The United States. Default or Hyperinflation?

[Kak]

The Unites States is backed into a corner that it can not get out of. The only way this country can get out of it's debt obligation is to hyperinflate or to default.

Why do I think this? Well instead of talking about paying off debt, our politicians only talk about cutting the deficit.

If I make 50k per year and spend 70k for decades, will cutting my spending to 65 do a damn thing to get me out of debt? NO!

In a broken democracy like this it is damn near impossible to take away peoples entitlements once you give them to them. So hardly any spending cuts can be managed without putting people up in arms all pissed off that uncle sam pulled the government tit out of their mouths.

Also, contrary to the popular socialist belief in this country... higher taxes do not mean higher government revenue. What it does mean is: business owners cutting costs (jobs) to get back out of the red, now all of a sudden people are out of work and: 1. Not paying taxes any more. 2. on the government tit. Ultimately entrepreneurs, responsible for most of the tax revenue in this country, will look for a way out.

The government is stuck, it can't squeeze its subjects for more revenue and it also can't make the necessary cuts. Do you think we will hyperinflate or default? If you think it can't happen, you are WRONG!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[The-J]

Neither higher taxation, nor government incentives for business owners, will help reduce the deficit.

Truth is, 2/3 of our sovereign debt is to our own people and corporations. Those bailouts didn't come from nowhere.

This is a solvable problem, because running on a deficit isn't a bad thing as long as we're able to pay back all of our debt in a timely manner.

We need to learn how to run our government efficiently. We overspend on so many fronts it's not funny. There are men and women in our military, our government offices, and our schools whose job is simply to sit around, do F*ck-all and collect their paychecks at the end of every other week. We need to run our government not like a business, but instead like a sustainable non-profit organization that does not focus on growth or shrinking, but instead focuses on the welfare of the people, the defense of our ideals and the relations that we have between other sovereign nations.

This is not a politically charged post. I think Democratic and Republican platforms are equally stupid, that libertarianism and socialism are both fundamentally flawed, and that the American-style politics of the last twenty years will be the ruin of our great nation.

I think I'll remain in Canada for the time being.

 

[Kak]

This is a solvable problem, because running on a deficit isn't a bad thing as long as we're able to pay back all of our debt in a timely manner.

With all due respect, timely manner is not an option any more.

 

[The-J]

During the worst worldwide sovereign debt crisis to happen in a long time, you're right.

But generally speaking, holding a deficit doesn't mean it's bad. It's when it gets unmanageable that it gets bad. Unfortunately, as our debt starts to exceed our GDP, it's quickly becoming less and less easy to manage.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Kak]

J you talk about managing debt... FIRST you need to manage your expenses, we can't even do that. There is no turnaround, the country will continue to live outside its means, until hyperinflation, default and bankruptcy.

 

[Jake]

The problem is...the U.S must run a deficit. The U.S supplies the worlds reserve currency, the worlds liquidity.

Hyper-inflation it is. I'll add more later but I got to run to work.

 

[DeletedUser394]

I think I'll remain in Canada for the time being.

Move west when you're done uni please.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[GlobalWealth]

The problem is...the U.S must run a deficit. The U.S supplies the worlds reserve currency, the worlds liquidity.

Disagree. It is not necessary to run a budget deficit. It is reality now, but not a necessity.

 

[GlobalWealth]

KAK,
Actually my view is that we will see both; hyperinflation and default. The US has no other choice at this point but to inflate away the debt. It is politically impossible to reduce the size of govt.

The only way to salvage the govt is for it to shrink by at least 50%. Can you imagine how that would work politically? Have you ever seen a politician vote away his job?

We need to close the hundreds of military bases worldwide. Do we really need to colonize the world militarily? But can you imagine getting the politicians to do that when you have Lockheed Martin, Boeing, Northrop Grumman, Raytheon, and others earning billions and lining the pockets of Washington regulars?

We need to completely revamp the tax code. Personally I think we need to eliminate the IRS and income tax altogether as it is immoral to force an income tax at threat of violence - and replace it with consumption tax. A 10% import tax on all goods and a 10% national sales tax would more than cover all necessary govt expenditures.

But can you imagine all the accounting firms, CPAs, and companies like Intuit and H&R Block? They have huge lobbying groups lining politicians pockets. Do you think they really want to pass legislation that cuts off their gravy train?

The list goes on and on. The snowball is rolling and cannot be stopped now.

Tax revenue cannot be raised. Historically tax revenue is around 20% of gdp. No matter the tax rate or policy, it doesn't move much. You can set a top tax rate of 90% and it won't matter. People will find ways to avoid the top rate. Govt has been hard at work for decades trying to close loopholes, but smart people always find a way.

The morons that think you can just raise the taxes on the rich are just delusional. It is class warfare at its finest. The funny thing is the wealthy will find a way to minimize their losses. In most cases the lower and middle class will pay for it anyway in the form of higher prices, higher unemployment, and reduced worker benefits. Its already happening. We are in the middle of it.

The debt is completely unsustainable in the long run. In the short term, we can paper it over. But at some point, China or another country will overtake the US as largest economy. When that happens the world will view that country (China?) as the safe haven and the reserve currency status will be lost and the new country will gain it.

Demand will fall for US debt. Yields will rise pushing interest rates up. Right now it only takes about a 200bp movement for the US to not be able to afford interest payments on its debt. That is not as big a move as one may think.

That is the point of default. We are already in a severe inflationary environment. Don't believe the bullshit CPI numbers. Food cost and fuel cost are up dramatically over the past 4 years. Do you spend money on food or fuel?

So yes, inflation, likely hyperinflation and eventually default.

I would highly encourage you all to take precautionary measures.

 

[Jake]

Disagree. It is not necessary to run a budget deficit. It is reality now, but not a necessity.

it is necessary under the current construct. The U.S provides global liquidity via the USD. Our deficit gives foreign central banks a reserve which allows them to issue their own currency providing liquidity in their markets. By no means a perfect system but it is the rules the global financial market operates under. U.S deficit > (oil / reserve base / currency conversion + foreign gov expenditures / U.S assets) > economic activity > exports > USD > Back to step 2. The deficit being the fuel that keeps the economic loop going.

Care to refute any of the below? I'm interested to know how you see things.

"The global financial crisis has shown that the current international monetary system suffers from an inherent flaw: it depends on US current account deficits for the provision of global liquidity. Under this arrangement, peripheral countries in the system have to accept periodically the debasement of the US dollar. Thus, there are some mutual incentives for the EU and China to reform the current IMS through cooperation. In principle, both are in favour of stable exchange rates and both are keen to constrain US macroeconomic profligacy. There have been some efforts toward those objectives between China and the European countries in the past years, especially during the French presidency of the G20 in 2011. However, there has been no significant progress achieved till now."

"1. Introduction
The global financial crisis initiated in the United States in 2008 has raised doubts about the efficiency of the current dollar-led international monetary system. Two main structural theories have been put forward to explain the crisis, each with their respective reform solutions. On the one hand, there is the „savings glut‟ theory (Bernanke 2005; 2011),
favoured by policymakers in Washington and great part of the Economics literature, which says that the unsustainable over leveraging in the US was induced by the recycling of dollar-denominated savings in surplus economies (especially the East Asian countries,including China) in triple-A safe US debt instruments. This constant inflow of large volumes of savings (a by-product of East Asian countries maintaining their currencies artificially low in a neo-mercantilist strategy of export-led growth) suppressed the interest rates on US debt and thus fostered over-consumption and over-indebtedness.

To avoid a repeat of this mechanism, the proposed solution is to encourage countries like China to let its currency float freely so that the appropriate market equilibrium can be found and are balancing of the global economy can be achieved.On the other hand, there is the "Triffin Dilemma‟ theory (Zhou 2009; Padoa
-Schioppa 2010; Bini-Smaghi 2011), favoured by policymakers in Beijing and a number of high profile European officials, which argues that the crisis is a product of the structural contradiction associated to any international regime dominated by a national currency. As Triffin (1960)explained already in the era of the Bretton Woods System when the dollar was still linked to gold, there is an inherent flaw in the dollar standard. In order to provide the necessary liquidity for the global economy, the US needs to run bloating current account deficits. The increase of this deficit, however, undermines the credibility of the global reserve currency.While for some time economists thought that the Triffin Dilemma was just a page in history books because it was only valid for a system linked to gold, the recent crisis signifies the vengeance of Triffin. Even in a system where the issuer of the main international currency, in this case the US, adopts a flexible exchange rate regime there is a limit to its liquidity provision. As current events have shown, by increasing its fiscal deficits and expanding substantially its monetary base the US enters the risk of undermining the credibility of the dollar as the global reserve currency. The solution thus is to find a mechanism that can restrain US profligacy."

"2. The flaws of the current international monetary system
The current IMS is a heritage of the Bretton Woods system. Therefore, the dollar still plays the role of global reserve currency. Under the current regime, the United States (US)exports dollar liquidity through its current account deficit and the peripheral countries accumulate huge foreign exchange reserves. Because the US has the most liquid, diversified and deepest financial market, it is natural for peripheral countries to invest a large proportion of their foreign exchange reserves back in US dollar denominated assets.Thus, the combination of current account deficit and capital account surplus makes the US feel no urgent necessity to make structural adjustment to relieve its external imbalance. As a result, the global current account imbalances have become more serious in the early 21th century and the US has become by far the largest debtor.There is an insurmountable flaw in the current international monetary regime, which Robert Triffin (1960) identified long ago. To satisfy the global demand for safe international liquidity, the US must export more dollars through its current account deficit, which will result in the exacerbation of its current account imbalances and the accumulation of its external debts. However, as the deterioration of the US current account and net external debts increases, the dollar is facing an inevitable pressure to depreciate against other major currencies. If the dollar depreciates significantly, the foreign countries which hold gigantic investments in USD denominated assets will suffer huge capital losses.Therefore, the stability and sustainability of the current IMS depends on whether peripheral official creditors will continue to buy USD denominated assets to finance the US current account deficit in spite of the rising of USD depreciating risks. If external creditors begin to stop buying or even sell-off the dollar denominated assets collectively, then the current regime may crash, which will result in the large depreciation of the dollar, the rise of USl ong-term interest rates, and even an economic recession in the US. However, if external creditors continue to buy USD denominated assets in spite of the potential risks of USD depreciation, the current regime could maintain its stability for some time."

"It suffices here to add that there is a dilemma about whether the US should make prompt adjustment. On the one hand, if the US succeeds in reducing its current account deficit,there may be a lack of liquidity and demand in global markets. On the other hand, if the US keeps postponing necessary adjustment with the accumulation of US external debt, someday the creditor countries will lose their confidence in US sovereign credit and they will start to sell US dollar denominated assets collectively, which will result in the collapse of the current regime."

6. Conclusion
The current IMS suffers from an inherent flaw. It depends on US current account deficits for the provision of global liquidity. The larger this deficit, the greater is the possibility of debasement in the value of the USD. This tension has long been acknowledged by policymakers in Europe, especially in France, and it is now openly voiced by policy makers in emerging markets, especially in China, which is the main creditor to the US.The Bretton Woods II configuration whereby East Asian surpluses were recycled in USD denominated debt worked smoothly for some time, but the global financial crisis has shown that the Triffin Dilemma has not gone away. In order to overcome this flaw, Chinese policymakers have urged the international community to start a debate on the reform of the IMS. France, a country that has never hidden its frustration with the exorbitant privilege of the US, has picked up the call and made this topic one of its primary objectives for its G20 presidency in 2011. The aim of the French government has been to function as a broker between the distant positions of China and the US."

Academia.edu | EU-China Collaboration in the Reform of the International Monetary System | Miguel Otero-Iglesias

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Jake]

KAK,
......
When that happens the world will view that country (China?) as the safe haven and the reserve currency status will be lost and the new country will gain it.

Completely agree with everything stated except..the bold text.

Great post

 

[GlobalWealth]

Completely agree with everything states except..the bold text.

Great post

I don't think it is a 'flip the switch' event, but there is no other option. The US is grinding at no-low nominal growth and negative real growth.

China has a 1.3b population and a growing middle class. That is 4x the US population. They are also very technologically advanced.

There are only 2 ways to improve economic productivity (gdp), growth in population and increases in productivity.

With 4x the population and a growing middle class, their wealth will grow and outpace the US. It is only a matter of time.

There can be other countries to pop up and surprise us, but this is clearly then one on that trajectory.


China has already stopped trading in usd for many commodities it purchases and other trade items between their other partners. They are reducing their dependence on the usd. That is well known.

Some estimates project China's gdp surpassing the US gdp in about 15 years. I predict <10. Only time will tell.

but regardless of timeframe, when it happens, the US looses its status as 'most able to pay back its debts' aka 'reserve currency status'.

At that stage, China will be regarded as the safest country with the biggest tax base (1.3b + and a growing middle class). Demand for their debt offerings will rise and conversely demand for US debt will fall.

Demand falls => prices fall => yields rise => interest rates rise => interest payments rise => voila, default.

It is really just a matter of time. Could be 1 year, 5 years, 10 years or 30 years. Who knows. but its inevitable. its only math.

 

[Jake]

I don't disagree with you on that and I do believe the U.S losses it's status. I just don't agree with your conclusion. There will not be another country distributed global reserve currency. This brings me back to my post a couple above talking about Triffins Dilemma "there is an inherent flaw in the dollar standard. In order to provide the necessary liquidity for the global economy, the US needs to run bloating current account deficits. The increase of this deficit, however, undermines the credibility of the global reserve currency"

Replace USD with any reserve currency and the Dilemma persists.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Vigilante]

I have a friend that is a brilliant economist. He seldom can be coaxed into discussing this, as he is also a wealth manager, primarily to multimillion dollar portfolios. His viewpoint parallels Global Wealths. It's not IF, it's WHEN this happens. It's not a theory, it's math.

 

[ChickenHawk]

We saw Atlas Shrugged II last night. It was chilling how many things parallelled what's going on in our country today -- successful people being villified, bureaucrats demanding a "fair share", rabble rioting for wealth they didn't produce.

A side note... We seldom see movies in the theatre anymore, but we made a conscious choice to see this one on opening night, because we felt it was important to lend our small bit of financial/numerical support to those willing to present an opposing view to the standard Hollywood fare.

 

[Vigilante]

We also saw Atlas Shrugged Friday night. Great movie, and they did an amazing job of integrating current events into the cinematography to make it all the more real in present day. Amazing what a prophet Ayn Rand was when she wrote this decades ago. Production aspects of the movie aside, I thought they did a great job of bringing this second segment of Atlas Shrugged to the big screen and absolutely would recommend seeing it in the theater.

It's not an unrealistic scenario that the producers in society, once the negative return on investment reaches a certain threshold, stop producing. You see it happen in America when one of the founders of Facebook (Eduardo Saverin) flees just in time to escape the punitive success taxes. You see it happen daily in America as people move to less burdensome tax states like Florida and Texas. And you'e seeing it happen in France as people shut down rather than paying a 75% success tax.

I think people are wise that look well in advance at escape routes and escape hatches. This thread has sparked a great discussion at our house this morning about the consequences of the current American and world economy and it's inevitable conclusions. It's just simple math.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[AllenCrawley]

Thanks so much for this thread! This is an area I've wanted to learn about. It has also sparked great discussion in our family as well.

Glad to hear that Atlas Shrugged II is good. We plan to watch in theater this coming weekend.

 

[ChickenHawk]

I am definately going to netflix the first one and go to the second one.b

One thing that caught me off guard was the fact that the entire movie was recast between Atlas Shrugged I and II. Apparently, the actors hadn't signed on for more than one movie, so the producers started with a fresh cast, including the leads. My favorite casting change was Dagney's brother. The second variation of him was so perfect as the pompous, self-important boob -- someone we've all met in any office environment, tyocoon or not.

A funny side note...We were among the last to leave the theatre. The place was left utterly clean by the audience, no spilled popcorn, no stray drink containers, no empty candy boxes. Something to think about, huh?

 

[Rickson9]

The Unites States is backed into a corner that it can not get out of. The only way this country can get out of it's debt obligation is to hyperinflate or to default.

Why do I think this? Well instead of talking about paying off debt, our politicians only talk about cutting the deficit.

If I make 50k per year and spend 70k for decades, will cutting my spending to 65 do a damn thing to get me out of debt? NO!

In a broken democracy like this it is damn near impossible to take away peoples entitlements once you give them to them. So hardly any spending cuts can be managed without putting people up in arms all pissed off that uncle sam pulled the government tit out of their mouths.

Also, contrary to the popular socialist belief in this country... higher taxes do not mean higher government revenue. What it does mean is: business owners cutting costs (jobs) to get back out of the red, now all of a sudden people are out of work and: 1. Not paying taxes any more. 2. on the government tit. Ultimately entrepreneurs, responsible for most of the tax revenue in this country, will look for a way out.

The government is stuck, it can't squeeze its subjects for more revenue and it also can't make the necessary cuts. Do you think we will hyperinflate or default? If you think it can't happen, you are WRONG!

What is the solution?

How can we make money from this?

How can we add value to society with this information?

My vote for the poll was "I don't know."

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[GlobalWealth]

There will not be another country distributed global reserve currency.

I think there will be. Remember, money is like water, it follows the path of least resistance. The main assets classes are; sovereign debt, corporate debt, equities, currencies, commodities and real estate.

Right now the "safest" and most liquid market in the world is US treasuries. At some point that will no longer be the case and another country will step up to the plate. That will likely be China which places them as the reserve currency of the world.

Of course who knows. Only time will tell.

 

[GlobalWealth]

I think people are wise that look well in advance at escape routes and escape hatches. This thread has sparked a great discussion at our house this morning about the consequences of the current American and world economy and it's inevitable conclusions. It's just simple math.

I'm glad to hear some people are doing something about it. My goal is to spread ideas and spark intelligent thought and debate. Let's keep it going.

 

[GlobalWealth]

What is the solution?

How can we make money from this?

How can we add value to society with this information?

My vote for the poll was "I don't know."

Rickson9,
Agreed. We can "talk" about this till we turn blue, but the action we take is all that really matters. I do think the ideas are worth spreading though and this is one of the primary missions of my business.

Until we change the underlying ideology of the people, we will never change the outcome.

For me, it is all about diversification:
-asset class diversification
-geo-political diversification
-income diversification

For me that means:
-living in different countries
-investing in precious metals and income producing assets (high quality dividend paying companies, corporate bonds, options trading, etc)
-building web-based virtual businesses that can be operated from anywhere

For some investing in real estate is a good idea. For me it is not on my current agenda, although I have been thinking more and more about it. I am moving every couple of years now and don't like the idea of being a absentee landlord. I know it works for some people, but I am struggling with it.

I think ultimately though, the idea is to keep educating yourself and providing value. No matter what happens politically or in the global economy, people will still live indoors, eat, drink and entertain. There will always be markets.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Twiki]

This is a solvable problem, because running on a deficit isn't a bad thing as long as we're able to pay back all of our debt in a timely manner.

We need to learn how to run our government efficiently. We overspend on so many fronts it's not funny. There are men and women in our military, our government offices, and our schools whose job is simply to sit around, do F*ck-all and collect their paychecks at the end of every other week. We need to run our government not like a business, but instead like a sustainable non-profit organization that does not focus on growth or shrinking, but instead focuses on the welfare of the people, the defense of our ideals and the relations that we have between other sovereign nations.

I disagree that this is a solvable problem. Reason being: the things you describe as "we need to..." may be correct, but it gets to the "What you mean 'we', Kimosabe?" issue. There is a disconnect between the We in "We need to fix the system" vs. the We in the organizations that are incentivized to keep things broken.

A friend of mine had been out of a job for months. Finally he got into a DoD civilian agency. Eager to get back to work, he showed up the first day, was shown to his desk, and asked his supervisor "OK, great, what should I get started on?" The supervisor shrugged, said "Just look busy" and walked away. Ever since he is one of those folks who seems to have all day long to post stuff on the FB wall. Shame because once upon a time he wanted to be a hard working dude but I guess he has just settled into going along for the ride, TGIF, weekends with the family, looking fwd to govt pension, and all that. Give the people what they want, and apparently this truly is what most people want (whether it's 47% or 99%).

Anyway, if things are pretty much destined to reach an inevitable bad conclusion (it's just math and demographics after all -- doubtful that election outcomes or an inspirational Ayn Rand film can do much against those forces), here is a crazy thought: perhaps the optimal thing to do would be to accelerate the decline and do what we can to contribute to instability, so that we can tip things over the edge of chaos faster --- maybe this would at least reduce the duration of time that would be spent in "malaise". This way, we would not be condemning people into several "lost generations" of low productivity and employment, but rather just getting through a more acute period of crisis before the establishment of the new world order.

 

[Jake]

I think there will be. Remember, money is like water, it follows the path of least resistance. The main assets classes are; sovereign debt, corporate debt, equities, currencies, commodities and real estate.

Right now the "safest" and most liquid market in the world is US treasuries. At some point that will no longer be the case and another country will step up to the plate. That will likely be China which places them as the reserve currency of the world.

Of course who knows. Only time will tell.

I don't see why that would be the case and I don't see Central Banks putting out any indications that the Yuan is going to be the new focal point of the next monetary system. It doesn't fix anything. Debts must be extinguished and the Yuan doesn't do that. Balance sheets must be cleaned up, a jubilee of sorts without the forgiveness.

Central Banks accumulating gold at a record pace is a sign of things to come imo. The Euro got it right..they mark gold to market each quarter. Gold being the focal point that judges their currency.

"(Reuters) - Gold and gold receivables held by euro zone central banks rose in value by 45.5 billion euros to 479 billion euros after a quarterly revaluation, the European Central Bank said on Wednesday.

Net foreign exchange reserves in the Eurosystem of central banks fell by 5.8 billion euros to 229.2 billion euros, also reflecting the quarterly revaluation, while the combined balance sheet of the ECB and the 17 national central banks in the euro zone was worth just over 3 trillion euros."

Gold value goes up, debt burden goes down. That's the only true fix to this mess that I've been able to figure out. Revalue gold, let it float, let it's new (much higher) price extinguish the debt that's dragging the International Monetary System to it's knees.

So..that's how I see things. A two-tiered system instead of a reserve currency centric one putting one country completely in control over the IMS. A few key international currencies - Yuan, Euro, Dollar or "new dollar" and gold floating on balance sheets acting as the judge, the focal point, putting restraints on government stupidity but also allowing them to expand and contract their monetary base as needed.

 

[GlobalWealth]

I don't see why that would be the case and I don't see Central Banks putting out any indications that the Yuan is going to be the new focal point of the next monetary system.

The market will decide this. When China (or another country) overtakes the US as the largest economy, the market will make the decision on the safest sovereign debt. Central banks may try to influence it one way or another, but it won't matter. You cannot stop the economic growth engine when the incentives for growth are right.

It doesn't fix anything. Debts must be extinguished and the Yuan doesn't do that. Balance sheets must be cleaned up, a jubilee of sorts without the forgiveness.

Agreed, it doesn't fix anything. It only pushes the burden somewhere else. I never said it fixed the problem, only that it will be the "solution" presented.

Right now all money in the world is just debt. That is not good. There is no value to this money as you well know. Each piece of paper we hold in our hands is merely an iou from the issuing country. But I am being a realist here.

Central Banks accumulating gold at a record pace is a sign of things to come imo.

Central banks in China and India are accumulating gold at record rates. Here lies the problem and the opportunity. At some point, China could hold enough gold in its vaults to proclaim a % of gold per yuan at a fixed rate. China is also buying up resource assets all around the globe. At the current rate they could probably make this happen in 5-10 years. They will control enough mining operations to funnel all gold reserves into their vaults.

Personally, I see this as a good thing. But it could also be the next version of Bretton Woods where the Yuan becomes the official reserve currency (ala USD circa 1933) because of its gold backing. This could force all other world currencies to have a fixed exchange with the Yuan. Its the same thing that happened with the USD. It could happen again.

A few key international currencies - Yuan, Euro, Dollar or "new dollar" and gold floating on balance sheets acting as the judge, the focal point, putting restraints on government stupidity but also allowing them to expand and contract their monetary base as needed.

this already exists to some extent with the IMF ADR's.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[JAJT]

FYI - Read Atlas Shrugged if you haven't.

I haven't seen the movies (yet) but the book is written brilliantly.

 

[GlobalWealth]

This post and a few other recent discussions over the past week motivated my recent article. If interested you can read it here -

It's Just Math | Asset Protection Planning

 

[Jake]

Personally, I see this as a good thing. But it could also be the next version of Bretton Woods where the Yuan becomes the official reserve currency (ala USD circa 1933) because of its gold backing. This could force all other world currencies to have a fixed exchange with the Yuan. Its the same thing that happened with the USD. It could happen again.

Could..but I don't see it. Maybe if WW3 broke out and China came out on top but I think the Gold standard is dead. It's also a surefire way for China to lose their gold. Better to keep gold as a reserve then to fix it. A floating reserve works with you, a fixed price works against you.

This post and a few other recent discussions over the past week motivated my recent article. If interested you can read it here -

It's Just Math | Asset Protection Planning

"However, I am hugely optimistic for the future. I see this upcoming government collapse as a cleansing that will allow proper functioning of the markets and creation of real value to mankind."

Same here. We'll actually have to work for foreign goods instead of printing for them but putting an end to the massive misallocation of capital and human labor will be a good thing. The same misallocation that pays me an awful lot to sit in Afghanistan.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[ChickenHawk]

This thread is now over a month old. Since the last post, we've had a national election, are several weeks closer to the infamous "fiscal cliff," and our defecit is still growing. Things seem to be getting worse, not better. A year ago I wouldn't have thought so, but it does seem a distinct possibility that we may see hyperinflation AND default in our lifetimes.

The more I dig into this, the less evidence I find that "It will never happen to us." It's a sobering thought, especially if you're concerned for future generations.

I apologize for what you’re about to read

Yikes.

 

[Kak]

Death spiral....