Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: bart13 who wrote (91477)	6/13/2012 10:52:06 PM
From: Hawkmoon	2 Recommendations Read Replies (2) \| Respond to of 217574

Do recall that FDR revalued gold to fend off deflation... Yes.. but then Gold backed the USD, and to devalue the US currency by 40%, he needed to confiscate that gold because the currency was becoming too strong as deflationary pressures continued. What was it.. 10% decline in GDP a year for a number of years? Also, the US national debt was 16% of GDP at that time, giving FDR the perception that he could increase that debt as stimulus without having it exceed GDP. But ultimately, it required WWII, and the demand it created, to bring us out of depression, if also to re-instill a sense of national purpose and determination. But compare that to now, where we have excessive national debt that is over 100% of our GDP( and private debt that exceeds 3x GDP), 1% of our population controlling more wealth than 90% of the rest of the population.. Demand falling dramatically as debt is paid off, or defaulted upon.. with little savings to fuel demand, and little ability to obtain credit because they are un(der)employed.. I really don't see any other solution than a debt default.. It's just how long it can be staved off until the last domino (the US) falls.. Look at Japan.. They've deficit spent to the point that their national debt is 200% of GDP and it has led to nothing but falling equity prices and a VERY strong Yen. And they are a lesser global reserve currency. I fear what will happen to the USD (in terms of strengthening).. I think we're looking at becoming the next Japan, if only because so many commodities are priced in USD.. It will be great for those who have cash.. But not so good for those invested in commodities (minus food and possibly NG/Oil) until the commodities supply/demand curve returns to some semblance of normality (outside of financial speculation).. I may be wrong.. and I'm open to having my logic challenged.. But I just can't see gold and silver in an environment where money is being destroyed through default/debt reduction. However, I can see a potential scenario where the USD, Gold, and Silver, all appreciate in tandem as capital flight rushes to all USD denominated financial instruments. This is what I'm watching for right now.. Hawk