much that can be done.
Also, humans do not need to be healthy to destroy the environment(in fact Neolithic humans were
less healthy than their hunger-gatherer ancestors who had less of an environmental impact), they just need to be able to breed and move around for a while. It turns out most people who are healthy and happy tend to breed less and can actually reduce the human impact resulting from population. Naturally it's not as simple as that, things like consumption of cows, land used for agriculture, or energy use also go up with living standards, which impact the environment badly, but it's also not accurate to single out human health. Also, land used for housing is not the problem, it's land used for agriculture(which is also at the heart of California's drought problem or virtually any other environmental problem you want to name). The bigger problem is that many populations are facing a decline, but the environmental problems are going away. Both because other populations are growing and because the amount of people is not the only variable. Demography is important, but it's best to ask what can actually be done about it. "Green measures" are probably the most viable direction, like it or not.
It doesn't help matters when there's nonsense spouted about how terrible it is that for example not enough people in Japan are having kids. Maybe the fact that they're not having kids is a good thing overall, even though it does have some problems which are probably more easy to deal with than climate change etc.
system11 wrote:All things equal, would the planet be better off today (and for shits and giggles lets include habitat destruction), if the population had grown much more slowly such that it was half the size it is now.
Obviously, yes.
Certainly. But we can't control these things. We cannot simply hit a lever that makes the population go up or down.
Butchery!!!! 
