Ron,
The reality is that gold has been the most stable currency of all. Do not confuse stability and volatility.
After all, in the 1950's one could buy a small house with $10K or 10K grams of gold. Today, one can still buy the same house with 10K grams of gold but needs almost $100K for the same small house.
Gold became volatile because the gold standard was removed. Bring it back with some decent rules to allow local expansion and contraction, and gold will lose its volatility. But even with continuing volatility, gold long term stablity will be maintained.
The reason is simple. The growth rate in the supply of gold is more or less the same as the growth rate in the world population and the average growth rate the production of goods and services.
As for the US being in the best shape financialy, I don't read it the same way. The problems is that non-AAA corporate debts are too large, individual debts are exploding, long term growth in GNP on per per capita basis is slowing down from an average rate of 2.7% in the 1950-70 period to less than 1.13% now on an annual basis. USD production is growing much slower now, but still its money stocks are expanding like crazy (8-10%), debt is expanding and savings are at all times low. Beside public debt is 5.7T on a GDP of what $10.5T or so, that is 55%.
Sincerely
Claude |
