Tangible goods will always be there, so it's impossible to have pure digital.
What if paper money is going to go all digital? will u support it
" @CaLe: . I'm going to buy another gold coin, even if it cost me like $1500 for it after talking to you. Your going to be too broke next year to even talk to me when everything collapes anyways since you won't be able to afford an internet connection so I don't care what you think.
You know you guys laugh at HitmanAgent47, but if the shit ever does hit the fan this guy is gonna be more prepared than the rest of this whole board put together, me included.
I can just imagine a couple of GiantBombers in a FEMA camp saying to each other that HitmanAgent47 was right, should have listened to him. If all this does come true HitmanAgent47 is gonna become some myth or legend told to children of a sage who used to patrol videogame boards preaching the truth.
Got Gold, bitches?
Money is money. A digitized form of it won't make me love it any less.
My question is: how will you pay for drugs and prostitutes?
with gold" My question is: how will you pay for drugs and prostitutes? "
It's ridiculous to think that the government could even build enough camps to contain the number of people that would oppose this. The baby boomer population is WAY too paranoid about data theft to EVER let anything like this be implemented. My mom won't get a RFID license because she's afraid to have her identity stolen.
Something like this would have to be voted in voluntarily, and 90% of Americans would NOT give up physical money, despite what you would think.
Even if the government wants to take over the country, why would they do it? What's the endgame? The greedy top 1% are pretty happy with how things are going now I'd say, a martial law government isn't going to get the 1% richer, nor is tracking everyone with RFID chips. Where's the endgame there? What advantage would the government have to tracking everyone's location and spending other than directed marketing?
Seems like a pretty drastic thing to implement just for more effective marketing programs.
Anyway, I's oppose this because I don't actually have any gold to buy drugs and prostitutes with
" Ok, one problem with this idea. You know when banks and people lose records, or data gets lost or corrupted? That's your finances going down the drain, not just records. "Unless you carry your entire net worth around with you in cash, the risk is still there, because banks still lose records, and data still gets corrupted, even today. It would really be no different. I already essentially use an all-digital system for everything except purchases for which cash is required, and I usually don't even carry cash on me.
There's something quite magical about a wad of physical cash.
Let me start by saying I haven't read anything but the first post.
@HitmanAgent47: I think you're mixing two completely separate issues. The potential crash of our economy, and our economy going completely digital can happen independently of each other.
As it is, our economy going digital is already happening. Did you know that people no longer get checks from the government? Whether it's social security, welfare, or even a tax return - if you aren't getting direct deposit, then they will set up an account for you and direct deposit to that account.
Paper money is going the way of the dodo. As I mentioned in one of the PSN threads the other day - if any adult in this thread lost their debit and credit cards right this second, without having a chance to run and get some cash to live on, how much would that disrupt their lives? I'd wager it would be at least a minor convenience, and on average a big pain in the ass. We all spend air nowadays, not cash. The government would be up shit's creek if they had to print cash for all the digital currency that's currently floating around out there in numbers in some bank's computer.
Maybe others are like bilderberg group? What the hell is hitman talking about? What is the bilderberg group?
http://en.wikipedia.org/wiki/Bilderberg_Group
" @HitmanAgent47 said:Let's cover a few basis here." @CaLe: . I'm going to buy another gold coin, even if it cost me like $1500 for it after talking to you. Your going to be too broke next year to even talk to me when everything collapes anyways since you won't be able to afford an internet connection so I don't care what you think.
You know you guys laugh at HitmanAgent47, but if the shit ever does hit the fan this guy is gonna be more prepared than the rest of this whole board put together, me included.
I can just imagine a couple of GiantBombers in a FEMA camp saying to each other that HitmanAgent47 was right, should have listened to him. If all this does come true HitmanAgent47 is gonna become some myth or legend told to children of a sage who used to patrol videogame boards preaching the truth.
Got Gold, bitches?
"
1. Gold is not valuable because it is rare; it isn't. Helium is more rare than gold. Gold is valuable because until recently it had one property nothing else had: it doesn't corrode or rust.
2. If the economy collapsed to the point where the dollar was worthless, the banks aren't going to be giving anything out because they're the first institutions that will go under. Look what happened just a few years ago, who were the first casualties if the economic downturn? The big banks. You may say "Well, they made it through and are still here today" to which I reply "Yes, you can thank the taxpayers for that, not the banks." But if money is worthless, then throwing taxpayer money at the banks aren't going to keep them afloat.
3. If the US economy crashes, so does everyone else, and you aren't going to be trading foreign bank notes with anyone. Look what that little bump in the US Housing market did to countries world-wide. We're not even talking about the dollar, just the housing market. Now imagine the dollar bottoming out...it will not be an isolated event.
4. Food, water and guns are what you need to survive a world in anarchy, not gold. Again, if you've got water, food and gold and all I have are guns, guess whose going to have guns, food, water and gold at the end of the day? Not you.
Next few post, tl;dr
Look you can't introduce a new currency, if there is an old currency around. It has to not be the world's reserve currency because if it is, then they can't introduce a new world currency because they will continue to use the usd.Oh, you mean like when Canada switched from paper $1 bills to loonies and toonies? Oh, you mean a complete overhaul, LIKE ALL OF FUCKING EUROPE SWTICHING TO THE EURO?
Yeah, that'll never work. /eyeroll
Sure, it's easy to take a few scare points and paint a big spooky picture. It's quite another thing to educate yourself on economics and civil government so you can see that reality is flipping all you crazies the big fucking middle finger.
And that's the honest truth.
Wow, anyone else get the picture of a little kid with their fingers in their ears? And how do you know it's hostile and not worth reading....if you haven't read it? Damn, this shit is too funny." @Fajita_Jim: not reading your post. I will be ignoring all your post from now on because it's hostile and not worth reading. "
What arguement, hey guiz, gold is worthless, no one will buy it therefore i'm right because I had two decades of reading a fairy tale book so i'm educated. Get real, it's like ignoring everyone else's point and convincing absolutely no one of your gold theory and thinking your 616 fairy tales are relevent to anything important. I only ignored two ppl on this forum, they both seem angry and thinks they know it all, I wouldn't be suprised if they were somehow the same person. If I walked up to a third world country I can't trade gold for something valuable? Get real. But i'm willing to dicuss things with everyone else, who isn't yelling at me with theology stuff no one cares about.
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest). The gold market is subject to speculation as are other markets, especially through the use of futures contracts and derivatives. The history of the gold standard, the role of gold reserves in central banking, gold's low correlation with other commodity prices, and its pricing in relation to fiat currencies during the financial crisis of 2007–2010, suggest that gold behaves more like a currency than a commodity.
----------------------------------------------------
Gold, like all precious metals, may be used as a hedge against inflation, deflation or currency devaluation. As Joe Foster, portfolio manager of the New York-based Van Eck International Gold Fund, explained in September 2010:
The currencies of all the major countries, including ours, are under severe pressure because of massive government deficits. The more money that is pumped into these economies – the printing of money basically – then the less valuable the currencies become.
If the return on bonds, equities and real estate is not adequately compensating for risk and inflation then the demand for gold and other alternative investments such as commodities increases. An example of this is the period of stagflation that occurred during the 1970s and which led to an economic bubble forming in precious metals.
-------------------------------------------
n the last century, major economic crises (such as the Great Depression, World War II, the first and second oil crisis) lowered the Dow/gold ratio, an indicator of how bad a recession is and whether the outlook is deteriorating or improving, to a value well below 4. The ratio fell on February 18, 2009 to below 8. During these difficult times, many investors tried to preserve their assets by investing in precious metals, most notably gold and silver.
" @Fajita_Jim: He says it all the time when he is defeated in his arguments. Pay no mind. "What arguments? You mean "I saw it on Yoootuuube"? That's not an argument, just regurgitation.
" What arguement, hey guiz, gold is worthless, no one will buy it therefore i'm right because I had two decades of reading a fairy tale book so i'm educated. Get real, it's like ignoring everyone else's point and convincing absolutely no one of your gold theory. "See, this is how I know you are uneducated and are just shouting off whatever crazy ideas you hear and think sound more cool and exciting than the very real world that's turning just fine outside your window.
Let's role-play here. It's been three weeks since the world-wide economic collapse. The trash doesn't run. Newspapers are not only not delievered, they're not printed. There's no food at the grocery store and no one is working there anymore anyway. The telephones stopped working days ago, the police cruisers are downtown with flat tires and there's no one in the police station.
You have a car, but there's no more gas. You know for a fact that your little garden is the only source off food for a weeks walk in any direction.
Some formerly rich dude rides up on his horse to your house and offers you a half-ton of gold for your garden. Do you take it?
If you did, you'll be a dead idiot in short time. But hey, at least you'll be rich with gold.
Gold is the highest it's ever been at a record high of $1500 usd. Also I have studied trends in silver, it always gets near gold prices, during a depression, but only during a depression. So if you invested in silver, which is a cheaper and better investment, you will probally make more from that than gold if you talk about how many times more you get out of it. I mean you all heard silver prices going up lately, it's not just a trend, it happens during a depression believe it or not, or when your going into one. Now would be a great time to invest. I'm predicting gold is going to be $2500 per bullion coin next year. Wait why am I telling you ppl this, nevermind, you can make a good profit at everyone else's expenses after the depression next year. Food for thought. Keep telling yourselves it's worthless, maybe if the world is flooded and civilization is destroyed with all the financial institiutions. If you were so inclined, you can actually buy gold at swiss banks, but they will hold the gold for you instead, if you want to cash out your chips, they will give you back whatever the gold is worth then, so you don't have to sell it yourself.
To the next post, wait until you see my next thread. Lol.
I can now see why you haven't created a thread in a long time, but seriously, giving up personal freedoms for a quick fix is wrong. I do agree that most americans would conform to this new plan or whatever just because it's more convenient.
I bet Sony won't support it.
Currency will never become completely digital. Banks will always handle our physical currency and in the future majority of us will just pay using the NFC chips in our phones. Also, I feel pretty confident saying that the USD will never be effected by mass inflation. It is more of a scare tactic by the Conservatives to sell commodities like Gold and Silver.
" Gold is the highest it's ever been at a record high of $1500 usd. Also I have studied trends in silver, it always gets near gold prices, during a depression, but only during a depression. So if you invested in silver, which is a cheaper and better investment, you will probally make more from that than gold if you talk about how many times more you get out of it. I mean you all heard silver prices going up lately, it's not just a trend, it happens during a depression believe it or not, or when your going into one. Now would be a great time to invest. I'm predicting gold is going to be $2500 per bullion coin next year. Wait why am I telling you ppl this, nevermind, you can make a good profit at everyone else's expenses after the depression next year. Food for thought. Keep telling yourselves it's worthless, maybe if the world is flooded and civilization is destroyed with all the financial institiutions. To the next post, wait until you see my next thread. Lol. "If Gold is worth $1500 and $1500 is worth nothing, what does that mean Gold is worth?
Really, think this shit through before you make yourself look...well, you know.
Here is something ppl doesn't understand, gold isn't really rising in price as ppl thinks. It's just the usd paper money is losing it's value. That's the natural value of gold, the usd has gone down the toilet, canadian money is actually worth more than the usd. But gold was the same prices it has been decades ago, but slightly higher now. The good thing about my global digital currency is that they will use the gold standard to back up the digital system, but it will all be digital regardless. But maybe digital money isn't the solution, maybe we need to stop printing so much money now and go back to the gold standard, or where the usd had legal tender in gold.
" Wait... gold is worthless now? When did that happen? Because I want some fucking white gold jewelry for my birthday but it's been too expensive so everywhere is just selling sterling silver :( "No, here's the question: If money is worthless, who is going to be buying gold and what with? Like I said above, if Gold is worth $1500 but $1500 is worth nothing, what is gold worth?
We're not talking about devaluation here but rather the complete collapse of the economic system.
" @melcene said:Then gold will take the place of current currency and be used in exchange for goods and services." Wait... gold is worthless now? When did that happen? Because I want some fucking white gold jewelry for my birthday but it's been too expensive so everywhere is just selling sterling silver :( "No, here's the question: If money is worthless, who is going to be buying gold and what with? Like I said above, if Gold is worth $1500 but $1500 is worth nothing, what is gold worth?We're not talking about devaluation here but rather the complete collapse of the economic system. "
" @Fajita_Jim said:I disagree. I say food will become the common currency. Without trucks to move that food around, or without the big movers and machines needed to produce food the way we do now, and with most of the population in non-producing metros, gold isn't going to be worth two peas in a pod." @melcene said:Then gold will take the place of current currency and be used in exchange for goods and services. "" Wait... gold is worthless now? When did that happen? Because I want some fucking white gold jewelry for my birthday but it's been too expensive so everywhere is just selling sterling silver :( "No, here's the question: If money is worthless, who is going to be buying gold and what with? Like I said above, if Gold is worth $1500 but $1500 is worth nothing, what is gold worth?We're not talking about devaluation here but rather the complete collapse of the economic system. "
You and your Gold Standard. It will never be used again for the same reason it isn't used now. Why isn't it used now? Here you go:" Gold is the highest it's ever been at a record high of $1500 usd. Also I have studied trends in silver, it always gets near gold prices, during a depression, but only during a depression. So if you invested in silver, which is a cheaper and better investment, you will probally make more from that than gold if you talk about how many times more you get out of it. I mean you all heard silver prices going up lately, it's not just a trend, it happens during a depression believe it or not, or when your going into one. Now would be a great time to invest. I'm predicting gold is going to be $2500 per bullion coin next year. Wait why am I telling you ppl this, nevermind, you can make a good profit at everyone else's expenses after the depression next year. Food for thought. Keep telling yourselves it's worthless, maybe if the world is flooded and civilization is destroyed with all the financial institiutions. If you were so inclined, you can actually buy gold at swiss banks, but they will hold the gold for you instead, if you want to cash out your chips, they will give you back whatever the gold is worth then, so you don't have to sell it yourself. To the next post, wait until you see my next thread. Lol. "
Consequences for the Magnitude of Business Cycles:
Loss of control over economic policy. If the U.S. and a substantial number of other industrial economies adopted a gold standard, the U.S. would lose the ability to tune its economic policies to fit domestic conditions.
- For example, in the spring of 1995 the dollar weakened against the yen. Under a gold standard, such a decline in the dollar would not have been allowed: instead the Federal Reserve would have raised interest rates considerably in order to keep the value of the dollar fixed at its gold parity, and a recession would probably have followed.
Recessionary bias. Under a gold standard, the burden of adjustment is always placed on the "weak currency" country.
- Countries seeing downward market pressure on the values of their currencies are forced to contract their economies and raise unemployment.
- The gold standard imposes no equivalent adjustment burden on countries seeing upward market pressure on currency values.
- Hence a deflationary bias which makes it likely that a gold standard regime will see a higher average unemployment rate than an alternative managed regime.
The gold standard and the Great Depression. The current judgment of economic historians (see, for example, Barry J. Eichengreen, Golden Fetters) is that attachment to the gold standard played a major part in keeping governments from fighting the Great Depression, and was a major factor turning the recession of 1929-1931 into the Great Depression of 1931-1941.
- Countries that were not on the gold standard in 1929--or that quickly abandoned the gold standard--by and large escaped the Great Depression
- Countries that abandoned the gold standard in 1930 and 1931 suffered from the Great Depression, but escaped its worst ravages.
- Countries that held to the gold standard through 1933 (like the United States) or 1936 (like France) suffered the worst from the Great Depression
- Commitment to the gold standard prevented Federal Reserve action to expand the money supply in 1930 and 1931--and forced President Hoover into destructive attempts at budget-balancing in order to avoid a gold standard-generated run on the dollar.
- Commitment to the gold standard left countries vulnerable to "runs" on their currencies--Mexico in January of 1995 writ very, very large. Such a run, and even the fear that there might be a future run, boosted unemployment and amplified business cycles during the gold standard era.
- The standard interpretation of the Depression, dating back to Milton Friedman and Anna Schwartz's Monetary History of the United States, is that the Federal Reserve could have but for some mysterious reason did not boost the money supply to cure the Depression; but Friedman and Schwartz do not stress the role played by the gold standard in tieing the Federal Reserve's hands--the "golden fetters" of Eichengreen.
- Friedman was and is aware of the role played by the gold standard--hence his long time advocacy of floating exchange rates, the antithesis of the gold standard.
Consequences for the Long-Run Average Rate of Inflation:
Average inflation determined by gold mining. Under a gold standard, the long-run trajectory of the price level is determined by the pace at which gold is mined in South Africa and Russia.
- For example, the discovery and exploitation of large gold reserves near present-day Johannesburg at the end of the nineteenth century was responsible for a four percentage point per year shift in the worldwide rate of inflation--from a deflation of roughly two percent per year before 1896 to an inflation of roughly two percent per year after 1896.
- In the election of 1896, William Jennings Bryan's Democrats called for free coinage of silver as a way to end the then-current deflation and stop the transfer of wealth away from indebted farmers. The concurrent gold discoveries in South Africa changed the rate of drift of the price level, and accomplished more than the writers of the Democratic platform could have dreamed, without any change in the U.S. coinage.
- Thus any political factors that interrupted the pace of gold mining would have major effects on the long-run trend of the price level--send us into an era of slow deflation, with high unemployment. Conversely, significant advances in gold mining technology could provide a significant boost to the average rate of inflation over decades.
- Under the gold standard, the average rate of inflation or deflation over decades ceases to be under the control of the government or the central bank, and becomes the result of the balance between growing world production and the pace of gold mining.
Why Do Some Still Advocate a Gold Standard?
- A belief that governments and central banks should not control the average rate of inflation over decades, and that the world will be better off if the long-run drift of the price level is determined "automatically."
- A belief that bondholders and investors will be reassured by a government committed to a gold standard, will be confident that inflation rates will be low, and so will bid down nominal interest rates.
- Of course, if you do not trust a central bank to keep inflation low, why should you trust it to remain on the gold standard for generations? This large hole in the supposed case for a gold standard is not addressed.
- Failure to recognize the role played by the gold standard in amplifying and propagating the Great Depression.
- Failure to recognize that the international monetary system functions best when the burden-of-adjustment is spread between balance-of-payments "surplus" and "deficit" countries, rather than being loaded exclusively onto "deficit" countries.
- Failure to recognize how gold convertibility increases the likelihood of a run on the currency, and thus amplifies recessions.
Ppl should give credit where it is due, like to what was said above even though I didn't get to read it because I just woke up from a nap. Of course I don't directly believe in going back to a gold standard, what's why I proposed a digital currency where they can reset everything and start all over. I only read a line of that and it was too well researched to be your points so I googled it because it actually made sense. They can't print as much money if their fiat money is exchangable to legal tender. But still, at least they are pushing it through utah, then the rest of the u.s to be allowed to use gold again as a backup currency. I applaude this decision. But we sure as hell don't need the federal reserve at it's current state printing money non stop and borrowing with interest.
http://www.j-bradford-delong.net/politics/whynotthegoldstandard.html
Yeah, that's true, maybe there is like 2 trillion worth of gold, maybe more, I don't know. So I guess we can't go back to that, but I do like the digital currency, at least we should take everyone's gold and back up this digital program for 2 trillion. Confisate everyone's gold and put it towards the program before the digital RFID chip program is implemented. Maybe implement gold and silver, I don't know, just brainstorming, but our current system isn't good enough with the federal reserve and their printing presses. I'm not saying I have all the answers in the world, no one does, but still the digital currency is just an idea, reset everything and start with this new program.
Nah, I am cool with paper money bro (by bro I mean overbearing corporations in bed with the government).
Ok so I'm going to address your main argument in a minute. But right now- (and this ties to your main argument hanging on rampant inflation)- Gold is in the high $1500 price range right now, which compared to the previous inflation adjusted high price (which was set in 1981, btw) is still at a loss. What that does mean is the dollar is highly inflated. What it does not mean is that gold is really worth more than it ever has been, as if you had the same thought you're having now back in 1981, and held on to your gold, you wouldn't be able to buy more with that gold in 2010 than 30 years ago. As a matter of fact, you'd be able to buy less. The 2010 inflation adjusted value of 1981 gold prices is around $1800 dollars, which is what at today's price level you'd be able to spend on the $590 you had in 1981." Gold is the highest it's ever been at a record high of $1500 usd. Also I have studied trends in silver, it always gets near gold prices, during a depression, but only during a depression. So if you invested in silver, which is a cheaper and better investment, you will probally make more from that than gold if you talk about how many times more you get out of it. I mean you all heard silver prices going up lately, it's not just a trend, it happens during a depression believe it or not, or when your going into one. Now would be a great time to invest. I'm predicting gold is going to be $2500 per bullion coin next year. Wait why am I telling you ppl this, nevermind, you can make a good profit at everyone else's expenses after the depression next year. Food for thought. Keep telling yourselves it's worthless, maybe if the world is flooded and civilization is destroyed with all the financial institiutions. If you were so inclined, you can actually buy gold at swiss banks, but they will hold the gold for you instead, if you want to cash out your chips, they will give you back whatever the gold is worth then, so you don't have to sell it yourself. To the next post, wait until you see my next thread. Lol. "
Yes- this is an indictment on rampant inflation moreso than it is on gold being worth more. And yes- if you think buying gold will keep you afloat, it will in the sense that the money you have now (but secured in gold if you do that) will buy you in the future exactly what you can buy now. However- as the inflation adjusted price vs market price shows from the 1981 price, you will almost certainly always have a little less spending power in the current currency (dollars as it is now) on your gold holdings. That's because the actual value of Gold rarely changes, making it a good hedge against inflation but a bad investment, as there are other ways to increase your capital inflation-adjusted. Gold is not a way to do this.
Ok getting to your point in the initial post. I read through the first 3-4 pages and the last page to get a handle on what you were on about. I wasn't sure if you were making a predictory or psychological/philosophical statement. I'm believing you were making the latter. That being said, my answer is no. A) Financial stability ALWAYS should take a backseat to human rights. B) Just as the US printing money now is not solving any economic problems, creating a virtual currency would also not solve this problem. Going back to historical financial crisis (last 120 years), solving problems by ignoring inflation has always backfired, and letting crisises work themselves out by allowing prices to 'deflate' and letting markets and finances have time to stabilize has almost always worked. So if the world creates a virtual economy, then I'm confident the first scenario would happen and while virtual dollars can't be burned like rubles could when the USSR collapsed, the effect would be the same. Virtual currency would be so worthless that it's only value would be as firestarter.
And a little more on your gold argument:
http://seekingalpha.com/article/265225-determining-the-true-inflation-adjusted-gold-price
Above is a link to an article doing a little more indepth analysis on gold prices. I think the issue you will run into investing in gold is gold being a fixed asset is approximately always worth the same thing. Which means that in general you will never have more or less money if your money is invested in gold. If you are betting on total economic collapse, I guess I could see this strategy. But if you are simply betting on exponential inflation (as barring the human rights issues what your opening scenario essentially is), Gold's not the way to go. Consider who or what will create and/or drive value in your given scenario and invest in that. Or if you don't want to think that hard, consider what will be valued at an increasing rate faster than inflation (which Gold and Silver are not), and invest in that.
http://www.gold-eagle.com/editorials_99/mbutler101899.html
Not sure if I understand every detail of that article I posted, but I got the basics down, silver does goes up during a depression, you can make a profit from it but gold is only to keep stability. Thanks for pointing that out, I agree with you. The virtual currency is just a what if scenario, not even sure if it will work, but I do know they are trying to release a new world currency in the next few years. When that happens, maybe others will remember this thread and say, wow hitman knew. Other than that, this thread is just a fun what if scenario thread to get others to think and be more aware of inflation we are going to be facing next year.
http://seekingalpha.com/article/265390-determining-the-true-inflation-adjusted-silver-price
http://seekingalpha.com/article/261413-jim-cramer-and-london-financial-times-now-touting-physical-silver
I think you will see that the first article is saying something similar to what the other article about Gold I put up is saying, which is that silver hasn't done the greatest against inflation. The second article makes a more interesting observation (which I think you are making) and that is that silver is just plain underpriced, and that to get to initial value, silver will have to sell for alot more. So there's some upside there.
However- I think I would mainly caution you against considering a physical asset an investment vehicle, especially a precious metal who's real (non monetary) value is probably fixed.
Now onto the world currency item (and a point from your first post I forgot): I think that you're probably right, there has been a push to a more unified worldwide currency. You aren't the first person I've heard this from, but then again I'm not cloistered in a video game centric world, I work in finance. That being said, I think this was brought up with the euro and this hasn't really happened, and some countries in the euro region still use their base currency for trade. Also- something you said in your first post, about the US not being able to print money because we aren't a world reserve currency. I'm guessing you mean that in the scenario where the dollar completely collapses, the world will choose another reserve currency. In which case, yes, the US will not be able to print money. China and Russia began proposing this since earlier this year, but this has not happened yet.
I seriously doubt barring an actual collapse of the dollar this will happen. Especially if China and Russia are the proponents. China is a huge economy, to be sure, but as of yet it's economy is highly ineffiecient and it's interactions with the world are marred by a government that can't be hands off with it's own economy. To be sure, if China's government was to stop fiddling with it's international economic interactions, their economy would face some bumps but largely sky-rocket. That being said, they don't have a government that believes in free-market economics, not domestically and not internationally. Until that happens they simply won't have the monetary clout to compete with other worldwide economies. Russia is in a similar situation. Although I don't think Russia's problem is meddling with it's international economic interactions, Russia is far too corrupt and at this point Russia's central government is far too involved with economic matters for their economy to excel.
What probably needs to happen is other large free-market economies need to rise to power to combat the inflationary tactics of the US. Being that china is just recently developing an economy the size and scale of the US, yet has a considerably larger population than the US is why I seriously doubt that any international economic push of theirs will have clout. Now, they step down the state controlled PR campaign and let loose the reigns of monetary control, I'm pretty sure there's a force to be reckoned with there. But not until then. Russia needs the same thing, though I don't think as a country the base economic value is there. I don't see Russia as a country destined for permanent second or third world status, but I don't see their economic output truly advancing for some time to come. Least of all while they remain a security state.
But really what made me think about the year 2012 for the ficticious scenario for this thread? Well sometimes I listen to gerald celente. This guy tells it like it is, he seems like an alarmist to cnn and stuff, but he's absolutely hilarious when he tells the truth. He predicts there will be war and food riots that will happen soon. The other thing that also pasture lindsey williams who's predictions was all correct so far about oil prices. Well at least 95% correct because he's friends with oil tycoons who really sets the price of oil. They are predicting next year $200 per barrel and the only way to create that is for uprising in the middle east. It's all happening now, but u.s has their own oil fields which they will charge alot for it. I believe there is a plot to devalue the dollar. For what purpose? I don't know, but it's likely they might push for a new world currency during these few years.
http://www.youtube.com/user/GeraldCelenteChannel
there are a hundred articles stating the same thing
http://geraldcelentechannel.blogspot.com/2011/04/imf-predicts-china-to-overtake-us-as.html
Since you work in fianaces, I want your take on the goldman sachs and jp morgan scheme of lending to the poor, bankrupting them and getting reimbursed by the government by their ponzi scheme. Explain it for others here from your understanding. I also listen to Nomi prins since she usesd to work for goldman sachs and she's exposing the ponzi scheme. I mentioned this because I believe these big banks are intentionally bankrupting americans and they are futher imploding the economy. They have to be stopped, not just the federal reserve which is only a part of it and also the foreign policy of civil unrest in the middle east driving oil prices up. Not everyone is going to agree there is a globalist agenda, but I believe these globalist private banking elite are in control of everything and is devaluing the dollar intentionally. These ppl has a globalist agenda, that's why I mentioned the RFID chip because it gives them more control. Also they are so smart power, they can stage wars and world events and fool the american ppl who isn't anywhere near as smart generally. Just thought you should know my views on that.
I am an ideological capitalist who also happens to believe in the marx theory of history. That is, given a natural evolution of economic forces economies will become more sophisticated and nations will follow a progression of economies from power based (feudalism) to individualistic and monetary (capitalism) from there to a post-money society (which is what he called socialism which I believe is not anything we have seen). In that sense I'm pretty fatalistic about his timeframe. That is capitalistic society needs to advance to such a point where further economic gains are outweighed by the effort it would take to reach them. That being said I don't believe we are at that point. My definition of that point would be when every part of society (from poorest to richest) is so wealthy that the poor are the equivalent of today's upper middle class. That being my starting point I'd say the US is in a mid to early late stage capitalist society. The other major economic powers (Russia and China) I term as being late term (Russia later than China) feudalistic societies, and in need of going through a full capitalist evolution before they can economically progress.
My point in saying all that is my mental timeframe for where society is, my life will be spent entirely in the capitalist phase of economic history, therefore I am an ideological capitalist.
So on your investment strategy, if capital preservation is important to you, by all means yes I suppose that's a good method of investment. However, that's only if capital preservation in the short term is your goal. For example- I'm young enough that my main concern with money I have invested is capital appreciation on the long term. Which is to say I view investing largely 30+ year proposition. For the short term, I do take the easy route and keep savings. Something like gold or silver might be good for that. However, in the 30+ year timeframe capital preservation assets don't pay off (even given huge bumps like say, a depression) in the manner that other investments do. And while during the great depression most people got rid of the business investments they had, if they had held onto them a business investory (equity/stock) would have outperformed any gold or silver investors over a long-term timeframe. However, during the period of the great depression the gold and silver investors would have retained their capital. Its just that once the economy rebounds the equity investors capital outpaces and outperforms the gold and silver investors. Which is why my 401k is entirely an equity based portfolio right now, because in the unlikely event of a world economic collapse, chances are (and history seems to show thus far this is true) the economy will rebound and my portfolio will profit. 30% of my money is also in overseas companies which hedges against the possibiltiy of a US financial collapse that we never recover from (assuming that the correlation between different countries collapsing is so low that a complete worldwide financial collapse that the world never recovers from is then a near impossibility)
On your last item- I must admit that 1) I'm a bit torn on what i think about big investment banks. I see that they can provide liquidity and non-inflationary money (versus the treasury printing money causing inflation) to a whole society, but I also see they can do things like fuel the funding of asset classes that have no place being an asset (subprime mortgages for example). I do think that investment banks saw themselves at efficiency level a, and wanted to be at a higher level, B and used innapropriate means to get there. I do not think they are bad institutions on principle. I'm pretty sure they should be around. But I do think they were entirely too shortsighted about their plans for immediate profits.
Now that being said- on the current issue (subprime mortgages) which is certainly sending plenty of americans into financial ruin, I honestly don't have a good explanation. I think it's fairly unfortunate for our future that the federal reserve stepped in and basically guaranteed alot of the crappy assets, and also straight up purchased bad subprime loans from the banks. I do think they should have had to just take their losses and adapt/evolve. So in that way unless the govt is more hands off with these problems, we'll continue to have these problems. I don't think the answer is shutting down the banks, and I also think had the fed not stepped in this time the banks that were the dumbest would have suffered the consequences and all investment banks as well as our economy would be better off.
That is all to say that I believe neither the type of govt intervention we saw (propping up banks' bad bets) nor the government stepping in to shut down these banks would be good. Nor do (and here's my controversial view) I believe that anything should be done to keep people in houses they had no business owning in the first place. The national income to mortgage ratio used to waver between 2.5 and 3x income. It needs to get back to there, and right before the subprime collapse it got to around 4 times income. People need to lose homes for this to resolve itself. That's the unfortunate part. From what I've read on the latest forclosure stuff, the govt is right to step in and make sure servicers are following correct and best practices in this. It does not sound like they have been. However, once that issue gets resolved, I believe the best thing to do is to let the bad mortgages continue to go bad, and to cycle the inventory of forclosed homes.
A few things will happen then: Home prices will hit a reasonable bottom. Homesales will either increase or stay steady, but the supply of homes for sale will decrease. If the govt indeed keeps their hands out of this process, people will begin shopping for homes in a reasonable 2-3x income price range, and they will find (as I am now seeing for myself) that reasonable, well built homes are available in that range. Finally, home prices will increase at a moderate pace, reasonable with inflation rates and ACTUAL purchasing power. Say this happens, then I think we won't be looking at a global currency and we won't be so worried about 1984 all over again.
I guess my point is while I think investment banks have been 'bad actors,' they can only create temporary problems. So long as the govt and fed reserve keep up this policy of backing up the investment banks' poor decisions, your scenario remains a possibility. However, if the gov't remains a little more hands off (which yes, could result in individual hardships on the part of foreclosed homeowners), the investment banks will have to curtail the bad things they do on principle (losses are unnacceptable to the banks, but the fed reserve makes losses acceptable) and the whole economy will slowly recover. That our economy still stays on top, even with the govt doing it's best to screw things up is a testament to our economic momentum, which I think people should take some sort of comfort in.
Just reading wiki on how the u.s got out of a depression since I wasn't too sure. I find it interesting that they mentioned gold helped them alot. Also getting rid of the gold standard later helped too or lowering gold's value. I guess I need to do more research on this again to futher understand this.
http://en.wikipedia.org/wiki/Great_Depression#Turning_point_and_recovery
The common view among mainstream economists is that Roosevelt's New Deal policies either caused or accelerated the recovery, although his policies were never aggressive enough to bring the economy completely out of recession. Some economists have also called attention to the positive effects from expectations of reflation and rising nominal interest rates that Roosevelt's words and actions portended. However, opposition from the new Conservative Coalition caused a rollback of the New Deal policies in early 1937, which caused a setback in the recovery.
According to Christina Romer, the money supply growth caused by huge international gold inflows was a crucial source of the recovery of the United States economy, and that the economy showed little sign of self-correction. The gold inflows were partly due to devaluation of the U.S. dollar and partly due to deterioration of the political situation in Europe.---------------------------------------
Gold standard
Economic studies have indicated that just as the downturn was spread worldwide by the rigidities of the Gold Standard, it was suspending gold convertibility (or devaluing the currency in gold terms) that did most to make recovery possible. What policies countries followed after casting off the gold standard, and what results followed varied widely.
@TeflonBilly:
That's why you do bumps or use a straw, yes?
The bigger issue is that you won't be able to dump a 20 in the urinal, piss on it, and check if anyone picked it up on your next visit. That's the true value of (paper)money.
I do think that with the housing economy in free-fall, it behooves my generation to re-start the housing market (my generation being the 24-32 yr olds) by purchasing housing (in a smart manner) over the next 2-4 years, hopefully creating a starting point for housing prices to rise from and a starting economic base for the current young adult generation.
And I favor education over regulation. If adults with kids raise more financially literate kids, this will spider out. Which also means adults that are more or less financially literate probably should help one another out. One of the key things I read in all the perspectives written on how the subprime mortgage machine got created, while people were duped by greedy loan sharks, who were fueled with Wall street funding, the docs were always there for them to read how the loans functioned. IE: how the bank was going to screw the customer.
People need to read, is what I'm saying. Not that bad salesmen get a pass, but people need to do their homework.
Oh- and I was going to make an off-color joke, but then I did my homework. I looked up the "FEMA camps for civil unrest " you talked about. That's H.R.645.1H and S.3476 (house and senate versions) from the 111th congress. The 111th congress was the 2009-2010 congress, and both of these bills were referred to committees, read, and referred to other committees. No action has been taken on the house bill since 2009, and the senate bill since 2010. They also happened at different times but have been identified as companion pieces. Here is the library of congress link to the house bill (you can get to the senate bill from there):
http://thomas.loc.gov/cgi-bin/bdquery/z?d111:H.R.645:
As far as I can tell these bills got killed in committee. We are now in the 112th congress, so they'd have to be re-introduced (which they have not been). So if you read somewhere that FEMA now can do these things, those people were misconstruing the status of the bill. This bill did not pass, is not law, and would have to be re-introduced to become law as bills that get killed in committee have to be re-introduced with each congress. In other words, if we all started rioting over economic conditions, FEMA could not set up concentration camps.
http://www.sweetliberty.org/issues/eo/femalist.htm
Here is the map of the new dissolved congress u.s, if they enact on their executive orders.
http://en.wikipedia.org/wiki/File:FEMA_regions.png
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