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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (75879)12/17/2006 6:30:37 PM
From: kris b  Read Replies (2) of 110194
 
What are my options? I could let the bills mature, take the cash, and convert all into gold, but gold pays no return, and am still worried about Riskloves exposure in it.

Russ, this still doesn't go to the heart of the matter. For one, you are an exception by having (I don't know how much. Btw. you would be spending your old money by liquidating assets and blowing it on good looking ladies <G>. No net addition to the economy. You are shifting it from one side of the ledger to the other. Only new income or borrowings by you would create NEW buying power. Take a look at Piscata household cash flow chart.) liquid assets, 90% of the households don't, they have mountains of debt instead. Their main assets class (30% of all assets) is illiquid (declining in price) primary residence. But lets say that they have other investments. How much do they have invested in bonds, stock and other assets? $ $100K per households? This is their invested capital, but you want to monetize gain on this capital to create new money. Right. What is their gain? Lets assume $30K (30% annualized) in 2006. This is your new money that can be monetized/extracted and put to work in the economy by households . Right? Unfortunately it pales in comparison with annual MEW over the last four years. Do you get my drift? You need $ 700 Billion in unrealized capital (new money) gains to extract annually in order to replace the housing bubble. Can you see the FED’s predicament? Where is the next bubble?
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