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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (78073)	8/20/2011 9:40:18 PM
From: Wildstar	Read Replies (2) \| Respond to of 217825

Right, and based on those trends, DJIA:Gold ratio of <1 makes sense. As you pointed out, though, everything changes if hyperinflation occurs. That chart doesn't include any periods of hyperinflation (though it does include partial defaults). If it's a run-of-the-mill cycle like the 30s and 70s in which people think the world's been changed forever for the worse, but hasn't really, then historical ratios will work. That means the system will survive. Specifically, the currency will survive. Political reforms will have to be made, which means, in the US, massively reforming Social Security, Medicare, and Medicaid. If that happens and stocks are cheap on a trailing PE basis, a DJIA:Gold ratio <1 would be a nice entry point for the start of the next stock bull. But...this time around, there may no political will to reform SS, Medicare, and Medicaid, in which case the only way for the obligations to be paid will be in worthless dollars. With a Fed chairman who believes the problem with the Great Depression was lack of newly printed money, and with a President who thinks central planning is the answer to everything, the hyperinflation scenario is not to be discounted. In that scenario, all bets are off. Everything becomes more difficult to evaluate. If that seems like it's going to happen, I'll probably merely diversify my gold holdings into foreign stocks and real estate in more stable countries with less irrational governments, while always keeping a stash of gold handy.

To: TobagoJack who wrote (78073)	8/22/2011 2:35:26 AM
From: elmatador	Respond to of 217825

The whole world depending on a speech from a man in WY. Am I the only one who think there is somehting wrong wit this? World Looks for Reassurance That the Fed Will Take Steps By REUTERS Published: August 21, 2011 With the global economy sputtering and financial markets on the rocks, the world is looking for reassurance that the United States central bank stands ready to save the day. Much attention will focus on a speech on Friday by Ben S. Bernanke, the Federal Reserve chairman, in Jackson Hole, Wyo., where policy makers and academics are meeting as part of an annual symposium. Last year, Mr. Bernanke used the forum to suggest that the Fed could help growth by buying long-term bonds, a prelude to a program that did just that. However, no grand new plan is expected this year, in part because the Fed already pledged this month to keep interest rates near zero into 2013. “Markets are increasingly hoping there will be some signs that the Fed will come running to the rescue,” said Paul Dales, an economist at Capital Economics in Toronto. Many economists said they expected Mr. Bernanke to explain what was in his policy toolbox while promising to use those tools if necessary. One danger looming over the world economy, which could compel Mr. Bernanke to act, is the prospect that the European sovereign debt crisis could worsen. ELMAT: That looks like Europe waiting for its fate to be decided! Investors are becoming more nervous daily that a new recession threatens. Economists see rising risks that growth could evaporate in the United States, while Europe languishes in a debt crisis. Even strong performers like the economies of China and Brazil show signs of slowing. ELMAT: China and Brazil slowing is welcome. They were overheating and facing inflation pressures. Moreover, stocks have plunged, further threatening the economy because consumers could pull back if they sense their retirement savings are dwindling. ELMAT: This is how life is post-QE2. This would have happened last year were not for QE2. Investors have rushed into United States Treasuries as a haven, and the yield on the 10-year note last week fell below 2 percent for the first time since at least the early 1960s. Already, worries over European debts are rattling the markets, leading investors to demand that some European governments pay higher interest rates to borrow. Investors have shunned the debt of Ireland, Portugal and Greece, and now market forces appear to be tilting against larger countries, threatening to create a much larger crisis. ELMAT: Europe standard of living it was used to, is no longer affordable. Policy makers are scrambling to contain this, with the European Central Bank buying Italian and Spanish bonds this month. But the European Central Bank is internally divided over that move, increasing anxiety for investors. On Monday, the central bank will release figures that could show how committed it is to propping up Italy and Spain. A bad reaction by investors to that data, or to revised readings due this week on United States and British second-quarter economic performance, could increase pressure on Mr. Bernanke to act. nytimes.com