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Just remember, you can't eat gold so don't put all your eggs in one basket.
And if you buy gold, take physical delivery. There's some funny stuff going on right now with gold..both missing and people receiving gold with different numbers than on their certificates.
Just remember, you can't eat gold so don't put all your eggs in one basket.
And if you buy gold, take physical delivery. There's some funny stuff going on right now with gold..both missing and people receiving gold with different numbers than on their certificates.
While gold can't be eaten, it does show up in people's mouths quite often.
Of course. It's going to happen. It's just not going to happen overnight. As I said, there is no viable alternative yet - and it will take quite a while to hammer that out - but yeah, other countries are starting to think about it.
Of course. It's going to happen. It's just not going to happen overnight. As I said, there is no viable alternative yet - and it will take quite a while to hammer that out - but yeah, other countries are starting to think about it.
Ken
China has already agreed to currency swaps with several countries.
I don't think the yuan though will cut it as the new reserve currency.
I think something will emerge from the IMF that will eventually replace the USD.
China has already agreed to currency swaps with several countries.
I don't think the yuan though will cut it as the new reserve currency.
I think something will emerge from the IMF that will eventually replace the USD.
Yup - and it won't be the Yuan - that would likely make the Yuan too strong, and as I said, China doesn't really want a strong Yuan - it would make their exports too expensive. As I said, there is not really a good candidate yet to serve as the replacement for the dollar - but the first step has been taken (people are starting to talk about it).
There WILL be an alternative to the dollar AT SOME POINT - and it could very well be a brand new currency - but again, nothing is going to happen real soon. And - when it does happen, it will be at the behest of the big financial movers and shakers around the world - not because of some wacko Left-Wing econuts.
I DO think that we are likely to see some degree of inflation over the next few years, but it will be kept under relative control and WILL NOT result in some stupid hyperinflation scenario. Even with the deficit growing so large, the Fed has LOTS of wiggle-room to adjust interest rates upward to keep inflation in check - mainly because current interest rates are so darn low to begin with (at historically low levels). That's not to say that the Fed doesn't have lots of challenges - it most certainly does. This IS the worst financial crises in three quarters of a century - but we WILL get through it and as the economy begins to recover and inflation begins to creep back into the picture (it's NOT an issue now AT ALL, but it WILL be eventually) then the Fed will have a tricky job of balancing inflation with the need to not let the economy fall back into recession. It will be a challenge, but it CAN be done, and we WILL get through it.
Ken
I generally agree with you here, but think that interest rates may become a bit of a problem, in helping keep control of inflation. I can see a scenario where the gap between inflation and interest rates goes to very high levels, and causes secondary problems throughout the economy.
But overall, I pretty much agree with your assessment.
I'd agree with Ken almost entirely. People forget the deflationary background resulting from the simple evaporation of $15 trillion worth of wealth from merely the US real estate and equity markets. The global effect is quite a bit larger. Further, with unemployment in the neighborhhod of 9.5% and capacity utilization at about 68%, there are ample supplies of both labor and capital able and willing to be put to work. Even relatively slight upward pressure on prices will be a cue to begin pulling those resources back into production, thereby increasing output and putting a balancing downward pressure on prices. There is a reason why all those projections of $9+ trillion dollar deficits out over the next ten years also show a projected annual inflation rate that does not exceed 2% at any point through 2019. 2% per annum has never amounted to hyperinflation, and it doesn't now.
As for the dollar being replaced by some other standard, it won't happen so long as the US accounts for 20% of world GDP and no one else can claim more than roughly half that. In the long run (and in the long run, we are all dead), global finances will indeed evolve, but they will evolve as trade does. When international trade flows as national trade does today, international finances will come to resemble national finances today. At the moment and for the foreseeable future, however, it is quite correct that there simply is no available alternative to the dollar. The speculative talk that is heard is of course both interesting and significant to those who tend to pay attention to these matters anyway, but it is otherwise only the best that those with an investment in dollars can do in terms of begging the US not to get too carried away with its efforts at pump-priming.
Last edited by saganista; 07-04-2009 at 12:41 PM..
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