A certainty.
et si tu es faux monsieur?
or words to that effet.
In other words a prognosticator should have several scenarios with several outcomes, depending on the market forces as they will play out. Knowing exactly what will happen involves guessing what governments will do, right or wrong.
What are the alternatives? Once we have seen all of these and the consequences we can pick the most likely one.
One alternative is that there is deflationary pressure. The other one is that there is stagflation. The other is that there is collapsing of debt and treasury notes in value, but the resulting issuance of money to cover results in high inflation and thence high interest. However high interest would mean the collapse of all the overleveraged corporations who cannot sell stuff now. A few of them could get bought out such as the GM's the Salomon Bros, the Goldman Sachs, etc. but you cannot buy out the whole nation. No printing press could go that far. Exactly what would happen here is hard to fathom. We would get massive company failures as financeable goods would disappear and the companies who sell those high priced goods would disappear. This would mean massive unemployment, perhaps 11% to 16%. In this scenario, much like the great depression, gold would rise as it is a competitive money. Gold rises, paradoxically, where either deflationary or inflationary times are drastic. It fluctuates mildly in the interim up with inflation and down with deflation. But in all times of extremities it tends to rise. It is what you would call an emergency metal.
My guess is that in the short term despite drops in credit cost, credit will continue to be hard to get and many businesses will fail because of that. The governments of the world will step in to regulate issuance of credit instruments to leverage debt. Multi layer financial companies will be forced to separate in order not to such clients into too many investment instruments they do not understand or that would create too much debt.
There may be a move to exert more control over central banks. If this happens you may be sure the printing presses green button will be taped over and eventually there will be catastrophic inflation and eventual world wide collapse and failure of the monetary system.
Unless they outlaw gold, it will being to rise as a currency. The Dinar is the only currency I really trust.
The governments of the world are trapped in a quandary. The are in an inextricable situation. Everything that spells wealth in their nations is bought on long term payment plans which are very vulnerable to changes in interest. At the same time, families who are at the root of generating the demand that makes the G76 nations powerful are now workign two to a household and an inordinate amount of their income is going on food, fuel and rent. There is little left over. Increase the family payments and you have disaster. There is no room to double interest rates with GM or the American family. But at present rates the increase in the money supply means constantly rising prices. Incomes cannot cope with this inflationary pressure. Do the G7 nations decrease the money supply by increasing interest rates and thereby make everyone bankrupt? OR rise Wiemar type inflation? Hobbes choice? It is no time for austerity. You do that before you get runaway inflation.
The conservatives in Canada did the right thing both under Mulroney and Harper. They paid down the deficit, and decreased inflation. Fundamentally that leaves Canada in a much better place. If we just did not have such a regulatory nightmare, we would have a growing economy. Fat chance of that if the US economy goes south.
The only thing saving Canada right now is its oil and gas. They are paying they bills. The Tar Sands may save America's ass, and if we can give Chavez the boot, and get their heavy oil developed it could save that country too.
Gold and metals could have put a substantial bottom line boost to Canada's foreign exchange. At one time it was a much larger part of our economy. We let it languish with bad gov't policies and luddite attitudes of our snivel service. We are in no position manpower, training or financial to ramp up our industry. We don't have the miners, the money, the drill database or the markets to develop orebodies. Our biggest miners are owned by foreigners. Their attitude is to sell all the assets they can. They actually have some pretty attractive assets. I know of two base metal assets that exceed 14 billion in metal value even at today's prices and they are lying fallow. For sale. Believe it or not. And one has ALL the infrastructure! They will never be mined. Regs, money, etc.. Where is a body going to get 150 million to develop a base metal mine in the Arctic or even 300 miles from Toronto? and base metals are now falling fast due to hedge fund problems. I don't know if we can ever say to the Chinese, "I know the Comex says $1.80 in copper, but you and I know that is irrelevant, if you want to buy 30,000 tons of the stuff per year, we want $5,000 US per ton."
If we could get $2.50 that would be $3.00 CDN anyway.
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