Michael,
I've never said that gold is not a "store of value". Only that as a store of value its greatest worth is in a time of absolute economic and social chaos.
Lots of items are "stores of value" and it just depends on what economic conditions exist for the value to be realized. Homes are also "stores of value" in inflationary times since people take out debt to buy them, and then pay back those loans in devalued dollars.
Oil is a "storehouse of value" in times when OPEC opts to limit or cease production of it.
Bears have been predicting a "implosion of the credit bubble" for as long as I've bothered to pay attention (at least the mid-'80s). They've predicted the collapse of the global financial system and a return to the gold standard until they are blue in the face, and their gold portfolios severely thrashed.
I'm not trying to be rude, but it seems that folks like yourself continuously wish to expound upon the perils of a growing debt level, calling it a bubble. Yet you seem to conveniently forget that during that same period the overall GDP numbers have also climbed.
The only ratios I care about are the percentage of national debt to national GDP, governmental debt to tax revenue, personal debt as compared to the average personal income, and ultimately labor productivity.
And while the US economy now accounts for 33% of global GDP, it will ultimately fall back to the pre-Asian crisis levels of 20%. As their economies recover in the post-2000 period, they will be forced to spend money on IT infrastructure improvements, an arena in which the US still, and likely will, remain dominant.
They will require US managerial skills, as well as our financial support, just as much as we require the skills of many of their more educated and skilled programmers and engineers. Those talented individuals will continue to immigrate to the US because this labor marketplace will provide them the best financial return on the educational investment they have made.
So what I see is a US economy that may suffer a temporary slowdown as capital eventually returns to emerging economies that have straightened out their financial systems. But I also see US productivity gains helping to maintain our economic position of dominance.
The only thing that really worries me is the development of an economy in Europe or elsewhere that develops to provide an even greater income opportunity, or level of freedom, than the US.
The rest of the world has a lot of catching up to do before they can realistically compete with the US. I would worry more about their economies blowing up again, than worrying about the nation that has remained strong throughout the recent economic turmoil.
Regards,
Ron |
