What am I missing? Is that a train coming at me or am I Chicken Little?

[echo5juliet]

It is quite obvious that there are people in this forum far smarter and more educated in finance than I am. Hopefully one (or more) of you can tell me what I am missing.

The dollar is rapidly declining in value. Every time the fed hacks interest rates the dollar slides down more as a result. The dow moves up but not at a rate that overcomes the dollar’s devaluation. We moron types watch the 5pm news and see the green Dow arrow pointing up and we think all is well. 5 years of Bush’s Iraq wanderlust has cost us billions and billions of dollars we will unlikely recoup in cheap oil. China holds trillions in US treasury bonds that artificially prop up the currency, all so we dummies keep buying Chinese made crud we don’t need. As consumers we keep mindlessly buying crud made in China and the end result is that our consolidated domestic wealth gets sent offshore and is not recouped. The devaluation of the dollar is close to causing OPEC to revalue the oil market based on the Euro instead of the Petrodollar. In addition to the dollar’s fall this move is being actively promoted by unfriendly personalities like Chavez and Ahmadinejad. On top of all of that several hedge funds, investment banks, traditional banks and funds are significantly leveraged in the subprime/housing ether bubble.

Many TV pudits say that another 1929 wont happen. Yet they fail to state or admit that in 1929 our society and economy was that of a exporter/manufacturer, now we are an importer/consumer economy. Then our currency was backed by gold and silver, now it is fiat monopoly money. Then we did not have much credit exposure, now we have trillions of dollars in exposure to consumer, real estate and institutional credit.

So, there you have the view of an uneducated idiot consumer and “little guy” investor. Can anyone tell me why I shouldn’t move to a minimal risk position in metals and dig a foxhole in my front yard?

(disclaimer: I added the foxhole for comic relief)

[Coronita]

Because if you believe you are average joe, and if other average joes and j6p's are talking about moving money into commodities and foreign investments, and when the investment houses start to massively advertise moving things into commodities and foreign investments, perhaps this is like herd mentality which doesn't really know what they're getting themselves into? Herds always seems to drives up prices, and it seems like mainstream media has caught commodity, precious metals, etc. It probably is too late to move into precious metals/energy/foreign assets.

Seriously though, when did you start to think about metals/commodities? Is it something you read on CNN or the like? If so, don't you think others are thinking the same thing?

 

Anyone else catch on NPR yesterday night that some european companies are starting to complain that with the weak dollar, it's hurting them competitively? I'm just wondering how a strong Euro in the long term is going to help EU companies.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[echo5juliet]

Well I am not quite J6P nor a moron. I am a master of self-deprecation. =) I am an educated technologist and my expertise is in the flow of electrons not the flow of capital.

To your “seriousness” question, I have been leaning toward metals for the past three years. Today I am suffering from procrastination induced remorse and based on the points I laid out in the original post it seems to me that things can only go down from here. After all, the fed cannot ratchet rates down much lower and any movement they make only devalues the greenback even more. Gold in the 900s and oil dancing back and forth around $110 may be the peak to some but if all forces are considered (geopolitical, market/credit, subprime, commodity/resource constraints) the future appears quite likely to go even deeper into the abyss.

(note: my real niche talent is systemic analysis and on some levels there is not much difference between micro and macro systems, cause and effect, electrons, people, etc)

The only brass ring I can see for the dollar and American economy is that a pummeled dollar makes us a prime candidate for manufacturing and exporting. That may happen in time but it would take a fair amount of time (2-4 years) to revive our domestic manufacturing infrastructure that has been eviscerated by China. For some industries domestic manufacturing and exportation would not even help due to the fact that some industries depend on materials that are controlled globally to artificially maintain price parity between the Americas, Asia and Europe.

In those 2-4 years we Americans would face stagflation and a dollar swirling around the drain. By that time, the insiders would have already made the move to low risk investments like metals, foreign money markets, etc.

The real concern of J6P and non-finance people like me is the risk of being the straw man. The group of small investors that holds up the market while the insiders slide out from under. If things are really going to take a bigger nose dive in the next 3-9 months my family would appreciate it if I moved out from under before everything pops.

Make sense?

I keep waiting for someone to point out a variable that I have not considered or a basic concept I do not understand but so far that hasn’t happened.

I know I am being “glass if half full” but as one of my favorite bumper sticker slogans goes “Just because I am paranoid does not mean they are not following me”. That was another attempt at levity.

Seriously, where is the border between cynicism and realism?

[drunkle]

your concerns regarding gold/oil/wheat are similar to mine. as well, there’s speculation that the recent price drops of 10%+ are the result of hedge funds and institutional investors liquidating due to margin calls and capital requirements.

short treasury yields are practically zero indicating a “flight to quality”. assuming that the smart money is driving the yields down and j6p is clueless, i’d probably join the smart money and hide in short treasuries.

btw, metals, foreign currencies, etc are not exactly “low risk”. historical price of gold vs today, for instance, and currency backlash such as what just happened when the fed cut .75 instead of the expected 1.0.

edit:

also, jim cramer has been selling gold and oil lately whereas, 6 months ago, he was calling gold bugs “kooks”. what does that tell you? tells me its time to get out of gold/oil…

[nostradamus]

echo5 is no j6p. A monster train is coming and the securitization of subprime debt is driving it. In the engine car we have the fed, feeding the furnace with bushels of dollars at an ever-increasing speed that somehow never seems to keep pace with the train. In the caboose we find Joe 6-pack, discussing (during commercial breaks from Hee-Haw, American Idol, and Lost) what Obama’s pastor said or what Hillary’s husband did or where McCain was born or what Britney is up to these days.

Why not precious metals? Because they may be just as bubbly. What if someone, somewhere, discovers the mother-of-all-mother-lodes gold vein? What makes these metals “precious”? Just their rarity? I know gold is used in some semiconductors but silicon is much cheaper and precious IMO.

Anyhow, for some comfort you can look at past recessions to see how those panned out. There are some similarities to what’s going on now, but still we are in a never-before-seen situation here and nobody knows what will happen.

Worldwide Recession, 1980’s

Japan’s 2000’s recession

[echo5juliet]

As a funny stroke of fate, your reply title reads “Echo5 is no j6p. A monster”. I love it, I’m starting to sound like a Bond supervillain.

I have to believe there is a safe harbor somewhere. Gates and Buffet have supposedly, by some reports, bought big into silver. Fiat currencies, thanks to globalization, will do the domino effect if the dollar really augers.

There is no true zero risk position. Metals held tangibly would seem to be the most secure.

Ultimately I could just invest in ammunition but that sounds too “Mad Max-ian” for me to swallow thus far.

Are there other options if I want to protect what little nestegg I have amassed (~$100K)? Zero growth is fine, my gut tells me to prepare for massive devaluation. In that case value protection becomes a growth position. Suggestions?

All things are relative. Positive growth can be increase of value or hovering in place while the floor drops out and sending everyone falling.

[kewp]

…there’s speculation that the recent price drops of 10%+ are the result of hedge funds and institutional investors liquidating due to margin calls and capital requirements.

I’m almost certain thats it. Great buying opportunity if you aren’t in yet.

[kewp]

…there’s speculation that the recent price drops of 10%+ are the result of hedge funds and institutional investors liquidating due to margin calls and capital requirements.

I’m almost certain thats it. Great buying opportunity if you aren’t in yet.

[kewp]

…there’s speculation that the recent price drops of 10%+ are the result of hedge funds and institutional investors liquidating due to margin calls and capital requirements.

I’m almost certain thats it. Great buying opportunity if you aren’t in yet.

[kewp]

…there’s speculation that the recent price drops of 10%+ are the result of hedge funds and institutional investors liquidating due to margin calls and capital requirements.

I’m almost certain thats it. Great buying opportunity if you aren’t in yet.

[kewp]

…there’s speculation that the recent price drops of 10%+ are the result of hedge funds and institutional investors liquidating due to margin calls and capital requirements.

I’m almost certain thats it. Great buying opportunity if you aren’t in yet.

[Anonymous]

Are there other options if I want to protect what little nestegg I have amassed (~$100K)? Zero growth is fine, my gut tells me to prepare for massive devaluation. In that case value protection becomes a growth position. Suggestions?

If return of capital is more important than return on capital. I would look into either a CD ladder or a treasury ladder.

Here is a write up on how a CD ladder works.

http://www.bankrate.com/brm/news/sav/20010521b.asp

If you go with CDs, make sure you don’t have more than the FDIC limit in a single bank.

You can do the same with US Treasury, if you don’t trust banks or FDIC. Go open a treasury direct account.

http://www.treasurydirect.gov/

I wouldn’t buy anything with maturity of more than 2 years. Actually, shorter term the better.

If you can tolerate some risk, you could seek out best saving interest rates and split your money into those banks. Some banks have better money market/saving interest rate than other bank’s short term CD. Just be aware that in this environment, if a bank or saving institution is offering rates a lot better than their peers, they probably need your money more than other banks. They are offering higher rate because they are a higher risk.

There are options to protect against devaluation of US dollar. but they don’t guarantee return of capital and given your account size, these options may not be worthwhile to you from benefit/risk stand point.

Good luck.

[5yearwaiter]

Well when started looking all options I found Union Bank of California providing CDs that we can invest in Foreign currency (many doing Switzerland and Australia CDs), Few moved all their money to Longterm Bonds (expected APR is 7%) and I am taking also move all my 401K etc to longterm bonds for a couple of years.

Metals market is going to volatile due to Feds interruption to lower interest rate and sure they can’t stop market falling further but also not give us good chance to invest in Metals too.

5yearswaiter

[5yearwaiter]

Well when started looking all options I found Union Bank of California providing CDs that we can invest in Foreign currency (many doing Switzerland and Australia CDs), Few moved all their money to Longterm Bonds (expected APR is 7%) and I am taking also move all my 401K etc to longterm bonds for a couple of years.

Metals market is going to volatile due to Feds interruption to lower interest rate and sure they can’t stop market falling further but also not give us good chance to invest in Metals too.

5yearswaiter

[5yearwaiter]

Well when started looking all options I found Union Bank of California providing CDs that we can invest in Foreign currency (many doing Switzerland and Australia CDs), Few moved all their money to Longterm Bonds (expected APR is 7%) and I am taking also move all my 401K etc to longterm bonds for a couple of years.

Metals market is going to volatile due to Feds interruption to lower interest rate and sure they can’t stop market falling further but also not give us good chance to invest in Metals too.

5yearswaiter

[5yearwaiter]

Well when started looking all options I found Union Bank of California providing CDs that we can invest in Foreign currency (many doing Switzerland and Australia CDs), Few moved all their money to Longterm Bonds (expected APR is 7%) and I am taking also move all my 401K etc to longterm bonds for a couple of years.

Metals market is going to volatile due to Feds interruption to lower interest rate and sure they can’t stop market falling further but also not give us good chance to invest in Metals too.

5yearswaiter

[5yearwaiter]

Well when started looking all options I found Union Bank of California providing CDs that we can invest in Foreign currency (many doing Switzerland and Australia CDs), Few moved all their money to Longterm Bonds (expected APR is 7%) and I am taking also move all my 401K etc to longterm bonds for a couple of years.

Metals market is going to volatile due to Feds interruption to lower interest rate and sure they can’t stop market falling further but also not give us good chance to invest in Metals too.

5yearswaiter

[Anonymous]

Are there other options if I want to protect what little nestegg I have amassed (~$100K)? Zero growth is fine, my gut tells me to prepare for massive devaluation. In that case value protection becomes a growth position. Suggestions?

If return of capital is more important than return on capital. I would look into either a CD ladder or a treasury ladder.

Here is a write up on how a CD ladder works.

http://www.bankrate.com/brm/news/sav/20010521b.asp

If you go with CDs, make sure you don’t have more than the FDIC limit in a single bank.

You can do the same with US Treasury, if you don’t trust banks or FDIC. Go open a treasury direct account.

http://www.treasurydirect.gov/

I wouldn’t buy anything with maturity of more than 2 years. Actually, shorter term the better.

If you can tolerate some risk, you could seek out best saving interest rates and split your money into those banks. Some banks have better money market/saving interest rate than other bank’s short term CD. Just be aware that in this environment, if a bank or saving institution is offering rates a lot better than their peers, they probably need your money more than other banks. They are offering higher rate because they are a higher risk.

There are options to protect against devaluation of US dollar. but they don’t guarantee return of capital and given your account size, these options may not be worthwhile to you from benefit/risk stand point.

Good luck.

[Anonymous]

Are there other options if I want to protect what little nestegg I have amassed (~$100K)? Zero growth is fine, my gut tells me to prepare for massive devaluation. In that case value protection becomes a growth position. Suggestions?

If return of capital is more important than return on capital. I would look into either a CD ladder or a treasury ladder.

Here is a write up on how a CD ladder works.

http://www.bankrate.com/brm/news/sav/20010521b.asp

If you go with CDs, make sure you don’t have more than the FDIC limit in a single bank.

You can do the same with US Treasury, if you don’t trust banks or FDIC. Go open a treasury direct account.

http://www.treasurydirect.gov/

I wouldn’t buy anything with maturity of more than 2 years. Actually, shorter term the better.

If you can tolerate some risk, you could seek out best saving interest rates and split your money into those banks. Some banks have better money market/saving interest rate than other bank’s short term CD. Just be aware that in this environment, if a bank or saving institution is offering rates a lot better than their peers, they probably need your money more than other banks. They are offering higher rate because they are a higher risk.

There are options to protect against devaluation of US dollar. but they don’t guarantee return of capital and given your account size, these options may not be worthwhile to you from benefit/risk stand point.

Good luck.

[Anonymous]

Are there other options if I want to protect what little nestegg I have amassed (~$100K)? Zero growth is fine, my gut tells me to prepare for massive devaluation. In that case value protection becomes a growth position. Suggestions?

If return of capital is more important than return on capital. I would look into either a CD ladder or a treasury ladder.

Here is a write up on how a CD ladder works.

http://www.bankrate.com/brm/news/sav/20010521b.asp

If you go with CDs, make sure you don’t have more than the FDIC limit in a single bank.

You can do the same with US Treasury, if you don’t trust banks or FDIC. Go open a treasury direct account.

http://www.treasurydirect.gov/

I wouldn’t buy anything with maturity of more than 2 years. Actually, shorter term the better.

If you can tolerate some risk, you could seek out best saving interest rates and split your money into those banks. Some banks have better money market/saving interest rate than other bank’s short term CD. Just be aware that in this environment, if a bank or saving institution is offering rates a lot better than their peers, they probably need your money more than other banks. They are offering higher rate because they are a higher risk.

There are options to protect against devaluation of US dollar. but they don’t guarantee return of capital and given your account size, these options may not be worthwhile to you from benefit/risk stand point.

Good luck.

[Anonymous]

Are there other options if I want to protect what little nestegg I have amassed (~$100K)? Zero growth is fine, my gut tells me to prepare for massive devaluation. In that case value protection becomes a growth position. Suggestions?

If return of capital is more important than return on capital. I would look into either a CD ladder or a treasury ladder.

Here is a write up on how a CD ladder works.

http://www.bankrate.com/brm/news/sav/20010521b.asp

If you go with CDs, make sure you don’t have more than the FDIC limit in a single bank.

You can do the same with US Treasury, if you don’t trust banks or FDIC. Go open a treasury direct account.

http://www.treasurydirect.gov/

I wouldn’t buy anything with maturity of more than 2 years. Actually, shorter term the better.

If you can tolerate some risk, you could seek out best saving interest rates and split your money into those banks. Some banks have better money market/saving interest rate than other bank’s short term CD. Just be aware that in this environment, if a bank or saving institution is offering rates a lot better than their peers, they probably need your money more than other banks. They are offering higher rate because they are a higher risk.

There are options to protect against devaluation of US dollar. but they don’t guarantee return of capital and given your account size, these options may not be worthwhile to you from benefit/risk stand point.

Good luck.

[echo5juliet]

As a funny stroke of fate, your reply title reads “Echo5 is no j6p. A monster”. I love it, I’m starting to sound like a Bond supervillain.

I have to believe there is a safe harbor somewhere. Gates and Buffet have supposedly, by some reports, bought big into silver. Fiat currencies, thanks to globalization, will do the domino effect if the dollar really augers.

There is no true zero risk position. Metals held tangibly would seem to be the most secure.

Ultimately I could just invest in ammunition but that sounds too “Mad Max-ian” for me to swallow thus far.

Are there other options if I want to protect what little nestegg I have amassed (~$100K)? Zero growth is fine, my gut tells me to prepare for massive devaluation. In that case value protection becomes a growth position. Suggestions?

All things are relative. Positive growth can be increase of value or hovering in place while the floor drops out and sending everyone falling.

[echo5juliet]

As a funny stroke of fate, your reply title reads “Echo5 is no j6p. A monster”. I love it, I’m starting to sound like a Bond supervillain.

I have to believe there is a safe harbor somewhere. Gates and Buffet have supposedly, by some reports, bought big into silver. Fiat currencies, thanks to globalization, will do the domino effect if the dollar really augers.

There is no true zero risk position. Metals held tangibly would seem to be the most secure.

Ultimately I could just invest in ammunition but that sounds too “Mad Max-ian” for me to swallow thus far.

Are there other options if I want to protect what little nestegg I have amassed (~$100K)? Zero growth is fine, my gut tells me to prepare for massive devaluation. In that case value protection becomes a growth position. Suggestions?

All things are relative. Positive growth can be increase of value or hovering in place while the floor drops out and sending everyone falling.

[echo5juliet]

As a funny stroke of fate, your reply title reads “Echo5 is no j6p. A monster”. I love it, I’m starting to sound like a Bond supervillain.

I have to believe there is a safe harbor somewhere. Gates and Buffet have supposedly, by some reports, bought big into silver. Fiat currencies, thanks to globalization, will do the domino effect if the dollar really augers.

There is no true zero risk position. Metals held tangibly would seem to be the most secure.

Ultimately I could just invest in ammunition but that sounds too “Mad Max-ian” for me to swallow thus far.

Are there other options if I want to protect what little nestegg I have amassed (~$100K)? Zero growth is fine, my gut tells me to prepare for massive devaluation. In that case value protection becomes a growth position. Suggestions?

All things are relative. Positive growth can be increase of value or hovering in place while the floor drops out and sending everyone falling.

[echo5juliet]

As a funny stroke of fate, your reply title reads “Echo5 is no j6p. A monster”. I love it, I’m starting to sound like a Bond supervillain.

I have to believe there is a safe harbor somewhere. Gates and Buffet have supposedly, by some reports, bought big into silver. Fiat currencies, thanks to globalization, will do the domino effect if the dollar really augers.

There is no true zero risk position. Metals held tangibly would seem to be the most secure.

Ultimately I could just invest in ammunition but that sounds too “Mad Max-ian” for me to swallow thus far.

Are there other options if I want to protect what little nestegg I have amassed (~$100K)? Zero growth is fine, my gut tells me to prepare for massive devaluation. In that case value protection becomes a growth position. Suggestions?

All things are relative. Positive growth can be increase of value or hovering in place while the floor drops out and sending everyone falling.

[nostradamus]

echo5 is no j6p. A monster train is coming and the securitization of subprime debt is driving it. In the engine car we have the fed, feeding the furnace with bushels of dollars at an ever-increasing speed that somehow never seems to keep pace with the train. In the caboose we find Joe 6-pack, discussing (during commercial breaks from Hee-Haw, American Idol, and Lost) what Obama’s pastor said or what Hillary’s husband did or where McCain was born or what Britney is up to these days.

Why not precious metals? Because they may be just as bubbly. What if someone, somewhere, discovers the mother-of-all-mother-lodes gold vein? What makes these metals “precious”? Just their rarity? I know gold is used in some semiconductors but silicon is much cheaper and precious IMO.

Anyhow, for some comfort you can look at past recessions to see how those panned out. There are some similarities to what’s going on now, but still we are in a never-before-seen situation here and nobody knows what will happen.

Worldwide Recession, 1980’s

Japan’s 2000’s recession

[nostradamus]

echo5 is no j6p. A monster train is coming and the securitization of subprime debt is driving it. In the engine car we have the fed, feeding the furnace with bushels of dollars at an ever-increasing speed that somehow never seems to keep pace with the train. In the caboose we find Joe 6-pack, discussing (during commercial breaks from Hee-Haw, American Idol, and Lost) what Obama’s pastor said or what Hillary’s husband did or where McCain was born or what Britney is up to these days.

Why not precious metals? Because they may be just as bubbly. What if someone, somewhere, discovers the mother-of-all-mother-lodes gold vein? What makes these metals “precious”? Just their rarity? I know gold is used in some semiconductors but silicon is much cheaper and precious IMO.

Anyhow, for some comfort you can look at past recessions to see how those panned out. There are some similarities to what’s going on now, but still we are in a never-before-seen situation here and nobody knows what will happen.

Worldwide Recession, 1980’s

Japan’s 2000’s recession

[nostradamus]

echo5 is no j6p. A monster train is coming and the securitization of subprime debt is driving it. In the engine car we have the fed, feeding the furnace with bushels of dollars at an ever-increasing speed that somehow never seems to keep pace with the train. In the caboose we find Joe 6-pack, discussing (during commercial breaks from Hee-Haw, American Idol, and Lost) what Obama’s pastor said or what Hillary’s husband did or where McCain was born or what Britney is up to these days.

Why not precious metals? Because they may be just as bubbly. What if someone, somewhere, discovers the mother-of-all-mother-lodes gold vein? What makes these metals “precious”? Just their rarity? I know gold is used in some semiconductors but silicon is much cheaper and precious IMO.

Anyhow, for some comfort you can look at past recessions to see how those panned out. There are some similarities to what’s going on now, but still we are in a never-before-seen situation here and nobody knows what will happen.

Worldwide Recession, 1980’s

Japan’s 2000’s recession

[nostradamus]

echo5 is no j6p. A monster train is coming and the securitization of subprime debt is driving it. In the engine car we have the fed, feeding the furnace with bushels of dollars at an ever-increasing speed that somehow never seems to keep pace with the train. In the caboose we find Joe 6-pack, discussing (during commercial breaks from Hee-Haw, American Idol, and Lost) what Obama’s pastor said or what Hillary’s husband did or where McCain was born or what Britney is up to these days.

Why not precious metals? Because they may be just as bubbly. What if someone, somewhere, discovers the mother-of-all-mother-lodes gold vein? What makes these metals “precious”? Just their rarity? I know gold is used in some semiconductors but silicon is much cheaper and precious IMO.

Anyhow, for some comfort you can look at past recessions to see how those panned out. There are some similarities to what’s going on now, but still we are in a never-before-seen situation here and nobody knows what will happen.

Worldwide Recession, 1980’s

Japan’s 2000’s recession

[drunkle]

your concerns regarding gold/oil/wheat are similar to mine. as well, there’s speculation that the recent price drops of 10%+ are the result of hedge funds and institutional investors liquidating due to margin calls and capital requirements.

short treasury yields are practically zero indicating a “flight to quality”. assuming that the smart money is driving the yields down and j6p is clueless, i’d probably join the smart money and hide in short treasuries.

btw, metals, foreign currencies, etc are not exactly “low risk”. historical price of gold vs today, for instance, and currency backlash such as what just happened when the fed cut .75 instead of the expected 1.0.

edit:

also, jim cramer has been selling gold and oil lately whereas, 6 months ago, he was calling gold bugs “kooks”. what does that tell you? tells me its time to get out of gold/oil…

[drunkle]

your concerns regarding gold/oil/wheat are similar to mine. as well, there’s speculation that the recent price drops of 10%+ are the result of hedge funds and institutional investors liquidating due to margin calls and capital requirements.

short treasury yields are practically zero indicating a “flight to quality”. assuming that the smart money is driving the yields down and j6p is clueless, i’d probably join the smart money and hide in short treasuries.

btw, metals, foreign currencies, etc are not exactly “low risk”. historical price of gold vs today, for instance, and currency backlash such as what just happened when the fed cut .75 instead of the expected 1.0.

edit:

also, jim cramer has been selling gold and oil lately whereas, 6 months ago, he was calling gold bugs “kooks”. what does that tell you? tells me its time to get out of gold/oil…

[drunkle]

your concerns regarding gold/oil/wheat are similar to mine. as well, there’s speculation that the recent price drops of 10%+ are the result of hedge funds and institutional investors liquidating due to margin calls and capital requirements.

short treasury yields are practically zero indicating a “flight to quality”. assuming that the smart money is driving the yields down and j6p is clueless, i’d probably join the smart money and hide in short treasuries.

btw, metals, foreign currencies, etc are not exactly “low risk”. historical price of gold vs today, for instance, and currency backlash such as what just happened when the fed cut .75 instead of the expected 1.0.

edit:

also, jim cramer has been selling gold and oil lately whereas, 6 months ago, he was calling gold bugs “kooks”. what does that tell you? tells me its time to get out of gold/oil…

[drunkle]

your concerns regarding gold/oil/wheat are similar to mine. as well, there’s speculation that the recent price drops of 10%+ are the result of hedge funds and institutional investors liquidating due to margin calls and capital requirements.

short treasury yields are practically zero indicating a “flight to quality”. assuming that the smart money is driving the yields down and j6p is clueless, i’d probably join the smart money and hide in short treasuries.

btw, metals, foreign currencies, etc are not exactly “low risk”. historical price of gold vs today, for instance, and currency backlash such as what just happened when the fed cut .75 instead of the expected 1.0.

edit:

also, jim cramer has been selling gold and oil lately whereas, 6 months ago, he was calling gold bugs “kooks”. what does that tell you? tells me its time to get out of gold/oil…

[echo5juliet]

Well I am not quite J6P nor a moron. I am a master of self-deprecation. =) I am an educated technologist and my expertise is in the flow of electrons not the flow of capital.

To your “seriousness” question, I have been leaning toward metals for the past three years. Today I am suffering from procrastination induced remorse and based on the points I laid out in the original post it seems to me that things can only go down from here. After all, the fed cannot ratchet rates down much lower and any movement they make only devalues the greenback even more. Gold in the 900s and oil dancing back and forth around $110 may be the peak to some but if all forces are considered (geopolitical, market/credit, subprime, commodity/resource constraints) the future appears quite likely to go even deeper into the abyss.

(note: my real niche talent is systemic analysis and on some levels there is not much difference between micro and macro systems, cause and effect, electrons, people, etc)

The only brass ring I can see for the dollar and American economy is that a pummeled dollar makes us a prime candidate for manufacturing and exporting. That may happen in time but it would take a fair amount of time (2-4 years) to revive our domestic manufacturing infrastructure that has been eviscerated by China. For some industries domestic manufacturing and exportation would not even help due to the fact that some industries depend on materials that are controlled globally to artificially maintain price parity between the Americas, Asia and Europe.

In those 2-4 years we Americans would face stagflation and a dollar swirling around the drain. By that time, the insiders would have already made the move to low risk investments like metals, foreign money markets, etc.

The real concern of J6P and non-finance people like me is the risk of being the straw man. The group of small investors that holds up the market while the insiders slide out from under. If things are really going to take a bigger nose dive in the next 3-9 months my family would appreciate it if I moved out from under before everything pops.

Make sense?

I keep waiting for someone to point out a variable that I have not considered or a basic concept I do not understand but so far that hasn’t happened.

I know I am being “glass if half full” but as one of my favorite bumper sticker slogans goes “Just because I am paranoid does not mean they are not following me”. That was another attempt at levity.

Seriously, where is the border between cynicism and realism?

[echo5juliet]

Well I am not quite J6P nor a moron. I am a master of self-deprecation. =) I am an educated technologist and my expertise is in the flow of electrons not the flow of capital.

To your “seriousness” question, I have been leaning toward metals for the past three years. Today I am suffering from procrastination induced remorse and based on the points I laid out in the original post it seems to me that things can only go down from here. After all, the fed cannot ratchet rates down much lower and any movement they make only devalues the greenback even more. Gold in the 900s and oil dancing back and forth around $110 may be the peak to some but if all forces are considered (geopolitical, market/credit, subprime, commodity/resource constraints) the future appears quite likely to go even deeper into the abyss.

(note: my real niche talent is systemic analysis and on some levels there is not much difference between micro and macro systems, cause and effect, electrons, people, etc)

The only brass ring I can see for the dollar and American economy is that a pummeled dollar makes us a prime candidate for manufacturing and exporting. That may happen in time but it would take a fair amount of time (2-4 years) to revive our domestic manufacturing infrastructure that has been eviscerated by China. For some industries domestic manufacturing and exportation would not even help due to the fact that some industries depend on materials that are controlled globally to artificially maintain price parity between the Americas, Asia and Europe.

In those 2-4 years we Americans would face stagflation and a dollar swirling around the drain. By that time, the insiders would have already made the move to low risk investments like metals, foreign money markets, etc.

The real concern of J6P and non-finance people like me is the risk of being the straw man. The group of small investors that holds up the market while the insiders slide out from under. If things are really going to take a bigger nose dive in the next 3-9 months my family would appreciate it if I moved out from under before everything pops.

Make sense?

I keep waiting for someone to point out a variable that I have not considered or a basic concept I do not understand but so far that hasn’t happened.

I know I am being “glass if half full” but as one of my favorite bumper sticker slogans goes “Just because I am paranoid does not mean they are not following me”. That was another attempt at levity.

Seriously, where is the border between cynicism and realism?

[echo5juliet]

Well I am not quite J6P nor a moron. I am a master of self-deprecation. =) I am an educated technologist and my expertise is in the flow of electrons not the flow of capital.

To your “seriousness” question, I have been leaning toward metals for the past three years. Today I am suffering from procrastination induced remorse and based on the points I laid out in the original post it seems to me that things can only go down from here. After all, the fed cannot ratchet rates down much lower and any movement they make only devalues the greenback even more. Gold in the 900s and oil dancing back and forth around $110 may be the peak to some but if all forces are considered (geopolitical, market/credit, subprime, commodity/resource constraints) the future appears quite likely to go even deeper into the abyss.

(note: my real niche talent is systemic analysis and on some levels there is not much difference between micro and macro systems, cause and effect, electrons, people, etc)

The only brass ring I can see for the dollar and American economy is that a pummeled dollar makes us a prime candidate for manufacturing and exporting. That may happen in time but it would take a fair amount of time (2-4 years) to revive our domestic manufacturing infrastructure that has been eviscerated by China. For some industries domestic manufacturing and exportation would not even help due to the fact that some industries depend on materials that are controlled globally to artificially maintain price parity between the Americas, Asia and Europe.

In those 2-4 years we Americans would face stagflation and a dollar swirling around the drain. By that time, the insiders would have already made the move to low risk investments like metals, foreign money markets, etc.

The real concern of J6P and non-finance people like me is the risk of being the straw man. The group of small investors that holds up the market while the insiders slide out from under. If things are really going to take a bigger nose dive in the next 3-9 months my family would appreciate it if I moved out from under before everything pops.

Make sense?

I keep waiting for someone to point out a variable that I have not considered or a basic concept I do not understand but so far that hasn’t happened.

I know I am being “glass if half full” but as one of my favorite bumper sticker slogans goes “Just because I am paranoid does not mean they are not following me”. That was another attempt at levity.

Seriously, where is the border between cynicism and realism?

[echo5juliet]

Well I am not quite J6P nor a moron. I am a master of self-deprecation. =) I am an educated technologist and my expertise is in the flow of electrons not the flow of capital.

To your “seriousness” question, I have been leaning toward metals for the past three years. Today I am suffering from procrastination induced remorse and based on the points I laid out in the original post it seems to me that things can only go down from here. After all, the fed cannot ratchet rates down much lower and any movement they make only devalues the greenback even more. Gold in the 900s and oil dancing back and forth around $110 may be the peak to some but if all forces are considered (geopolitical, market/credit, subprime, commodity/resource constraints) the future appears quite likely to go even deeper into the abyss.

(note: my real niche talent is systemic analysis and on some levels there is not much difference between micro and macro systems, cause and effect, electrons, people, etc)

The only brass ring I can see for the dollar and American economy is that a pummeled dollar makes us a prime candidate for manufacturing and exporting. That may happen in time but it would take a fair amount of time (2-4 years) to revive our domestic manufacturing infrastructure that has been eviscerated by China. For some industries domestic manufacturing and exportation would not even help due to the fact that some industries depend on materials that are controlled globally to artificially maintain price parity between the Americas, Asia and Europe.

In those 2-4 years we Americans would face stagflation and a dollar swirling around the drain. By that time, the insiders would have already made the move to low risk investments like metals, foreign money markets, etc.

The real concern of J6P and non-finance people like me is the risk of being the straw man. The group of small investors that holds up the market while the insiders slide out from under. If things are really going to take a bigger nose dive in the next 3-9 months my family would appreciate it if I moved out from under before everything pops.

Make sense?

I keep waiting for someone to point out a variable that I have not considered or a basic concept I do not understand but so far that hasn’t happened.

I know I am being “glass if half full” but as one of my favorite bumper sticker slogans goes “Just because I am paranoid does not mean they are not following me”. That was another attempt at levity.

Seriously, where is the border between cynicism and realism?

[jonnycsd]

I am semi-educated in finance – books more than practice. 3 years of public accounting and an MBA in finance from a very prestigious Ivy League school notorious for producing Wall Street types who end up in federal prison for white collar crime. Might be a few alumni on the hook at BSC. The following is my (lengthy) and humble opinion:

My take is that our fiat money will allow the necessary pain of correction to be spread over time and across several diverse groups – domestic and foreign. The powers that be can generate literally an endless supply of dollars to keep things from seizing up the way they did in November 1929. Economic activity was so frozen that it was difficult for farmers to get money to plant food, and there were tremendous dislocations of families and communities. No one came out a winner – well almost no one. We may have dodged a similar bullet last week. There may be a few more bullets to dodge. My take is that the current bear market rally is the market’s recognition that this Fed is willing to print as much money as needed to keep the economy from locking up. That’s the good thing about fiat money, and Heli-Ben is no Roy Young. The financial system will be kept lubricated and running. Period. Even it the dollar gets beat up in the process and hurts dollar savers, T-bill investors, CMO investors, foreign manufacturers, and domestic fixed income retirees and wage earners.

The bad thing about fiat money is that it does not function as a perfect store of value. Over time inflation erodes the value. Right now, the rate of erosion is increasing and that is destroying some wealth but not nearly as much as would be lost in a 1930s style scenario. People on this board write glibly about the ’30s, but the truth is there was not enough food to go around then. Like parts of Africa today people went hungry. Try telling your kids that they aren’t getting dinner for a couple nights in a row. Inflation is a lot better than food riots.

So, even if we end up with South American style hyper-inflation (extremely unlikely), the sun will come up every morning and people will go to work, earn wages and engage in economic activity. Period. Everyone should take comfort in this.

As far as how to hedge against further declines in the dollar – hell, one of the best dollar shorts around is a fixed rate 30 year mortgage. Fiat money begs to be gambled, borrowed and lent – after all, it is not real – it is ephemeral and meaningless – it is just an image, a shell, an emotion and a feeling. If you think the dollar is going down the toilet, just short it (i.e., borrow it at a low fixed rate of interest and pay it back later using post-inflation money). Lock in 5.75% for 30 years and laugh as inflation reduces the true value of what you owe. And you even get an income tax break along the way. Just gotta find the right situation so the depreciation of the collateral asset you purchase doesn’t eat into the gains from your short position. I did this and got a nice 30 year fixed on a property one block from the beach with a good future as a weekly rental – or a vacation home if I don’t need the income. Bring it on Bennie – drive that dollar into the dirt! After inflation and after taxes my cost of money is right about zero and may soon go negative. I think I’ll go sneak a corona on the sand tomorrow afternoon and think about this with a smile. I love getting a “free” 30 year short position on the dollar, especially when the valuation cycle of the collateral used to buy the position is 5 to 10 years.

If you have a more immediate investment horizon, you could look at equities, which tend to do OK during inflation. Double down with foreign companies. Look at some Hong Kong equities. China has a real economy now so even if the USA stops buying from them you could get some good exposure there. The patriotic way to play the declining dollar would be to buy shares in a domestic company with dollar costs and non-dollar pricing (i.e., they make stuff here, not in Mexico and sell it anywhere but the US off a price sheet that uses the buyer’s currency). Great concept, not so sure too many of these exists. Not yet anyway, but they may soon evolve.

Rather than dig a fox hole you should get flexible, diversified and fight a guerrilla war – hit and move, don’t play by the “rules”. Spread your chips around the table and expect to take some hits. And don’t forget that the Fed is going to do whatever it takes to keep the market liquid – $200BB, $600BB, $1TT, $2TT – whatever it takes – even if it means hyper-inflation (it won’t). It’s a no limit table and there will be no food riots. Inflation will take its vigorish and we will all be bit poorer because of wasteful practices like war. Despite Ron Paul’s protestations to the contrary, the shell game of fiat money makes us wealthier not poorer.

[jonnycsd]

PS – Um, one other thing . . .

The other traditional “safe haven” against inflation . . .

um, that other one, the one that is not metals, is, um . . .

[whisper] real estate.

(the Pigs are gonna masacre me)

[NotCranky]

Yo jonny,
I do admire the gentlemen on here that disagree with you but if I were not a liquored up j6p, I would say it the way you did.

Another thing that didn’t exist in 1929 to the same extent that it does today is baby boomers and pre- baby boomers with pensions. They might be fiat money pensions but they are going to get paid just the same.

[SD Realtor]

Well said Rus. I would agree with you.

Johnny you better keep your head down in that foxhole man. Just where in the heck do you think you are? You can’t come around these parts saying things like that!

The only thing I may say would be if home prices lose value quicker then the dollar deflates then it pays to wait doesn’t it? Or do I have it the other way around?

Anyways very thoughtful post.

SD Realtor

[Aecetia]

Fox holes or bunkers should be dug in the back yard, not the front yard. IMO.

[Aecetia]

Fox holes or bunkers should be dug in the back yard, not the front yard. IMO.

[Aecetia]

Fox holes or bunkers should be dug in the back yard, not the front yard. IMO.

[Aecetia]

Fox holes or bunkers should be dug in the back yard, not the front yard. IMO.

[Aecetia]

Fox holes or bunkers should be dug in the back yard, not the front yard. IMO.

[SD Realtor]

Well said Rus. I would agree with you.

Johnny you better keep your head down in that foxhole man. Just where in the heck do you think you are? You can’t come around these parts saying things like that!

The only thing I may say would be if home prices lose value quicker then the dollar deflates then it pays to wait doesn’t it? Or do I have it the other way around?

Anyways very thoughtful post.

SD Realtor

[SD Realtor]

Well said Rus. I would agree with you.

Johnny you better keep your head down in that foxhole man. Just where in the heck do you think you are? You can’t come around these parts saying things like that!

The only thing I may say would be if home prices lose value quicker then the dollar deflates then it pays to wait doesn’t it? Or do I have it the other way around?

Anyways very thoughtful post.

SD Realtor

[SD Realtor]

Well said Rus. I would agree with you.

Johnny you better keep your head down in that foxhole man. Just where in the heck do you think you are? You can’t come around these parts saying things like that!

The only thing I may say would be if home prices lose value quicker then the dollar deflates then it pays to wait doesn’t it? Or do I have it the other way around?

Anyways very thoughtful post.

SD Realtor

[SD Realtor]

Well said Rus. I would agree with you.

Johnny you better keep your head down in that foxhole man. Just where in the heck do you think you are? You can’t come around these parts saying things like that!

The only thing I may say would be if home prices lose value quicker then the dollar deflates then it pays to wait doesn’t it? Or do I have it the other way around?

Anyways very thoughtful post.

SD Realtor

[peterb]

It seems like there’s a lot of reference to previous business cycles. With the underlying assumption that this cycle will be very similar to the last couple of business cycles since the late 1970’s. There’s strong evidence that business cycles are dependable, given that similar dynamics exist through the various cycles. My main concern about this cycle is that we may not have similar dynamics.

There’s no doubt the Fed will create whatever amount of dollars needed and they’ve done this in the past. So that dynamic is the same. But what about the dynamics needed to begin an economic recovery? Will the rest of the world buy dollar denominated assets because they’re now cheaper? Will all the money on the side lines come in when prices stabilize after declining?

The Japanese put their rate at nearly 0 and they make things the world likes to buy and they still experienced a very protracted period of non-growth. I guess I’m wondering why we may experience anything different or worse?

Does anybody have any theory about how the US economy will recover once the cheap money kicks in?

[peterb]

It seems like there’s a lot of reference to previous business cycles. With the underlying assumption that this cycle will be very similar to the last couple of business cycles since the late 1970’s. There’s strong evidence that business cycles are dependable, given that similar dynamics exist through the various cycles. My main concern about this cycle is that we may not have similar dynamics.

There’s no doubt the Fed will create whatever amount of dollars needed and they’ve done this in the past. So that dynamic is the same. But what about the dynamics needed to begin an economic recovery? Will the rest of the world buy dollar denominated assets because they’re now cheaper? Will all the money on the side lines come in when prices stabilize after declining?

The Japanese put their rate at nearly 0 and they make things the world likes to buy and they still experienced a very protracted period of non-growth. I guess I’m wondering why we may experience anything different or worse?

Does anybody have any theory about how the US economy will recover once the cheap money kicks in?

[peterb]

It seems like there’s a lot of reference to previous business cycles. With the underlying assumption that this cycle will be very similar to the last couple of business cycles since the late 1970’s. There’s strong evidence that business cycles are dependable, given that similar dynamics exist through the various cycles. My main concern about this cycle is that we may not have similar dynamics.

There’s no doubt the Fed will create whatever amount of dollars needed and they’ve done this in the past. So that dynamic is the same. But what about the dynamics needed to begin an economic recovery? Will the rest of the world buy dollar denominated assets because they’re now cheaper? Will all the money on the side lines come in when prices stabilize after declining?

The Japanese put their rate at nearly 0 and they make things the world likes to buy and they still experienced a very protracted period of non-growth. I guess I’m wondering why we may experience anything different or worse?

Does anybody have any theory about how the US economy will recover once the cheap money kicks in?

[peterb]

It seems like there’s a lot of reference to previous business cycles. With the underlying assumption that this cycle will be very similar to the last couple of business cycles since the late 1970’s. There’s strong evidence that business cycles are dependable, given that similar dynamics exist through the various cycles. My main concern about this cycle is that we may not have similar dynamics.

There’s no doubt the Fed will create whatever amount of dollars needed and they’ve done this in the past. So that dynamic is the same. But what about the dynamics needed to begin an economic recovery? Will the rest of the world buy dollar denominated assets because they’re now cheaper? Will all the money on the side lines come in when prices stabilize after declining?

The Japanese put their rate at nearly 0 and they make things the world likes to buy and they still experienced a very protracted period of non-growth. I guess I’m wondering why we may experience anything different or worse?

Does anybody have any theory about how the US economy will recover once the cheap money kicks in?

[peterb]

It seems like there’s a lot of reference to previous business cycles. With the underlying assumption that this cycle will be very similar to the last couple of business cycles since the late 1970’s. There’s strong evidence that business cycles are dependable, given that similar dynamics exist through the various cycles. My main concern about this cycle is that we may not have similar dynamics.

There’s no doubt the Fed will create whatever amount of dollars needed and they’ve done this in the past. So that dynamic is the same. But what about the dynamics needed to begin an economic recovery? Will the rest of the world buy dollar denominated assets because they’re now cheaper? Will all the money on the side lines come in when prices stabilize after declining?

The Japanese put their rate at nearly 0 and they make things the world likes to buy and they still experienced a very protracted period of non-growth. I guess I’m wondering why we may experience anything different or worse?

Does anybody have any theory about how the US economy will recover once the cheap money kicks in?

[NotCranky]

Yo jonny,
I do admire the gentlemen on here that disagree with you but if I were not a liquored up j6p, I would say it the way you did.

Another thing that didn’t exist in 1929 to the same extent that it does today is baby boomers and pre- baby boomers with pensions. They might be fiat money pensions but they are going to get paid just the same.

[NotCranky]

Yo jonny,
I do admire the gentlemen on here that disagree with you but if I were not a liquored up j6p, I would say it the way you did.

Another thing that didn’t exist in 1929 to the same extent that it does today is baby boomers and pre- baby boomers with pensions. They might be fiat money pensions but they are going to get paid just the same.

[NotCranky]

Yo jonny,
I do admire the gentlemen on here that disagree with you but if I were not a liquored up j6p, I would say it the way you did.

Another thing that didn’t exist in 1929 to the same extent that it does today is baby boomers and pre- baby boomers with pensions. They might be fiat money pensions but they are going to get paid just the same.

[NotCranky]

Yo jonny,
I do admire the gentlemen on here that disagree with you but if I were not a liquored up j6p, I would say it the way you did.

Another thing that didn’t exist in 1929 to the same extent that it does today is baby boomers and pre- baby boomers with pensions. They might be fiat money pensions but they are going to get paid just the same.

[jonnycsd]

PS – Um, one other thing . . .

The other traditional “safe haven” against inflation . . .

um, that other one, the one that is not metals, is, um . . .

[whisper] real estate.

(the Pigs are gonna masacre me)

[jonnycsd]

PS – Um, one other thing . . .

The other traditional “safe haven” against inflation . . .

um, that other one, the one that is not metals, is, um . . .

[whisper] real estate.

(the Pigs are gonna masacre me)

[jonnycsd]

PS – Um, one other thing . . .

The other traditional “safe haven” against inflation . . .

um, that other one, the one that is not metals, is, um . . .

[whisper] real estate.

(the Pigs are gonna masacre me)

[jonnycsd]

PS – Um, one other thing . . .

The other traditional “safe haven” against inflation . . .

um, that other one, the one that is not metals, is, um . . .

[whisper] real estate.

(the Pigs are gonna masacre me)

[drunkle]

johnny:

the recent readings i’ve done are contradictory to your claims and i would like to explore this further…

you say that the fed can essentially print unlimited dollars. but that’s false; when the value of the dollar hits zero, no amount of additional printing will help.

inflation is winding down as credit is contracting. the high rate of defaults are destroying banks and brokers who built jenga structures of leverage off liar loans. these banks and brokers are scrambling to shore up capital and not scrambling to issue more bad loans.

you’re suggesting that inflation is a means of producing infinite growth. that by printing money, value will be pushed up. which is not logical; an apple is an apple at 10 cents or 20 dollars. the price of the apple may increase with everyone awash in funny money, but the value is the same.

evidence of deflation is here: home prices, job losses, tax revenue losses, corporate earnings losses… these impacts will filter through the economy, tanking the prices of food, gold, oil, etc because demand will evaporate. evaporation of demand for overpriced homes is what started this ball rolling. when liar loans became the norm along with free credit, inflation did occur. but destruction of credit is now causing deflation.

the fed cannot print money. interbank interest rate cuts do not equal printing of money. interbank interest rate cuts only matter if banks are lending to each other. they are not. discount window, taf and taf2 loans require collateral and while collateral is becoming pretty liberal, while allowable institutions is becoming liberal, that’s still not the same as printing money; if the collateral continues to dump in value, the borrowing institutions must pay the difference.

purchasing a home at 3x wages may hedge against inflation, but not at 9x wages.

[echo5juliet]

Drunkle, thank you. This is the type of exchange I was hoping for. While not a J6P I am hard pressed to see the potential silver linings and bright future when I am looking at some of the same current day situations you mentioned (home prices, credit, jobs, consumer confid, etc).

When it comes down to it, I am a little fish that is smart enough to know a storm is brewing. I just don’t know how bad or how safe my position really is.

By little fish, I mean I am not an active investor. I have $100K in a 401K (employee program) and it is managed by a firm (Principal). No real choice, just shares of their canned portfolios. I have a house bought in ’98 for $250K on a 6.5% 30yr fixed in a nice part of town that allows me salty sea breezes and nightly sea world fireworks. East of I5 but only by a few blocks. A $100K second on a variable spend on some fixups and a couple frivolous vacations.

So I sit here and wonder just how bad it will be and which demographic will get stung the hardest.

[blahblahblah]

The deflation/inflation scenario question is interesting and I see the arguments for both cases. However, the one thing I see in favor of the inflationary scenario is that it will benefit the Maja Playaz at the very tippy-top of the pyramid. They have already sheltered their wealth in other currencies, commodities, etc… If the dollar continues to slide against their investments, they will be able to snap up everything super-cheap once the collapse is complete. They will also use their power as market makers to manipulate currencies and commodities to fleece the little fish along the way.

If the deflation scenario takes hold, it will be harder for the Maja Playaz to sweep up the carnage for pennies on the dollar at the end, since their investments will be devalued as well. Since the Maja Playaz are the ones writing all the laws, getting all the government bailouts, etc… it is likely that they will get their way. Personally I think this has been their MO all along…

The tricky part for us little fish is to find some place to keep our wealth so that we don’t get fleeced as well. Gold and silver are very easy for the Maja Playaz to manipulate, so if you’re in those be prepared for a bumpy ride. Beyond that I have no idea. Jim Rogers says agriculture, but commodity investing seems risky and complicated. Perhaps we’re getting ready for another big move in the Beanie Baby market — it’s been depressed for years! NOT INVESTMENT ADVICE.

[blahblahblah]

The deflation/inflation scenario question is interesting and I see the arguments for both cases. However, the one thing I see in favor of the inflationary scenario is that it will benefit the Maja Playaz at the very tippy-top of the pyramid. They have already sheltered their wealth in other currencies, commodities, etc… If the dollar continues to slide against their investments, they will be able to snap up everything super-cheap once the collapse is complete. They will also use their power as market makers to manipulate currencies and commodities to fleece the little fish along the way.

If the deflation scenario takes hold, it will be harder for the Maja Playaz to sweep up the carnage for pennies on the dollar at the end, since their investments will be devalued as well. Since the Maja Playaz are the ones writing all the laws, getting all the government bailouts, etc… it is likely that they will get their way. Personally I think this has been their MO all along…

The tricky part for us little fish is to find some place to keep our wealth so that we don’t get fleeced as well. Gold and silver are very easy for the Maja Playaz to manipulate, so if you’re in those be prepared for a bumpy ride. Beyond that I have no idea. Jim Rogers says agriculture, but commodity investing seems risky and complicated. Perhaps we’re getting ready for another big move in the Beanie Baby market — it’s been depressed for years! NOT INVESTMENT ADVICE.

[blahblahblah]

The deflation/inflation scenario question is interesting and I see the arguments for both cases. However, the one thing I see in favor of the inflationary scenario is that it will benefit the Maja Playaz at the very tippy-top of the pyramid. They have already sheltered their wealth in other currencies, commodities, etc… If the dollar continues to slide against their investments, they will be able to snap up everything super-cheap once the collapse is complete. They will also use their power as market makers to manipulate currencies and commodities to fleece the little fish along the way.

If the deflation scenario takes hold, it will be harder for the Maja Playaz to sweep up the carnage for pennies on the dollar at the end, since their investments will be devalued as well. Since the Maja Playaz are the ones writing all the laws, getting all the government bailouts, etc… it is likely that they will get their way. Personally I think this has been their MO all along…

The tricky part for us little fish is to find some place to keep our wealth so that we don’t get fleeced as well. Gold and silver are very easy for the Maja Playaz to manipulate, so if you’re in those be prepared for a bumpy ride. Beyond that I have no idea. Jim Rogers says agriculture, but commodity investing seems risky and complicated. Perhaps we’re getting ready for another big move in the Beanie Baby market — it’s been depressed for years! NOT INVESTMENT ADVICE.

[blahblahblah]

The deflation/inflation scenario question is interesting and I see the arguments for both cases. However, the one thing I see in favor of the inflationary scenario is that it will benefit the Maja Playaz at the very tippy-top of the pyramid. They have already sheltered their wealth in other currencies, commodities, etc… If the dollar continues to slide against their investments, they will be able to snap up everything super-cheap once the collapse is complete. They will also use their power as market makers to manipulate currencies and commodities to fleece the little fish along the way.

If the deflation scenario takes hold, it will be harder for the Maja Playaz to sweep up the carnage for pennies on the dollar at the end, since their investments will be devalued as well. Since the Maja Playaz are the ones writing all the laws, getting all the government bailouts, etc… it is likely that they will get their way. Personally I think this has been their MO all along…

The tricky part for us little fish is to find some place to keep our wealth so that we don’t get fleeced as well. Gold and silver are very easy for the Maja Playaz to manipulate, so if you’re in those be prepared for a bumpy ride. Beyond that I have no idea. Jim Rogers says agriculture, but commodity investing seems risky and complicated. Perhaps we’re getting ready for another big move in the Beanie Baby market — it’s been depressed for years! NOT INVESTMENT ADVICE.

[blahblahblah]

The deflation/inflation scenario question is interesting and I see the arguments for both cases. However, the one thing I see in favor of the inflationary scenario is that it will benefit the Maja Playaz at the very tippy-top of the pyramid. They have already sheltered their wealth in other currencies, commodities, etc… If the dollar continues to slide against their investments, they will be able to snap up everything super-cheap once the collapse is complete. They will also use their power as market makers to manipulate currencies and commodities to fleece the little fish along the way.

If the deflation scenario takes hold, it will be harder for the Maja Playaz to sweep up the carnage for pennies on the dollar at the end, since their investments will be devalued as well. Since the Maja Playaz are the ones writing all the laws, getting all the government bailouts, etc… it is likely that they will get their way. Personally I think this has been their MO all along…

The tricky part for us little fish is to find some place to keep our wealth so that we don’t get fleeced as well. Gold and silver are very easy for the Maja Playaz to manipulate, so if you’re in those be prepared for a bumpy ride. Beyond that I have no idea. Jim Rogers says agriculture, but commodity investing seems risky and complicated. Perhaps we’re getting ready for another big move in the Beanie Baby market — it’s been depressed for years! NOT INVESTMENT ADVICE.

[drunkle]

echo:

i’ve already made the suggestion that you park your money in treasuries. if your 401k fund does not have a pure treasury option, take your pick on the bond funds. odds are, the bond values will be propped up by the fed/gov or at least, the values will not drop as hard as the equity funds. but cross your fingers just in case.

[drunkle]

echo:

i’ve already made the suggestion that you park your money in treasuries. if your 401k fund does not have a pure treasury option, take your pick on the bond funds. odds are, the bond values will be propped up by the fed/gov or at least, the values will not drop as hard as the equity funds. but cross your fingers just in case.

[drunkle]

echo:

i’ve already made the suggestion that you park your money in treasuries. if your 401k fund does not have a pure treasury option, take your pick on the bond funds. odds are, the bond values will be propped up by the fed/gov or at least, the values will not drop as hard as the equity funds. but cross your fingers just in case.

[drunkle]

echo:

i’ve already made the suggestion that you park your money in treasuries. if your 401k fund does not have a pure treasury option, take your pick on the bond funds. odds are, the bond values will be propped up by the fed/gov or at least, the values will not drop as hard as the equity funds. but cross your fingers just in case.

[drunkle]

echo:

i’ve already made the suggestion that you park your money in treasuries. if your 401k fund does not have a pure treasury option, take your pick on the bond funds. odds are, the bond values will be propped up by the fed/gov or at least, the values will not drop as hard as the equity funds. but cross your fingers just in case.

[echo5juliet]

Drunkle, thank you. This is the type of exchange I was hoping for. While not a J6P I am hard pressed to see the potential silver linings and bright future when I am looking at some of the same current day situations you mentioned (home prices, credit, jobs, consumer confid, etc).

When it comes down to it, I am a little fish that is smart enough to know a storm is brewing. I just don’t know how bad or how safe my position really is.

By little fish, I mean I am not an active investor. I have $100K in a 401K (employee program) and it is managed by a firm (Principal). No real choice, just shares of their canned portfolios. I have a house bought in ’98 for $250K on a 6.5% 30yr fixed in a nice part of town that allows me salty sea breezes and nightly sea world fireworks. East of I5 but only by a few blocks. A $100K second on a variable spend on some fixups and a couple frivolous vacations.

So I sit here and wonder just how bad it will be and which demographic will get stung the hardest.

[echo5juliet]

Drunkle, thank you. This is the type of exchange I was hoping for. While not a J6P I am hard pressed to see the potential silver linings and bright future when I am looking at some of the same current day situations you mentioned (home prices, credit, jobs, consumer confid, etc).

When it comes down to it, I am a little fish that is smart enough to know a storm is brewing. I just don’t know how bad or how safe my position really is.

By little fish, I mean I am not an active investor. I have $100K in a 401K (employee program) and it is managed by a firm (Principal). No real choice, just shares of their canned portfolios. I have a house bought in ’98 for $250K on a 6.5% 30yr fixed in a nice part of town that allows me salty sea breezes and nightly sea world fireworks. East of I5 but only by a few blocks. A $100K second on a variable spend on some fixups and a couple frivolous vacations.

So I sit here and wonder just how bad it will be and which demographic will get stung the hardest.

[echo5juliet]

Drunkle, thank you. This is the type of exchange I was hoping for. While not a J6P I am hard pressed to see the potential silver linings and bright future when I am looking at some of the same current day situations you mentioned (home prices, credit, jobs, consumer confid, etc).

When it comes down to it, I am a little fish that is smart enough to know a storm is brewing. I just don’t know how bad or how safe my position really is.

By little fish, I mean I am not an active investor. I have $100K in a 401K (employee program) and it is managed by a firm (Principal). No real choice, just shares of their canned portfolios. I have a house bought in ’98 for $250K on a 6.5% 30yr fixed in a nice part of town that allows me salty sea breezes and nightly sea world fireworks. East of I5 but only by a few blocks. A $100K second on a variable spend on some fixups and a couple frivolous vacations.

So I sit here and wonder just how bad it will be and which demographic will get stung the hardest.

[echo5juliet]

Drunkle, thank you. This is the type of exchange I was hoping for. While not a J6P I am hard pressed to see the potential silver linings and bright future when I am looking at some of the same current day situations you mentioned (home prices, credit, jobs, consumer confid, etc).

When it comes down to it, I am a little fish that is smart enough to know a storm is brewing. I just don’t know how bad or how safe my position really is.

By little fish, I mean I am not an active investor. I have $100K in a 401K (employee program) and it is managed by a firm (Principal). No real choice, just shares of their canned portfolios. I have a house bought in ’98 for $250K on a 6.5% 30yr fixed in a nice part of town that allows me salty sea breezes and nightly sea world fireworks. East of I5 but only by a few blocks. A $100K second on a variable spend on some fixups and a couple frivolous vacations.

So I sit here and wonder just how bad it will be and which demographic will get stung the hardest.

[Anonymous]

The inflation/deflation debate.

As far as I am concern, the game is not over yet.

Right now, we are having a monetary deflation as noted by decline asset values in house, stock…etc. We are also having a consumer price inflation in energy and food that I feel mostly is driven by speculation.

If the U.S. government doesn’t print any more money, we will eventually deflate.

If the U.S. government decides to print money to monetize debt, we will hyper-inflate.

The debate should be, can/would the U.S. government monetize the debt. They have the next move, and your move should depend on their move.

[echo5juliet]

What does the untrained eye look for to know when the fed/govt monetizes the debt or not. Is there a specific action or buzz word that means that the fed is running the printers 24/7?

[mrwrong]

Don’t you love capitalism? Smart people are having a hard time figuring out how to preserve the fruit of their labor! When unsure, diversify.

Mr. Wrong

[mrwrong]

Don’t you love capitalism? Smart people are having a hard time figuring out how to preserve the fruit of their labor! When unsure, diversify.

Mr. Wrong

[mrwrong]

Don’t you love capitalism? Smart people are having a hard time figuring out how to preserve the fruit of their labor! When unsure, diversify.

Mr. Wrong

[mrwrong]

Don’t you love capitalism? Smart people are having a hard time figuring out how to preserve the fruit of their labor! When unsure, diversify.

Mr. Wrong

[mrwrong]

Don’t you love capitalism? Smart people are having a hard time figuring out how to preserve the fruit of their labor! When unsure, diversify.

Mr. Wrong

[New_Renter]

It’s called the Money Supply. There are various govt. published figures that track it (M1, M2, M3) with M3 being the most important. But wait, guess what? The Fed stopped publishing M3 (the most important of the three) in 2006! See this link for more info:

http://www.inflationdata.com/inflation/Inflation_Articles/M3_Money_supply.asp

The way to tell when the Fed turned on the spigot used to be as simple as watching M3. But, apparently some kind of politics have hidden it from public consumption. Maybe the Fed/Govt. got concerned that the public would actually find out how drastically they were de-basing our currency!

[SD Realtor]

New_renter have you gone to shadowstats.com. Pretty good stuff there with regards to the non existent M3 published information.

SD Realtor

[fuggy]

Want to hear a lyin’ realtor story? I was looking at a foreclosed house for sale with a realtor. I was calculating what I could earn renting it out. Nothing, I would be supporting the renters’ beach lifestyle.
So she says “I have investors in Orlando who buy homes in Titusville (florida)for $60,000, put $10,000 into them then rent them out to Section 8 for $1200 a month!”

I went home and called Section 8 in Titusville. The most they ever pay, ALL bills paid for a big house is $750. Just the AC bill in summer could eat that up. They were dumbfounded at the realtor’s story. Me too!

fuggy

[fuggy]

Want to hear a lyin’ realtor story? I was looking at a foreclosed house for sale with a realtor. I was calculating what I could earn renting it out. Nothing, I would be supporting the renters’ beach lifestyle.
So she says “I have investors in Orlando who buy homes in Titusville (florida)for $60,000, put $10,000 into them then rent them out to Section 8 for $1200 a month!”

I went home and called Section 8 in Titusville. The most they ever pay, ALL bills paid for a big house is $750. Just the AC bill in summer could eat that up. They were dumbfounded at the realtor’s story. Me too!

fuggy

[fuggy]

Want to hear a lyin’ realtor story? I was looking at a foreclosed house for sale with a realtor. I was calculating what I could earn renting it out. Nothing, I would be supporting the renters’ beach lifestyle.
So she says “I have investors in Orlando who buy homes in Titusville (florida)for $60,000, put $10,000 into them then rent them out to Section 8 for $1200 a month!”

I went home and called Section 8 in Titusville. The most they ever pay, ALL bills paid for a big house is $750. Just the AC bill in summer could eat that up. They were dumbfounded at the realtor’s story. Me too!

fuggy

[fuggy]

Want to hear a lyin’ realtor story? I was looking at a foreclosed house for sale with a realtor. I was calculating what I could earn renting it out. Nothing, I would be supporting the renters’ beach lifestyle.
So she says “I have investors in Orlando who buy homes in Titusville (florida)for $60,000, put $10,000 into them then rent them out to Section 8 for $1200 a month!”

I went home and called Section 8 in Titusville. The most they ever pay, ALL bills paid for a big house is $750. Just the AC bill in summer could eat that up. They were dumbfounded at the realtor’s story. Me too!

fuggy

[fuggy]

Want to hear a lyin’ realtor story? I was looking at a foreclosed house for sale with a realtor. I was calculating what I could earn renting it out. Nothing, I would be supporting the renters’ beach lifestyle.
So she says “I have investors in Orlando who buy homes in Titusville (florida)for $60,000, put $10,000 into them then rent them out to Section 8 for $1200 a month!”

I went home and called Section 8 in Titusville. The most they ever pay, ALL bills paid for a big house is $750. Just the AC bill in summer could eat that up. They were dumbfounded at the realtor’s story. Me too!

fuggy

[SD Realtor]

New_renter have you gone to shadowstats.com. Pretty good stuff there with regards to the non existent M3 published information.

SD Realtor

[SD Realtor]

New_renter have you gone to shadowstats.com. Pretty good stuff there with regards to the non existent M3 published information.

SD Realtor

[SD Realtor]

New_renter have you gone to shadowstats.com. Pretty good stuff there with regards to the non existent M3 published information.

SD Realtor

[SD Realtor]

New_renter have you gone to shadowstats.com. Pretty good stuff there with regards to the non existent M3 published information.

SD Realtor

[New_Renter]

It’s called the Money Supply. There are various govt. published figures that track it (M1, M2, M3) with M3 being the most important. But wait, guess what? The Fed stopped publishing M3 (the most important of the three) in 2006! See this link for more info:

http://www.inflationdata.com/inflation/Inflation_Articles/M3_Money_supply.asp

The way to tell when the Fed turned on the spigot used to be as simple as watching M3. But, apparently some kind of politics have hidden it from public consumption. Maybe the Fed/Govt. got concerned that the public would actually find out how drastically they were de-basing our currency!

[New_Renter]

It’s called the Money Supply. There are various govt. published figures that track it (M1, M2, M3) with M3 being the most important. But wait, guess what? The Fed stopped publishing M3 (the most important of the three) in 2006! See this link for more info:

http://www.inflationdata.com/inflation/Inflation_Articles/M3_Money_supply.asp

The way to tell when the Fed turned on the spigot used to be as simple as watching M3. But, apparently some kind of politics have hidden it from public consumption. Maybe the Fed/Govt. got concerned that the public would actually find out how drastically they were de-basing our currency!

[New_Renter]

It’s called the Money Supply. There are various govt. published figures that track it (M1, M2, M3) with M3 being the most important. But wait, guess what? The Fed stopped publishing M3 (the most important of the three) in 2006! See this link for more info:

http://www.inflationdata.com/inflation/Inflation_Articles/M3_Money_supply.asp

The way to tell when the Fed turned on the spigot used to be as simple as watching M3. But, apparently some kind of politics have hidden it from public consumption. Maybe the Fed/Govt. got concerned that the public would actually find out how drastically they were de-basing our currency!

[New_Renter]

It’s called the Money Supply. There are various govt. published figures that track it (M1, M2, M3) with M3 being the most important. But wait, guess what? The Fed stopped publishing M3 (the most important of the three) in 2006! See this link for more info:

http://www.inflationdata.com/inflation/Inflation_Articles/M3_Money_supply.asp

The way to tell when the Fed turned on the spigot used to be as simple as watching M3. But, apparently some kind of politics have hidden it from public consumption. Maybe the Fed/Govt. got concerned that the public would actually find out how drastically they were de-basing our currency!

[echo5juliet]

What does the untrained eye look for to know when the fed/govt monetizes the debt or not. Is there a specific action or buzz word that means that the fed is running the printers 24/7?

[echo5juliet]

What does the untrained eye look for to know when the fed/govt monetizes the debt or not. Is there a specific action or buzz word that means that the fed is running the printers 24/7?

[echo5juliet]

What does the untrained eye look for to know when the fed/govt monetizes the debt or not. Is there a specific action or buzz word that means that the fed is running the printers 24/7?

[echo5juliet]

What does the untrained eye look for to know when the fed/govt monetizes the debt or not. Is there a specific action or buzz word that means that the fed is running the printers 24/7?

[Anonymous]

The inflation/deflation debate.

As far as I am concern, the game is not over yet.

Right now, we are having a monetary deflation as noted by decline asset values in house, stock…etc. We are also having a consumer price inflation in energy and food that I feel mostly is driven by speculation.

If the U.S. government doesn’t print any more money, we will eventually deflate.

If the U.S. government decides to print money to monetize debt, we will hyper-inflate.

The debate should be, can/would the U.S. government monetize the debt. They have the next move, and your move should depend on their move.

[Anonymous]

The inflation/deflation debate.

As far as I am concern, the game is not over yet.

Right now, we are having a monetary deflation as noted by decline asset values in house, stock…etc. We are also having a consumer price inflation in energy and food that I feel mostly is driven by speculation.

If the U.S. government doesn’t print any more money, we will eventually deflate.

If the U.S. government decides to print money to monetize debt, we will hyper-inflate.

The debate should be, can/would the U.S. government monetize the debt. They have the next move, and your move should depend on their move.

[Anonymous]

The inflation/deflation debate.

As far as I am concern, the game is not over yet.

Right now, we are having a monetary deflation as noted by decline asset values in house, stock…etc. We are also having a consumer price inflation in energy and food that I feel mostly is driven by speculation.

If the U.S. government doesn’t print any more money, we will eventually deflate.

If the U.S. government decides to print money to monetize debt, we will hyper-inflate.

The debate should be, can/would the U.S. government monetize the debt. They have the next move, and your move should depend on their move.

[Anonymous]

The inflation/deflation debate.

As far as I am concern, the game is not over yet.

Right now, we are having a monetary deflation as noted by decline asset values in house, stock…etc. We are also having a consumer price inflation in energy and food that I feel mostly is driven by speculation.

If the U.S. government doesn’t print any more money, we will eventually deflate.

If the U.S. government decides to print money to monetize debt, we will hyper-inflate.

The debate should be, can/would the U.S. government monetize the debt. They have the next move, and your move should depend on their move.

[jonnycsd]

Oh Drunkle. It would have been naïve of me to think I could put such a post on here and not get some response like yours. I see three problems that are keeping us apart– an apparent misunderstanding of terminology, extrapolation to long term conclusions from a few discrete events you observe in the immediate time frame, and reading things into my post that were not said.

To get a better feel for fiat money and how it works there is a great book called “Frozen Desire – The Meaning of Money”. It is entertaining, non-technical and very engaging.

“recent readings i’ve done “
What have you been reading?

“you say that the fed can essentially print unlimited dollars. but that’s false; when the value of the dollar hits zero, no amount of additional printing will help.”
I’m not sure what you are trying to say here and you commingle two issues –
1.How much money the Fed can print
2.The point at which additional printing no longer helps

I’ll just take the second topic for now; the point at which creating additional money stops helping and starts hurting will be reached long before the dollar becomes worthless.

“you’re suggesting that inflation is a means of producing infinite growth”

Please re-read my post. What I wrote is that increasing the supply of money (and thereby enhancing liquidity and curing certain solvency problems) will ensure that economic activity does not cease. This is a very different than the “infinite growth” concept you are reading into my words. Nowhere do I suggest we will not have a recession. Why do you believe my post suggests that we will not have a recession?

“an apple is an apple at 10 cents or 20 dollars. the price of the apple may increase with everyone awash in funny money, but the value is the same”

I do not agree with you that real values do not fluctuate over time – they do fluctuate, and sometimes in the extreme. But we do agree that price fluctuations can be caused by changes in the value of fiat money. (By the way, reserve currencies fluctuate in value too, it is just not as predictable or controllable as fiat money.) For example, the real value of a gallon of gasoline is higher now than it was a year ago. I don’t follow apple prices, but with out a doubt, like any other asset, good or service, they also do not have a constant real value.

“evidence of deflation is here”
I agree that prices are decreasing in some areas – mostly in assets – but that does not mean that there is currency deflation. In many cases it means that real values are decreasing. In other areas, prices are going up – mostly in goods and services – which alone does not necessarily indicate currency inflation.

These differential movements in valuation are, obviously, what is needed to correct the problem of over valued housing which you so clearly call out – assets (like real estate) are too expensive relative to wages – so prices of goods and services need to rise (and over time wages with them), while asset prices, (home prices in particular), need to decline – which decline is the half of the correction equation Piggington.com focuses on.

These price changes are happening as a mix of changes in real value and currency inflation. It will not be a straight line, and the process will not complete this year. However, as said on another Pigginton post “eventually the twain shall meet”.

Between and now there will be some major upheaval along the way. But there will be no food riots. The “system” will not collapse and the dollar will not go to zero.

You also say “the fed cannot print money” but this is inconsistent with your earlier assertion that “when the value of the dollar hits zero, no amount of additional printing will help.”

The truth is that the Fed can and does create (“print”) money. Where do you believe the Fed gets the dollars they lend and dollars they use to buy up government debt (and CDOs/CMOs for that matter)? They just make it up – AKA “print” it.

Of course they are not going to literally print it out on paper and just hand it out in big suitcases to random pedestrians on the street. They use a structured approach so that there is accountability and transparency. All these mechanisms you mention – discount window, having reserve requirements for loans, etc. are measures to provide an orderly conduit for newly “printed” money to enter the economy. There is no limit to the amount of dollars they can lend and the amount of treasuries they can buy is only limited by the total amount of federal borrowing outstanding (i.e. – they could buy EVERY SINGLE Treasury Bill, Bond and Note if they wanted to).

“purchasing a home at 3x wages may hedge against inflation, but not at 9x wages”
Finally, in the last line of your post, you reveal a certain agreement with my essential premise! The dollar is not going to zero, the Federal Government will not implode, the sun will come up and people will engage in commerce! HAVE YOU BEEN BAITING ME THIS ENTIRE TIME? 😉

The statement is still not quite right though. You get a dollar short position from borrowing dollars at a fixed rate of interest, it does not matter how many times wages you borrow, so long as you can afford to keep the position open. I agree that given current borrowing costs and requirements, most people would struggle to open and keep open such a position at 9X wages. Also, it is not a hedge (the term implies a risk neutral position), but a dollar short position.

In addition to considering wages and house price, I also suggest considering net worth and expenses. Now we have reduced the conversation to personal financial planning. Boring.

[jonnycsd]

Oh Drunkle. It would have been naïve of me to think I could put such a post on here and not get some response like yours. I see three problems that are keeping us apart– an apparent misunderstanding of terminology, extrapolation to long term conclusions from a few discrete events you observe in the immediate time frame, and reading things into my post that were not said.

To get a better feel for fiat money and how it works there is a great book called “Frozen Desire – The Meaning of Money”. It is entertaining, non-technical and very engaging.

“recent readings i’ve done “
What have you been reading?

“you say that the fed can essentially print unlimited dollars. but that’s false; when the value of the dollar hits zero, no amount of additional printing will help.”
I’m not sure what you are trying to say here and you commingle two issues –
1.How much money the Fed can print
2.The point at which additional printing no longer helps

I’ll just take the second topic for now; the point at which creating additional money stops helping and starts hurting will be reached long before the dollar becomes worthless.

“you’re suggesting that inflation is a means of producing infinite growth”

Please re-read my post. What I wrote is that increasing the supply of money (and thereby enhancing liquidity and curing certain solvency problems) will ensure that economic activity does not cease. This is a very different than the “infinite growth” concept you are reading into my words. Nowhere do I suggest we will not have a recession. Why do you believe my post suggests that we will not have a recession?

“an apple is an apple at 10 cents or 20 dollars. the price of the apple may increase with everyone awash in funny money, but the value is the same”

I do not agree with you that real values do not fluctuate over time – they do fluctuate, and sometimes in the extreme. But we do agree that price fluctuations can be caused by changes in the value of fiat money. (By the way, reserve currencies fluctuate in value too, it is just not as predictable or controllable as fiat money.) For example, the real value of a gallon of gasoline is higher now than it was a year ago. I don’t follow apple prices, but with out a doubt, like any other asset, good or service, they also do not have a constant real value.

“evidence of deflation is here”
I agree that prices are decreasing in some areas – mostly in assets – but that does not mean that there is currency deflation. In many cases it means that real values are decreasing. In other areas, prices are going up – mostly in goods and services – which alone does not necessarily indicate currency inflation.

These differential movements in valuation are, obviously, what is needed to correct the problem of over valued housing which you so clearly call out – assets (like real estate) are too expensive relative to wages – so prices of goods and services need to rise (and over time wages with them), while asset prices, (home prices in particular), need to decline – which decline is the half of the correction equation Piggington.com focuses on.

These price changes are happening as a mix of changes in real value and currency inflation. It will not be a straight line, and the process will not complete this year. However, as said on another Pigginton post “eventually the twain shall meet”.

Between and now there will be some major upheaval along the way. But there will be no food riots. The “system” will not collapse and the dollar will not go to zero.

You also say “the fed cannot print money” but this is inconsistent with your earlier assertion that “when the value of the dollar hits zero, no amount of additional printing will help.”

The truth is that the Fed can and does create (“print”) money. Where do you believe the Fed gets the dollars they lend and dollars they use to buy up government debt (and CDOs/CMOs for that matter)? They just make it up – AKA “print” it.

Of course they are not going to literally print it out on paper and just hand it out in big suitcases to random pedestrians on the street. They use a structured approach so that there is accountability and transparency. All these mechanisms you mention – discount window, having reserve requirements for loans, etc. are measures to provide an orderly conduit for newly “printed” money to enter the economy. There is no limit to the amount of dollars they can lend and the amount of treasuries they can buy is only limited by the total amount of federal borrowing outstanding (i.e. – they could buy EVERY SINGLE Treasury Bill, Bond and Note if they wanted to).

“purchasing a home at 3x wages may hedge against inflation, but not at 9x wages”
Finally, in the last line of your post, you reveal a certain agreement with my essential premise! The dollar is not going to zero, the Federal Government will not implode, the sun will come up and people will engage in commerce! HAVE YOU BEEN BAITING ME THIS ENTIRE TIME? 😉

The statement is still not quite right though. You get a dollar short position from borrowing dollars at a fixed rate of interest, it does not matter how many times wages you borrow, so long as you can afford to keep the position open. I agree that given current borrowing costs and requirements, most people would struggle to open and keep open such a position at 9X wages. Also, it is not a hedge (the term implies a risk neutral position), but a dollar short position.

In addition to considering wages and house price, I also suggest considering net worth and expenses. Now we have reduced the conversation to personal financial planning. Boring.

[jonnycsd]

Oh Drunkle. It would have been naïve of me to think I could put such a post on here and not get some response like yours. I see three problems that are keeping us apart– an apparent misunderstanding of terminology, extrapolation to long term conclusions from a few discrete events you observe in the immediate time frame, and reading things into my post that were not said.

To get a better feel for fiat money and how it works there is a great book called “Frozen Desire – The Meaning of Money”. It is entertaining, non-technical and very engaging.

“recent readings i’ve done “
What have you been reading?

“you say that the fed can essentially print unlimited dollars. but that’s false; when the value of the dollar hits zero, no amount of additional printing will help.”
I’m not sure what you are trying to say here and you commingle two issues –
1.How much money the Fed can print
2.The point at which additional printing no longer helps

I’ll just take the second topic for now; the point at which creating additional money stops helping and starts hurting will be reached long before the dollar becomes worthless.

“you’re suggesting that inflation is a means of producing infinite growth”

Please re-read my post. What I wrote is that increasing the supply of money (and thereby enhancing liquidity and curing certain solvency problems) will ensure that economic activity does not cease. This is a very different than the “infinite growth” concept you are reading into my words. Nowhere do I suggest we will not have a recession. Why do you believe my post suggests that we will not have a recession?

“an apple is an apple at 10 cents or 20 dollars. the price of the apple may increase with everyone awash in funny money, but the value is the same”

I do not agree with you that real values do not fluctuate over time – they do fluctuate, and sometimes in the extreme. But we do agree that price fluctuations can be caused by changes in the value of fiat money. (By the way, reserve currencies fluctuate in value too, it is just not as predictable or controllable as fiat money.) For example, the real value of a gallon of gasoline is higher now than it was a year ago. I don’t follow apple prices, but with out a doubt, like any other asset, good or service, they also do not have a constant real value.

“evidence of deflation is here”
I agree that prices are decreasing in some areas – mostly in assets – but that does not mean that there is currency deflation. In many cases it means that real values are decreasing. In other areas, prices are going up – mostly in goods and services – which alone does not necessarily indicate currency inflation.

These differential movements in valuation are, obviously, what is needed to correct the problem of over valued housing which you so clearly call out – assets (like real estate) are too expensive relative to wages – so prices of goods and services need to rise (and over time wages with them), while asset prices, (home prices in particular), need to decline – which decline is the half of the correction equation Piggington.com focuses on.

These price changes are happening as a mix of changes in real value and currency inflation. It will not be a straight line, and the process will not complete this year. However, as said on another Pigginton post “eventually the twain shall meet”.

Between and now there will be some major upheaval along the way. But there will be no food riots. The “system” will not collapse and the dollar will not go to zero.

You also say “the fed cannot print money” but this is inconsistent with your earlier assertion that “when the value of the dollar hits zero, no amount of additional printing will help.”

The truth is that the Fed can and does create (“print”) money. Where do you believe the Fed gets the dollars they lend and dollars they use to buy up government debt (and CDOs/CMOs for that matter)? They just make it up – AKA “print” it.

Of course they are not going to literally print it out on paper and just hand it out in big suitcases to random pedestrians on the street. They use a structured approach so that there is accountability and transparency. All these mechanisms you mention – discount window, having reserve requirements for loans, etc. are measures to provide an orderly conduit for newly “printed” money to enter the economy. There is no limit to the amount of dollars they can lend and the amount of treasuries they can buy is only limited by the total amount of federal borrowing outstanding (i.e. – they could buy EVERY SINGLE Treasury Bill, Bond and Note if they wanted to).

“purchasing a home at 3x wages may hedge against inflation, but not at 9x wages”
Finally, in the last line of your post, you reveal a certain agreement with my essential premise! The dollar is not going to zero, the Federal Government will not implode, the sun will come up and people will engage in commerce! HAVE YOU BEEN BAITING ME THIS ENTIRE TIME? 😉

The statement is still not quite right though. You get a dollar short position from borrowing dollars at a fixed rate of interest, it does not matter how many times wages you borrow, so long as you can afford to keep the position open. I agree that given current borrowing costs and requirements, most people would struggle to open and keep open such a position at 9X wages. Also, it is not a hedge (the term implies a risk neutral position), but a dollar short position.

In addition to considering wages and house price, I also suggest considering net worth and expenses. Now we have reduced the conversation to personal financial planning. Boring.

[jonnycsd]

Oh Drunkle. It would have been naïve of me to think I could put such a post on here and not get some response like yours. I see three problems that are keeping us apart– an apparent misunderstanding of terminology, extrapolation to long term conclusions from a few discrete events you observe in the immediate time frame, and reading things into my post that were not said.

To get a better feel for fiat money and how it works there is a great book called “Frozen Desire – The Meaning of Money”. It is entertaining, non-technical and very engaging.

“recent readings i’ve done “
What have you been reading?

“you say that the fed can essentially print unlimited dollars. but that’s false; when the value of the dollar hits zero, no amount of additional printing will help.”
I’m not sure what you are trying to say here and you commingle two issues –
1.How much money the Fed can print
2.The point at which additional printing no longer helps

I’ll just take the second topic for now; the point at which creating additional money stops helping and starts hurting will be reached long before the dollar becomes worthless.

“you’re suggesting that inflation is a means of producing infinite growth”

Please re-read my post. What I wrote is that increasing the supply of money (and thereby enhancing liquidity and curing certain solvency problems) will ensure that economic activity does not cease. This is a very different than the “infinite growth” concept you are reading into my words. Nowhere do I suggest we will not have a recession. Why do you believe my post suggests that we will not have a recession?

“an apple is an apple at 10 cents or 20 dollars. the price of the apple may increase with everyone awash in funny money, but the value is the same”

I do not agree with you that real values do not fluctuate over time – they do fluctuate, and sometimes in the extreme. But we do agree that price fluctuations can be caused by changes in the value of fiat money. (By the way, reserve currencies fluctuate in value too, it is just not as predictable or controllable as fiat money.) For example, the real value of a gallon of gasoline is higher now than it was a year ago. I don’t follow apple prices, but with out a doubt, like any other asset, good or service, they also do not have a constant real value.

“evidence of deflation is here”
I agree that prices are decreasing in some areas – mostly in assets – but that does not mean that there is currency deflation. In many cases it means that real values are decreasing. In other areas, prices are going up – mostly in goods and services – which alone does not necessarily indicate currency inflation.

These differential movements in valuation are, obviously, what is needed to correct the problem of over valued housing which you so clearly call out – assets (like real estate) are too expensive relative to wages – so prices of goods and services need to rise (and over time wages with them), while asset prices, (home prices in particular), need to decline – which decline is the half of the correction equation Piggington.com focuses on.

These price changes are happening as a mix of changes in real value and currency inflation. It will not be a straight line, and the process will not complete this year. However, as said on another Pigginton post “eventually the twain shall meet”.

Between and now there will be some major upheaval along the way. But there will be no food riots. The “system” will not collapse and the dollar will not go to zero.

You also say “the fed cannot print money” but this is inconsistent with your earlier assertion that “when the value of the dollar hits zero, no amount of additional printing will help.”

The truth is that the Fed can and does create (“print”) money. Where do you believe the Fed gets the dollars they lend and dollars they use to buy up government debt (and CDOs/CMOs for that matter)? They just make it up – AKA “print” it.

Of course they are not going to literally print it out on paper and just hand it out in big suitcases to random pedestrians on the street. They use a structured approach so that there is accountability and transparency. All these mechanisms you mention – discount window, having reserve requirements for loans, etc. are measures to provide an orderly conduit for newly “printed” money to enter the economy. There is no limit to the amount of dollars they can lend and the amount of treasuries they can buy is only limited by the total amount of federal borrowing outstanding (i.e. – they could buy EVERY SINGLE Treasury Bill, Bond and Note if they wanted to).

“purchasing a home at 3x wages may hedge against inflation, but not at 9x wages”
Finally, in the last line of your post, you reveal a certain agreement with my essential premise! The dollar is not going to zero, the Federal Government will not implode, the sun will come up and people will engage in commerce! HAVE YOU BEEN BAITING ME THIS ENTIRE TIME? 😉

The statement is still not quite right though. You get a dollar short position from borrowing dollars at a fixed rate of interest, it does not matter how many times wages you borrow, so long as you can afford to keep the position open. I agree that given current borrowing costs and requirements, most people would struggle to open and keep open such a position at 9X wages. Also, it is not a hedge (the term implies a risk neutral position), but a dollar short position.

In addition to considering wages and house price, I also suggest considering net worth and expenses. Now we have reduced the conversation to personal financial planning. Boring.

[jonnycsd]

Oh Drunkle. It would have been naïve of me to think I could put such a post on here and not get some response like yours. I see three problems that are keeping us apart– an apparent misunderstanding of terminology, extrapolation to long term conclusions from a few discrete events you observe in the immediate time frame, and reading things into my post that were not said.

To get a better feel for fiat money and how it works there is a great book called “Frozen Desire – The Meaning of Money”. It is entertaining, non-technical and very engaging.

“recent readings i’ve done “
What have you been reading?

“you say that the fed can essentially print unlimited dollars. but that’s false; when the value of the dollar hits zero, no amount of additional printing will help.”
I’m not sure what you are trying to say here and you commingle two issues –
1.How much money the Fed can print
2.The point at which additional printing no longer helps

I’ll just take the second topic for now; the point at which creating additional money stops helping and starts hurting will be reached long before the dollar becomes worthless.

“you’re suggesting that inflation is a means of producing infinite growth”

Please re-read my post. What I wrote is that increasing the supply of money (and thereby enhancing liquidity and curing certain solvency problems) will ensure that economic activity does not cease. This is a very different than the “infinite growth” concept you are reading into my words. Nowhere do I suggest we will not have a recession. Why do you believe my post suggests that we will not have a recession?

“an apple is an apple at 10 cents or 20 dollars. the price of the apple may increase with everyone awash in funny money, but the value is the same”

I do not agree with you that real values do not fluctuate over time – they do fluctuate, and sometimes in the extreme. But we do agree that price fluctuations can be caused by changes in the value of fiat money. (By the way, reserve currencies fluctuate in value too, it is just not as predictable or controllable as fiat money.) For example, the real value of a gallon of gasoline is higher now than it was a year ago. I don’t follow apple prices, but with out a doubt, like any other asset, good or service, they also do not have a constant real value.

“evidence of deflation is here”
I agree that prices are decreasing in some areas – mostly in assets – but that does not mean that there is currency deflation. In many cases it means that real values are decreasing. In other areas, prices are going up – mostly in goods and services – which alone does not necessarily indicate currency inflation.

These differential movements in valuation are, obviously, what is needed to correct the problem of over valued housing which you so clearly call out – assets (like real estate) are too expensive relative to wages – so prices of goods and services need to rise (and over time wages with them), while asset prices, (home prices in particular), need to decline – which decline is the half of the correction equation Piggington.com focuses on.

These price changes are happening as a mix of changes in real value and currency inflation. It will not be a straight line, and the process will not complete this year. However, as said on another Pigginton post “eventually the twain shall meet”.

Between and now there will be some major upheaval along the way. But there will be no food riots. The “system” will not collapse and the dollar will not go to zero.

You also say “the fed cannot print money” but this is inconsistent with your earlier assertion that “when the value of the dollar hits zero, no amount of additional printing will help.”

The truth is that the Fed can and does create (“print”) money. Where do you believe the Fed gets the dollars they lend and dollars they use to buy up government debt (and CDOs/CMOs for that matter)? They just make it up – AKA “print” it.

Of course they are not going to literally print it out on paper and just hand it out in big suitcases to random pedestrians on the street. They use a structured approach so that there is accountability and transparency. All these mechanisms you mention – discount window, having reserve requirements for loans, etc. are measures to provide an orderly conduit for newly “printed” money to enter the economy. There is no limit to the amount of dollars they can lend and the amount of treasuries they can buy is only limited by the total amount of federal borrowing outstanding (i.e. – they could buy EVERY SINGLE Treasury Bill, Bond and Note if they wanted to).

“purchasing a home at 3x wages may hedge against inflation, but not at 9x wages”
Finally, in the last line of your post, you reveal a certain agreement with my essential premise! The dollar is not going to zero, the Federal Government will not implode, the sun will come up and people will engage in commerce! HAVE YOU BEEN BAITING ME THIS ENTIRE TIME? 😉

The statement is still not quite right though. You get a dollar short position from borrowing dollars at a fixed rate of interest, it does not matter how many times wages you borrow, so long as you can afford to keep the position open. I agree that given current borrowing costs and requirements, most people would struggle to open and keep open such a position at 9X wages. Also, it is not a hedge (the term implies a risk neutral position), but a dollar short position.

In addition to considering wages and house price, I also suggest considering net worth and expenses. Now we have reduced the conversation to personal financial planning. Boring.

[drunkle]

johnny:

the recent readings i’ve done are contradictory to your claims and i would like to explore this further…

you say that the fed can essentially print unlimited dollars. but that’s false; when the value of the dollar hits zero, no amount of additional printing will help.

inflation is winding down as credit is contracting. the high rate of defaults are destroying banks and brokers who built jenga structures of leverage off liar loans. these banks and brokers are scrambling to shore up capital and not scrambling to issue more bad loans.

you’re suggesting that inflation is a means of producing infinite growth. that by printing money, value will be pushed up. which is not logical; an apple is an apple at 10 cents or 20 dollars. the price of the apple may increase with everyone awash in funny money, but the value is the same.

evidence of deflation is here: home prices, job losses, tax revenue losses, corporate earnings losses… these impacts will filter through the economy, tanking the prices of food, gold, oil, etc because demand will evaporate. evaporation of demand for overpriced homes is what started this ball rolling. when liar loans became the norm along with free credit, inflation did occur. but destruction of credit is now causing deflation.

the fed cannot print money. interbank interest rate cuts do not equal printing of money. interbank interest rate cuts only matter if banks are lending to each other. they are not. discount window, taf and taf2 loans require collateral and while collateral is becoming pretty liberal, while allowable institutions is becoming liberal, that’s still not the same as printing money; if the collateral continues to dump in value, the borrowing institutions must pay the difference.

purchasing a home at 3x wages may hedge against inflation, but not at 9x wages.

[drunkle]

johnny:

the recent readings i’ve done are contradictory to your claims and i would like to explore this further…

you say that the fed can essentially print unlimited dollars. but that’s false; when the value of the dollar hits zero, no amount of additional printing will help.

inflation is winding down as credit is contracting. the high rate of defaults are destroying banks and brokers who built jenga structures of leverage off liar loans. these banks and brokers are scrambling to shore up capital and not scrambling to issue more bad loans.

you’re suggesting that inflation is a means of producing infinite growth. that by printing money, value will be pushed up. which is not logical; an apple is an apple at 10 cents or 20 dollars. the price of the apple may increase with everyone awash in funny money, but the value is the same.

evidence of deflation is here: home prices, job losses, tax revenue losses, corporate earnings losses… these impacts will filter through the economy, tanking the prices of food, gold, oil, etc because demand will evaporate. evaporation of demand for overpriced homes is what started this ball rolling. when liar loans became the norm along with free credit, inflation did occur. but destruction of credit is now causing deflation.

the fed cannot print money. interbank interest rate cuts do not equal printing of money. interbank interest rate cuts only matter if banks are lending to each other. they are not. discount window, taf and taf2 loans require collateral and while collateral is becoming pretty liberal, while allowable institutions is becoming liberal, that’s still not the same as printing money; if the collateral continues to dump in value, the borrowing institutions must pay the difference.

purchasing a home at 3x wages may hedge against inflation, but not at 9x wages.

[drunkle]

johnny:

the recent readings i’ve done are contradictory to your claims and i would like to explore this further…

you say that the fed can essentially print unlimited dollars. but that’s false; when the value of the dollar hits zero, no amount of additional printing will help.

inflation is winding down as credit is contracting. the high rate of defaults are destroying banks and brokers who built jenga structures of leverage off liar loans. these banks and brokers are scrambling to shore up capital and not scrambling to issue more bad loans.

you’re suggesting that inflation is a means of producing infinite growth. that by printing money, value will be pushed up. which is not logical; an apple is an apple at 10 cents or 20 dollars. the price of the apple may increase with everyone awash in funny money, but the value is the same.

evidence of deflation is here: home prices, job losses, tax revenue losses, corporate earnings losses… these impacts will filter through the economy, tanking the prices of food, gold, oil, etc because demand will evaporate. evaporation of demand for overpriced homes is what started this ball rolling. when liar loans became the norm along with free credit, inflation did occur. but destruction of credit is now causing deflation.

the fed cannot print money. interbank interest rate cuts do not equal printing of money. interbank interest rate cuts only matter if banks are lending to each other. they are not. discount window, taf and taf2 loans require collateral and while collateral is becoming pretty liberal, while allowable institutions is becoming liberal, that’s still not the same as printing money; if the collateral continues to dump in value, the borrowing institutions must pay the difference.

purchasing a home at 3x wages may hedge against inflation, but not at 9x wages.

[drunkle]

johnny:

the recent readings i’ve done are contradictory to your claims and i would like to explore this further…

you say that the fed can essentially print unlimited dollars. but that’s false; when the value of the dollar hits zero, no amount of additional printing will help.

inflation is winding down as credit is contracting. the high rate of defaults are destroying banks and brokers who built jenga structures of leverage off liar loans. these banks and brokers are scrambling to shore up capital and not scrambling to issue more bad loans.

you’re suggesting that inflation is a means of producing infinite growth. that by printing money, value will be pushed up. which is not logical; an apple is an apple at 10 cents or 20 dollars. the price of the apple may increase with everyone awash in funny money, but the value is the same.

evidence of deflation is here: home prices, job losses, tax revenue losses, corporate earnings losses… these impacts will filter through the economy, tanking the prices of food, gold, oil, etc because demand will evaporate. evaporation of demand for overpriced homes is what started this ball rolling. when liar loans became the norm along with free credit, inflation did occur. but destruction of credit is now causing deflation.

the fed cannot print money. interbank interest rate cuts do not equal printing of money. interbank interest rate cuts only matter if banks are lending to each other. they are not. discount window, taf and taf2 loans require collateral and while collateral is becoming pretty liberal, while allowable institutions is becoming liberal, that’s still not the same as printing money; if the collateral continues to dump in value, the borrowing institutions must pay the difference.

purchasing a home at 3x wages may hedge against inflation, but not at 9x wages.

[jonnycsd]

I am semi-educated in finance – books more than practice. 3 years of public accounting and an MBA in finance from a very prestigious Ivy League school notorious for producing Wall Street types who end up in federal prison for white collar crime. Might be a few alumni on the hook at BSC. The following is my (lengthy) and humble opinion:

My take is that our fiat money will allow the necessary pain of correction to be spread over time and across several diverse groups – domestic and foreign. The powers that be can generate literally an endless supply of dollars to keep things from seizing up the way they did in November 1929. Economic activity was so frozen that it was difficult for farmers to get money to plant food, and there were tremendous dislocations of families and communities. No one came out a winner – well almost no one. We may have dodged a similar bullet last week. There may be a few more bullets to dodge. My take is that the current bear market rally is the market’s recognition that this Fed is willing to print as much money as needed to keep the economy from locking up. That’s the good thing about fiat money, and Heli-Ben is no Roy Young. The financial system will be kept lubricated and running. Period. Even it the dollar gets beat up in the process and hurts dollar savers, T-bill investors, CMO investors, foreign manufacturers, and domestic fixed income retirees and wage earners.

The bad thing about fiat money is that it does not function as a perfect store of value. Over time inflation erodes the value. Right now, the rate of erosion is increasing and that is destroying some wealth but not nearly as much as would be lost in a 1930s style scenario. People on this board write glibly about the ’30s, but the truth is there was not enough food to go around then. Like parts of Africa today people went hungry. Try telling your kids that they aren’t getting dinner for a couple nights in a row. Inflation is a lot better than food riots.

So, even if we end up with South American style hyper-inflation (extremely unlikely), the sun will come up every morning and people will go to work, earn wages and engage in economic activity. Period. Everyone should take comfort in this.

As far as how to hedge against further declines in the dollar – hell, one of the best dollar shorts around is a fixed rate 30 year mortgage. Fiat money begs to be gambled, borrowed and lent – after all, it is not real – it is ephemeral and meaningless – it is just an image, a shell, an emotion and a feeling. If you think the dollar is going down the toilet, just short it (i.e., borrow it at a low fixed rate of interest and pay it back later using post-inflation money). Lock in 5.75% for 30 years and laugh as inflation reduces the true value of what you owe. And you even get an income tax break along the way. Just gotta find the right situation so the depreciation of the collateral asset you purchase doesn’t eat into the gains from your short position. I did this and got a nice 30 year fixed on a property one block from the beach with a good future as a weekly rental – or a vacation home if I don’t need the income. Bring it on Bennie – drive that dollar into the dirt! After inflation and after taxes my cost of money is right about zero and may soon go negative. I think I’ll go sneak a corona on the sand tomorrow afternoon and think about this with a smile. I love getting a “free” 30 year short position on the dollar, especially when the valuation cycle of the collateral used to buy the position is 5 to 10 years.

If you have a more immediate investment horizon, you could look at equities, which tend to do OK during inflation. Double down with foreign companies. Look at some Hong Kong equities. China has a real economy now so even if the USA stops buying from them you could get some good exposure there. The patriotic way to play the declining dollar would be to buy shares in a domestic company with dollar costs and non-dollar pricing (i.e., they make stuff here, not in Mexico and sell it anywhere but the US off a price sheet that uses the buyer’s currency). Great concept, not so sure too many of these exists. Not yet anyway, but they may soon evolve.

Rather than dig a fox hole you should get flexible, diversified and fight a guerrilla war – hit and move, don’t play by the “rules”. Spread your chips around the table and expect to take some hits. And don’t forget that the Fed is going to do whatever it takes to keep the market liquid – $200BB, $600BB, $1TT, $2TT – whatever it takes – even if it means hyper-inflation (it won’t). It’s a no limit table and there will be no food riots. Inflation will take its vigorish and we will all be bit poorer because of wasteful practices like war. Despite Ron Paul’s protestations to the contrary, the shell game of fiat money makes us wealthier not poorer.

[jonnycsd]

I am semi-educated in finance – books more than practice. 3 years of public accounting and an MBA in finance from a very prestigious Ivy League school notorious for producing Wall Street types who end up in federal prison for white collar crime. Might be a few alumni on the hook at BSC. The following is my (lengthy) and humble opinion:

My take is that our fiat money will allow the necessary pain of correction to be spread over time and across several diverse groups – domestic and foreign. The powers that be can generate literally an endless supply of dollars to keep things from seizing up the way they did in November 1929. Economic activity was so frozen that it was difficult for farmers to get money to plant food, and there were tremendous dislocations of families and communities. No one came out a winner – well almost no one. We may have dodged a similar bullet last week. There may be a few more bullets to dodge. My take is that the current bear market rally is the market’s recognition that this Fed is willing to print as much money as needed to keep the economy from locking up. That’s the good thing about fiat money, and Heli-Ben is no Roy Young. The financial system will be kept lubricated and running. Period. Even it the dollar gets beat up in the process and hurts dollar savers, T-bill investors, CMO investors, foreign manufacturers, and domestic fixed income retirees and wage earners.

The bad thing about fiat money is that it does not function as a perfect store of value. Over time inflation erodes the value. Right now, the rate of erosion is increasing and that is destroying some wealth but not nearly as much as would be lost in a 1930s style scenario. People on this board write glibly about the ’30s, but the truth is there was not enough food to go around then. Like parts of Africa today people went hungry. Try telling your kids that they aren’t getting dinner for a couple nights in a row. Inflation is a lot better than food riots.

So, even if we end up with South American style hyper-inflation (extremely unlikely), the sun will come up every morning and people will go to work, earn wages and engage in economic activity. Period. Everyone should take comfort in this.

As far as how to hedge against further declines in the dollar – hell, one of the best dollar shorts around is a fixed rate 30 year mortgage. Fiat money begs to be gambled, borrowed and lent – after all, it is not real – it is ephemeral and meaningless – it is just an image, a shell, an emotion and a feeling. If you think the dollar is going down the toilet, just short it (i.e., borrow it at a low fixed rate of interest and pay it back later using post-inflation money). Lock in 5.75% for 30 years and laugh as inflation reduces the true value of what you owe. And you even get an income tax break along the way. Just gotta find the right situation so the depreciation of the collateral asset you purchase doesn’t eat into the gains from your short position. I did this and got a nice 30 year fixed on a property one block from the beach with a good future as a weekly rental – or a vacation home if I don’t need the income. Bring it on Bennie – drive that dollar into the dirt! After inflation and after taxes my cost of money is right about zero and may soon go negative. I think I’ll go sneak a corona on the sand tomorrow afternoon and think about this with a smile. I love getting a “free” 30 year short position on the dollar, especially when the valuation cycle of the collateral used to buy the position is 5 to 10 years.

If you have a more immediate investment horizon, you could look at equities, which tend to do OK during inflation. Double down with foreign companies. Look at some Hong Kong equities. China has a real economy now so even if the USA stops buying from them you could get some good exposure there. The patriotic way to play the declining dollar would be to buy shares in a domestic company with dollar costs and non-dollar pricing (i.e., they make stuff here, not in Mexico and sell it anywhere but the US off a price sheet that uses the buyer’s currency). Great concept, not so sure too many of these exists. Not yet anyway, but they may soon evolve.

Rather than dig a fox hole you should get flexible, diversified and fight a guerrilla war – hit and move, don’t play by the “rules”. Spread your chips around the table and expect to take some hits. And don’t forget that the Fed is going to do whatever it takes to keep the market liquid – $200BB, $600BB, $1TT, $2TT – whatever it takes – even if it means hyper-inflation (it won’t). It’s a no limit table and there will be no food riots. Inflation will take its vigorish and we will all be bit poorer because of wasteful practices like war. Despite Ron Paul’s protestations to the contrary, the shell game of fiat money makes us wealthier not poorer.

[jonnycsd]

I am semi-educated in finance – books more than practice. 3 years of public accounting and an MBA in finance from a very prestigious Ivy League school notorious for producing Wall Street types who end up in federal prison for white collar crime. Might be a few alumni on the hook at BSC. The following is my (lengthy) and humble opinion:

My take is that our fiat money will allow the necessary pain of correction to be spread over time and across several diverse groups – domestic and foreign. The powers that be can generate literally an endless supply of dollars to keep things from seizing up the way they did in November 1929. Economic activity was so frozen that it was difficult for farmers to get money to plant food, and there were tremendous dislocations of families and communities. No one came out a winner – well almost no one. We may have dodged a similar bullet last week. There may be a few more bullets to dodge. My take is that the current bear market rally is the market’s recognition that this Fed is willing to print as much money as needed to keep the economy from locking up. That’s the good thing about fiat money, and Heli-Ben is no Roy Young. The financial system will be kept lubricated and running. Period. Even it the dollar gets beat up in the process and hurts dollar savers, T-bill investors, CMO investors, foreign manufacturers, and domestic fixed income retirees and wage earners.

The bad thing about fiat money is that it does not function as a perfect store of value. Over time inflation erodes the value. Right now, the rate of erosion is increasing and that is destroying some wealth but not nearly as much as would be lost in a 1930s style scenario. People on this board write glibly about the ’30s, but the truth is there was not enough food to go around then. Like parts of Africa today people went hungry. Try telling your kids that they aren’t getting dinner for a couple nights in a row. Inflation is a lot better than food riots.

So, even if we end up with South American style hyper-inflation (extremely unlikely), the sun will come up every morning and people will go to work, earn wages and engage in economic activity. Period. Everyone should take comfort in this.

As far as how to hedge against further declines in the dollar – hell, one of the best dollar shorts around is a fixed rate 30 year mortgage. Fiat money begs to be gambled, borrowed and lent – after all, it is not real – it is ephemeral and meaningless – it is just an image, a shell, an emotion and a feeling. If you think the dollar is going down the toilet, just short it (i.e., borrow it at a low fixed rate of interest and pay it back later using post-inflation money). Lock in 5.75% for 30 years and laugh as inflation reduces the true value of what you owe. And you even get an income tax break along the way. Just gotta find the right situation so the depreciation of the collateral asset you purchase doesn’t eat into the gains from your short position. I did this and got a nice 30 year fixed on a property one block from the beach with a good future as a weekly rental – or a vacation home if I don’t need the income. Bring it on Bennie – drive that dollar into the dirt! After inflation and after taxes my cost of money is right about zero and may soon go negative. I think I’ll go sneak a corona on the sand tomorrow afternoon and think about this with a smile. I love getting a “free” 30 year short position on the dollar, especially when the valuation cycle of the collateral used to buy the position is 5 to 10 years.

If you have a more immediate investment horizon, you could look at equities, which tend to do OK during inflation. Double down with foreign companies. Look at some Hong Kong equities. China has a real economy now so even if the USA stops buying from them you could get some good exposure there. The patriotic way to play the declining dollar would be to buy shares in a domestic company with dollar costs and non-dollar pricing (i.e., they make stuff here, not in Mexico and sell it anywhere but the US off a price sheet that uses the buyer’s currency). Great concept, not so sure too many of these exists. Not yet anyway, but they may soon evolve.

Rather than dig a fox hole you should get flexible, diversified and fight a guerrilla war – hit and move, don’t play by the “rules”. Spread your chips around the table and expect to take some hits. And don’t forget that the Fed is going to do whatever it takes to keep the market liquid – $200BB, $600BB, $1TT, $2TT – whatever it takes – even if it means hyper-inflation (it won’t). It’s a no limit table and there will be no food riots. Inflation will take its vigorish and we will all be bit poorer because of wasteful practices like war. Despite Ron Paul’s protestations to the contrary, the shell game of fiat money makes us wealthier not poorer.

[jonnycsd]

I am semi-educated in finance – books more than practice. 3 years of public accounting and an MBA in finance from a very prestigious Ivy League school notorious for producing Wall Street types who end up in federal prison for white collar crime. Might be a few alumni on the hook at BSC. The following is my (lengthy) and humble opinion:

My take is that our fiat money will allow the necessary pain of correction to be spread over time and across several diverse groups – domestic and foreign. The powers that be can generate literally an endless supply of dollars to keep things from seizing up the way they did in November 1929. Economic activity was so frozen that it was difficult for farmers to get money to plant food, and there were tremendous dislocations of families and communities. No one came out a winner – well almost no one. We may have dodged a similar bullet last week. There may be a few more bullets to dodge. My take is that the current bear market rally is the market’s recognition that this Fed is willing to print as much money as needed to keep the economy from locking up. That’s the good thing about fiat money, and Heli-Ben is no Roy Young. The financial system will be kept lubricated and running. Period. Even it the dollar gets beat up in the process and hurts dollar savers, T-bill investors, CMO investors, foreign manufacturers, and domestic fixed income retirees and wage earners.

The bad thing about fiat money is that it does not function as a perfect store of value. Over time inflation erodes the value. Right now, the rate of erosion is increasing and that is destroying some wealth but not nearly as much as would be lost in a 1930s style scenario. People on this board write glibly about the ’30s, but the truth is there was not enough food to go around then. Like parts of Africa today people went hungry. Try telling your kids that they aren’t getting dinner for a couple nights in a row. Inflation is a lot better than food riots.

So, even if we end up with South American style hyper-inflation (extremely unlikely), the sun will come up every morning and people will go to work, earn wages and engage in economic activity. Period. Everyone should take comfort in this.

As far as how to hedge against further declines in the dollar – hell, one of the best dollar shorts around is a fixed rate 30 year mortgage. Fiat money begs to be gambled, borrowed and lent – after all, it is not real – it is ephemeral and meaningless – it is just an image, a shell, an emotion and a feeling. If you think the dollar is going down the toilet, just short it (i.e., borrow it at a low fixed rate of interest and pay it back later using post-inflation money). Lock in 5.75% for 30 years and laugh as inflation reduces the true value of what you owe. And you even get an income tax break along the way. Just gotta find the right situation so the depreciation of the collateral asset you purchase doesn’t eat into the gains from your short position. I did this and got a nice 30 year fixed on a property one block from the beach with a good future as a weekly rental – or a vacation home if I don’t need the income. Bring it on Bennie – drive that dollar into the dirt! After inflation and after taxes my cost of money is right about zero and may soon go negative. I think I’ll go sneak a corona on the sand tomorrow afternoon and think about this with a smile. I love getting a “free” 30 year short position on the dollar, especially when the valuation cycle of the collateral used to buy the position is 5 to 10 years.

If you have a more immediate investment horizon, you could look at equities, which tend to do OK during inflation. Double down with foreign companies. Look at some Hong Kong equities. China has a real economy now so even if the USA stops buying from them you could get some good exposure there. The patriotic way to play the declining dollar would be to buy shares in a domestic company with dollar costs and non-dollar pricing (i.e., they make stuff here, not in Mexico and sell it anywhere but the US off a price sheet that uses the buyer’s currency). Great concept, not so sure too many of these exists. Not yet anyway, but they may soon evolve.

Rather than dig a fox hole you should get flexible, diversified and fight a guerrilla war – hit and move, don’t play by the “rules”. Spread your chips around the table and expect to take some hits. And don’t forget that the Fed is going to do whatever it takes to keep the market liquid – $200BB, $600BB, $1TT, $2TT – whatever it takes – even if it means hyper-inflation (it won’t). It’s a no limit table and there will be no food riots. Inflation will take its vigorish and we will all be bit poorer because of wasteful practices like war. Despite Ron Paul’s protestations to the contrary, the shell game of fiat money makes us wealthier not poorer.

[jpinpb]

I have family in Italy. I spoke w/them recently. They said the economy is not doing so well there. I emailed my friend there and she said the same thing. Despite the Euro being strong compared to the dollar, their economy is not thriving.

[jpinpb]

I have family in Italy. I spoke w/them recently. They said the economy is not doing so well there. I emailed my friend there and she said the same thing. Despite the Euro being strong compared to the dollar, their economy is not thriving.

[jpinpb]

I have family in Italy. I spoke w/them recently. They said the economy is not doing so well there. I emailed my friend there and she said the same thing. Despite the Euro being strong compared to the dollar, their economy is not thriving.

[jpinpb]

I have family in Italy. I spoke w/them recently. They said the economy is not doing so well there. I emailed my friend there and she said the same thing. Despite the Euro being strong compared to the dollar, their economy is not thriving.

[jpinpb]

I have family in Italy. I spoke w/them recently. They said the economy is not doing so well there. I emailed my friend there and she said the same thing. Despite the Euro being strong compared to the dollar, their economy is not thriving.

[Coronita]

Because if you believe you are average joe, and if other average joes and j6p's are talking about moving money into commodities and foreign investments, and when the investment houses start to massively advertise moving things into commodities and foreign investments, perhaps this is like herd mentality which doesn't really know what they're getting themselves into? Herds always seems to drives up prices, and it seems like mainstream media has caught commodity, precious metals, etc. It probably is too late to move into precious metals/energy/foreign assets.

Seriously though, when did you start to think about metals/commodities? Is it something you read on CNN or the like? If so, don't you think others are thinking the same thing?

 

Anyone else catch on NPR yesterday night that some european companies are starting to complain that with the weak dollar, it's hurting them competitively? I'm just wondering how a strong Euro in the long term is going to help EU companies.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Because if you believe you are average joe, and if other average joes and j6p's are talking about moving money into commodities and foreign investments, and when the investment houses start to massively advertise moving things into commodities and foreign investments, perhaps this is like herd mentality which doesn't really know what they're getting themselves into? Herds always seems to drives up prices, and it seems like mainstream media has caught commodity, precious metals, etc. It probably is too late to move into precious metals/energy/foreign assets.

Seriously though, when did you start to think about metals/commodities? Is it something you read on CNN or the like? If so, don't you think others are thinking the same thing?

 

Anyone else catch on NPR yesterday night that some european companies are starting to complain that with the weak dollar, it's hurting them competitively? I'm just wondering how a strong Euro in the long term is going to help EU companies.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Because if you believe you are average joe, and if other average joes and j6p's are talking about moving money into commodities and foreign investments, and when the investment houses start to massively advertise moving things into commodities and foreign investments, perhaps this is like herd mentality which doesn't really know what they're getting themselves into? Herds always seems to drives up prices, and it seems like mainstream media has caught commodity, precious metals, etc. It probably is too late to move into precious metals/energy/foreign assets.

Seriously though, when did you start to think about metals/commodities? Is it something you read on CNN or the like? If so, don't you think others are thinking the same thing?

 

Anyone else catch on NPR yesterday night that some european companies are starting to complain that with the weak dollar, it's hurting them competitively? I'm just wondering how a strong Euro in the long term is going to help EU companies.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Because if you believe you are average joe, and if other average joes and j6p's are talking about moving money into commodities and foreign investments, and when the investment houses start to massively advertise moving things into commodities and foreign investments, perhaps this is like herd mentality which doesn't really know what they're getting themselves into? Herds always seems to drives up prices, and it seems like mainstream media has caught commodity, precious metals, etc. It probably is too late to move into precious metals/energy/foreign assets.

Seriously though, when did you start to think about metals/commodities? Is it something you read on CNN or the like? If so, don't you think others are thinking the same thing?

 

Anyone else catch on NPR yesterday night that some european companies are starting to complain that with the weak dollar, it's hurting them competitively? I'm just wondering how a strong Euro in the long term is going to help EU companies.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Well I am not quite J6P nor a moron. I am a master of self-deprecation.

I didn't try to imply you were. You said you were average joe. Assuming that statement is accurate (I don't know) and that average joe and the rest of average j6p hears/reads/sees (ok maybe j6p doesn't read) on paper/internet/tv touting "BUY COMMODITIES NOW, GET RICH QUICK", to me that means that mainstream has caught up to this "next big thing", and that sooner or later prices are going to be driven up to insane levels and then fall.

Come on folks, don't you think that mass media has gotten hold of this next "big thing" and is now touting it? I can't count how many spam emails, junk snail mail, advertisements I'm seeing,hearing, watching touting "buy gold, buy silver, buy energy, get rich, beat inflation, beat blah blah blah.." It seems it's ominous of the next hype. There was even an cnn article about how folks/one should dig up old gold jewelry and try to sell them to capitalize on the recent run-up in gold prices (forgetting the fact that most accessory jewelry is like 14k and pretty useless).

 

As far as high oil prices. I think long term that might be a good thing. One thing that I think is that Americans are very creative, and if oil/gas is going to be insane, markets will bring the need for alternative energy.

 

echo, I think your analysis for buying gold/precious metals (in 20/20 hindsight :)) would have yielded you incredible gains 3 years ago. I'm not so sure if the runup will continue. But what do I know, I'm a lazy union worker j6p 🙂 Plus as someone once pointed out, opinions are like ….

 

So here's an idea (albeit terrible). Why not starting to move a (small) amount into REITS :)….Seriously, what do you have to lose? Things are so low across the board, not everything can be terrible. And no one is looking there these days…And if it is, it's just a small amount, who cares if it gets halved? (no I'm not doing this myself. Are you insane? 🙂 ) Or why not buy some low priced banks. Not every bank is going to default and end up like BSC.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Well I am not quite J6P nor a moron. I am a master of self-deprecation.

I didn't try to imply you were. You said you were average joe. Assuming that statement is accurate (I don't know) and that average joe and the rest of average j6p hears/reads/sees (ok maybe j6p doesn't read) on paper/internet/tv touting "BUY COMMODITIES NOW, GET RICH QUICK", to me that means that mainstream has caught up to this "next big thing", and that sooner or later prices are going to be driven up to insane levels and then fall.

Come on folks, don't you think that mass media has gotten hold of this next "big thing" and is now touting it? I can't count how many spam emails, junk snail mail, advertisements I'm seeing,hearing, watching touting "buy gold, buy silver, buy energy, get rich, beat inflation, beat blah blah blah.." It seems it's ominous of the next hype. There was even an cnn article about how folks/one should dig up old gold jewelry and try to sell them to capitalize on the recent run-up in gold prices (forgetting the fact that most accessory jewelry is like 14k and pretty useless).

 

As far as high oil prices. I think long term that might be a good thing. One thing that I think is that Americans are very creative, and if oil/gas is going to be insane, markets will bring the need for alternative energy.

 

echo, I think your analysis for buying gold/precious metals (in 20/20 hindsight :)) would have yielded you incredible gains 3 years ago. I'm not so sure if the runup will continue. But what do I know, I'm a lazy union worker j6p 🙂 Plus as someone once pointed out, opinions are like ….

 

So here's an idea (albeit terrible). Why not starting to move a (small) amount into REITS :)….Seriously, what do you have to lose? Things are so low across the board, not everything can be terrible. And no one is looking there these days…And if it is, it's just a small amount, who cares if it gets halved? (no I'm not doing this myself. Are you insane? 🙂 ) Or why not buy some low priced banks. Not every bank is going to default and end up like BSC.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Well I am not quite J6P nor a moron. I am a master of self-deprecation.

I didn't try to imply you were. You said you were average joe. Assuming that statement is accurate (I don't know) and that average joe and the rest of average j6p hears/reads/sees (ok maybe j6p doesn't read) on paper/internet/tv touting "BUY COMMODITIES NOW, GET RICH QUICK", to me that means that mainstream has caught up to this "next big thing", and that sooner or later prices are going to be driven up to insane levels and then fall.

Come on folks, don't you think that mass media has gotten hold of this next "big thing" and is now touting it? I can't count how many spam emails, junk snail mail, advertisements I'm seeing,hearing, watching touting "buy gold, buy silver, buy energy, get rich, beat inflation, beat blah blah blah.." It seems it's ominous of the next hype. There was even an cnn article about how folks/one should dig up old gold jewelry and try to sell them to capitalize on the recent run-up in gold prices (forgetting the fact that most accessory jewelry is like 14k and pretty useless).

 

As far as high oil prices. I think long term that might be a good thing. One thing that I think is that Americans are very creative, and if oil/gas is going to be insane, markets will bring the need for alternative energy.

 

echo, I think your analysis for buying gold/precious metals (in 20/20 hindsight :)) would have yielded you incredible gains 3 years ago. I'm not so sure if the runup will continue. But what do I know, I'm a lazy union worker j6p 🙂 Plus as someone once pointed out, opinions are like ….

 

So here's an idea (albeit terrible). Why not starting to move a (small) amount into REITS :)….Seriously, what do you have to lose? Things are so low across the board, not everything can be terrible. And no one is looking there these days…And if it is, it's just a small amount, who cares if it gets halved? (no I'm not doing this myself. Are you insane? 🙂 ) Or why not buy some low priced banks. Not every bank is going to default and end up like BSC.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Well I am not quite J6P nor a moron. I am a master of self-deprecation.

I didn't try to imply you were. You said you were average joe. Assuming that statement is accurate (I don't know) and that average joe and the rest of average j6p hears/reads/sees (ok maybe j6p doesn't read) on paper/internet/tv touting "BUY COMMODITIES NOW, GET RICH QUICK", to me that means that mainstream has caught up to this "next big thing", and that sooner or later prices are going to be driven up to insane levels and then fall.

Come on folks, don't you think that mass media has gotten hold of this next "big thing" and is now touting it? I can't count how many spam emails, junk snail mail, advertisements I'm seeing,hearing, watching touting "buy gold, buy silver, buy energy, get rich, beat inflation, beat blah blah blah.." It seems it's ominous of the next hype. There was even an cnn article about how folks/one should dig up old gold jewelry and try to sell them to capitalize on the recent run-up in gold prices (forgetting the fact that most accessory jewelry is like 14k and pretty useless).

 

As far as high oil prices. I think long term that might be a good thing. One thing that I think is that Americans are very creative, and if oil/gas is going to be insane, markets will bring the need for alternative energy.

 

echo, I think your analysis for buying gold/precious metals (in 20/20 hindsight :)) would have yielded you incredible gains 3 years ago. I'm not so sure if the runup will continue. But what do I know, I'm a lazy union worker j6p 🙂 Plus as someone once pointed out, opinions are like ….

 

So here's an idea (albeit terrible). Why not starting to move a (small) amount into REITS :)….Seriously, what do you have to lose? Things are so low across the board, not everything can be terrible. And no one is looking there these days…And if it is, it's just a small amount, who cares if it gets halved? (no I'm not doing this myself. Are you insane? 🙂 ) Or why not buy some low priced banks. Not every bank is going to default and end up like BSC.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Coronita]

Well I am not quite J6P nor a moron. I am a master of self-deprecation.

I didn't try to imply you were. You said you were average joe. Assuming that statement is accurate (I don't know) and that average joe and the rest of average j6p hears/reads/sees (ok maybe j6p doesn't read) on paper/internet/tv touting "BUY COMMODITIES NOW, GET RICH QUICK", to me that means that mainstream has caught up to this "next big thing", and that sooner or later prices are going to be driven up to insane levels and then fall.

Come on folks, don't you think that mass media has gotten hold of this next "big thing" and is now touting it? I can't count how many spam emails, junk snail mail, advertisements I'm seeing,hearing, watching touting "buy gold, buy silver, buy energy, get rich, beat inflation, beat blah blah blah.." It seems it's ominous of the next hype. There was even an cnn article about how folks/one should dig up old gold jewelry and try to sell them to capitalize on the recent run-up in gold prices (forgetting the fact that most accessory jewelry is like 14k and pretty useless).

 

As far as high oil prices. I think long term that might be a good thing. One thing that I think is that Americans are very creative, and if oil/gas is going to be insane, markets will bring the need for alternative energy.

 

echo, I think your analysis for buying gold/precious metals (in 20/20 hindsight :)) would have yielded you incredible gains 3 years ago. I'm not so sure if the runup will continue. But what do I know, I'm a lazy union worker j6p 🙂 Plus as someone once pointed out, opinions are like ….

 

So here's an idea (albeit terrible). Why not starting to move a (small) amount into REITS :)….Seriously, what do you have to lose? Things are so low across the board, not everything can be terrible. And no one is looking there these days…And if it is, it's just a small amount, who cares if it gets halved? (no I'm not doing this myself. Are you insane? 🙂 ) Or why not buy some low priced banks. Not every bank is going to default and end up like BSC.

 

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[gdcox]

Why complain about the dollar. You have beautiful cheap Mexico on your doorstep. In the UK , where our currency is also free falling, we only have expensive Euroland to go to.

And you cheap paradise is only just down the freeway

[echo5juliet]

gdcox… I thought the pound was backed by silver. Perhaps I have read too many Ian Fleming novels and I am mistaken. Is the pound a fiat currency as well?

As for the rest, I really appreciate your replies.

Especially Johnny. From where I am sitting things look really dark.

As for the foxhole being the backyard.. Unless you are a member of the neighborhood appearance committee and do not want me to detract from my home’s appearance it would be a tactical error to have your foxhole in back. A foxhole is a protected defensive position from which to repel or destroy an advancing enemy force. (can you tell what I did before I was a technologist?) Being the front yard would allow you to identify and engage a hostile force, destroy them and if need be lay down a final protective fire to protect home and family. =)

(if things do collapse my house wouldn’t be a good choice for a place to pillage)

[blahblahblah]

You have beautiful cheap Mexico on your doorstep. In the UK , where our currency is also free falling, we only have expensive Euroland to go to.

And you cheap paradise is only just down the freeway

Hi gdcox, if it were only so easy. I went to Puerto Vallarta earlier this year. Great town if you’ve never visited… Anyway, a nice dinner with a bottle of wine is as expensive or more than back here in the states. Good hotels are comparable in cost to here in SD. And of couse it’s Mexico so while it’s got a lot of beauty and history and fun, let’s face it it is a bit funky — trash in the streets, dangerous driving conditions and all that. It is still a good place to visit but cheap it is not until you go way out to the little towns (still fun but definitely a different experience).

Also, Baja is becoming more dangerous lately so many of us who like travelling to Mexico are heading deeper inland these days.

[gdcox]

Hey, that’s a pity Concho. Must have changed a lot since I was there 20 years ago. I will take your inland tip.

Echo 5. All currencies are paper currencies. Gold backed currencies disappeared many decades ago. However, arguably , currencies of countries dominated by precious metal and diamond exports could be considered to be like currencies backed by gold reserves .

By the way , why all the focus on gold. Platinum and paladium are the new gold.

[gdcox]

Hey, that’s a pity Concho. Must have changed a lot since I was there 20 years ago. I will take your inland tip.

Echo 5. All currencies are paper currencies. Gold backed currencies disappeared many decades ago. However, arguably , currencies of countries dominated by precious metal and diamond exports could be considered to be like currencies backed by gold reserves .

By the way , why all the focus on gold. Platinum and paladium are the new gold.

[gdcox]

Hey, that’s a pity Concho. Must have changed a lot since I was there 20 years ago. I will take your inland tip.

Echo 5. All currencies are paper currencies. Gold backed currencies disappeared many decades ago. However, arguably , currencies of countries dominated by precious metal and diamond exports could be considered to be like currencies backed by gold reserves .

By the way , why all the focus on gold. Platinum and paladium are the new gold.

[gdcox]

Hey, that’s a pity Concho. Must have changed a lot since I was there 20 years ago. I will take your inland tip.

Echo 5. All currencies are paper currencies. Gold backed currencies disappeared many decades ago. However, arguably , currencies of countries dominated by precious metal and diamond exports could be considered to be like currencies backed by gold reserves .

By the way , why all the focus on gold. Platinum and paladium are the new gold.

[gdcox]

Hey, that’s a pity Concho. Must have changed a lot since I was there 20 years ago. I will take your inland tip.

Echo 5. All currencies are paper currencies. Gold backed currencies disappeared many decades ago. However, arguably , currencies of countries dominated by precious metal and diamond exports could be considered to be like currencies backed by gold reserves .

By the way , why all the focus on gold. Platinum and paladium are the new gold.

[fuggy]

We actually have some money in Euros because we worked there in the past. Every day we watch our “investment” (we just haven’t exchanged them yet) go up a percent or so.
That is fun, but you kind of wonder if that can continue forever.
Europe has problems, too. Nobody has children except the muslims. They have debt and their money is fiat money, too.

fuggy

[fuggy]

We actually have some money in Euros because we worked there in the past. Every day we watch our “investment” (we just haven’t exchanged them yet) go up a percent or so.
That is fun, but you kind of wonder if that can continue forever.
Europe has problems, too. Nobody has children except the muslims. They have debt and their money is fiat money, too.

fuggy

[fuggy]

We actually have some money in Euros because we worked there in the past. Every day we watch our “investment” (we just haven’t exchanged them yet) go up a percent or so.
That is fun, but you kind of wonder if that can continue forever.
Europe has problems, too. Nobody has children except the muslims. They have debt and their money is fiat money, too.

fuggy

[fuggy]

We actually have some money in Euros because we worked there in the past. Every day we watch our “investment” (we just haven’t exchanged them yet) go up a percent or so.
That is fun, but you kind of wonder if that can continue forever.
Europe has problems, too. Nobody has children except the muslims. They have debt and their money is fiat money, too.

fuggy

[fuggy]

We actually have some money in Euros because we worked there in the past. Every day we watch our “investment” (we just haven’t exchanged them yet) go up a percent or so.
That is fun, but you kind of wonder if that can continue forever.
Europe has problems, too. Nobody has children except the muslims. They have debt and their money is fiat money, too.

fuggy

[blahblahblah]

You have beautiful cheap Mexico on your doorstep. In the UK , where our currency is also free falling, we only have expensive Euroland to go to.

And you cheap paradise is only just down the freeway

Hi gdcox, if it were only so easy. I went to Puerto Vallarta earlier this year. Great town if you’ve never visited… Anyway, a nice dinner with a bottle of wine is as expensive or more than back here in the states. Good hotels are comparable in cost to here in SD. And of couse it’s Mexico so while it’s got a lot of beauty and history and fun, let’s face it it is a bit funky — trash in the streets, dangerous driving conditions and all that. It is still a good place to visit but cheap it is not until you go way out to the little towns (still fun but definitely a different experience).

Also, Baja is becoming more dangerous lately so many of us who like travelling to Mexico are heading deeper inland these days.

[blahblahblah]

You have beautiful cheap Mexico on your doorstep. In the UK , where our currency is also free falling, we only have expensive Euroland to go to.

And you cheap paradise is only just down the freeway

Hi gdcox, if it were only so easy. I went to Puerto Vallarta earlier this year. Great town if you’ve never visited… Anyway, a nice dinner with a bottle of wine is as expensive or more than back here in the states. Good hotels are comparable in cost to here in SD. And of couse it’s Mexico so while it’s got a lot of beauty and history and fun, let’s face it it is a bit funky — trash in the streets, dangerous driving conditions and all that. It is still a good place to visit but cheap it is not until you go way out to the little towns (still fun but definitely a different experience).

Also, Baja is becoming more dangerous lately so many of us who like travelling to Mexico are heading deeper inland these days.

[blahblahblah]

You have beautiful cheap Mexico on your doorstep. In the UK , where our currency is also free falling, we only have expensive Euroland to go to.

And you cheap paradise is only just down the freeway

Hi gdcox, if it were only so easy. I went to Puerto Vallarta earlier this year. Great town if you’ve never visited… Anyway, a nice dinner with a bottle of wine is as expensive or more than back here in the states. Good hotels are comparable in cost to here in SD. And of couse it’s Mexico so while it’s got a lot of beauty and history and fun, let’s face it it is a bit funky — trash in the streets, dangerous driving conditions and all that. It is still a good place to visit but cheap it is not until you go way out to the little towns (still fun but definitely a different experience).

Also, Baja is becoming more dangerous lately so many of us who like travelling to Mexico are heading deeper inland these days.

[blahblahblah]

You have beautiful cheap Mexico on your doorstep. In the UK , where our currency is also free falling, we only have expensive Euroland to go to.

And you cheap paradise is only just down the freeway

Hi gdcox, if it were only so easy. I went to Puerto Vallarta earlier this year. Great town if you’ve never visited… Anyway, a nice dinner with a bottle of wine is as expensive or more than back here in the states. Good hotels are comparable in cost to here in SD. And of couse it’s Mexico so while it’s got a lot of beauty and history and fun, let’s face it it is a bit funky — trash in the streets, dangerous driving conditions and all that. It is still a good place to visit but cheap it is not until you go way out to the little towns (still fun but definitely a different experience).

Also, Baja is becoming more dangerous lately so many of us who like travelling to Mexico are heading deeper inland these days.

[echo5juliet]

gdcox… I thought the pound was backed by silver. Perhaps I have read too many Ian Fleming novels and I am mistaken. Is the pound a fiat currency as well?

As for the rest, I really appreciate your replies.

Especially Johnny. From where I am sitting things look really dark.

As for the foxhole being the backyard.. Unless you are a member of the neighborhood appearance committee and do not want me to detract from my home’s appearance it would be a tactical error to have your foxhole in back. A foxhole is a protected defensive position from which to repel or destroy an advancing enemy force. (can you tell what I did before I was a technologist?) Being the front yard would allow you to identify and engage a hostile force, destroy them and if need be lay down a final protective fire to protect home and family. =)

(if things do collapse my house wouldn’t be a good choice for a place to pillage)

[echo5juliet]

gdcox… I thought the pound was backed by silver. Perhaps I have read too many Ian Fleming novels and I am mistaken. Is the pound a fiat currency as well?

As for the rest, I really appreciate your replies.

Especially Johnny. From where I am sitting things look really dark.

As for the foxhole being the backyard.. Unless you are a member of the neighborhood appearance committee and do not want me to detract from my home’s appearance it would be a tactical error to have your foxhole in back. A foxhole is a protected defensive position from which to repel or destroy an advancing enemy force. (can you tell what I did before I was a technologist?) Being the front yard would allow you to identify and engage a hostile force, destroy them and if need be lay down a final protective fire to protect home and family. =)

(if things do collapse my house wouldn’t be a good choice for a place to pillage)

[echo5juliet]

gdcox… I thought the pound was backed by silver. Perhaps I have read too many Ian Fleming novels and I am mistaken. Is the pound a fiat currency as well?

As for the rest, I really appreciate your replies.

Especially Johnny. From where I am sitting things look really dark.

As for the foxhole being the backyard.. Unless you are a member of the neighborhood appearance committee and do not want me to detract from my home’s appearance it would be a tactical error to have your foxhole in back. A foxhole is a protected defensive position from which to repel or destroy an advancing enemy force. (can you tell what I did before I was a technologist?) Being the front yard would allow you to identify and engage a hostile force, destroy them and if need be lay down a final protective fire to protect home and family. =)

(if things do collapse my house wouldn’t be a good choice for a place to pillage)

[echo5juliet]

gdcox… I thought the pound was backed by silver. Perhaps I have read too many Ian Fleming novels and I am mistaken. Is the pound a fiat currency as well?

As for the rest, I really appreciate your replies.

Especially Johnny. From where I am sitting things look really dark.

As for the foxhole being the backyard.. Unless you are a member of the neighborhood appearance committee and do not want me to detract from my home’s appearance it would be a tactical error to have your foxhole in back. A foxhole is a protected defensive position from which to repel or destroy an advancing enemy force. (can you tell what I did before I was a technologist?) Being the front yard would allow you to identify and engage a hostile force, destroy them and if need be lay down a final protective fire to protect home and family. =)

(if things do collapse my house wouldn’t be a good choice for a place to pillage)

[gdcox]

Why complain about the dollar. You have beautiful cheap Mexico on your doorstep. In the UK , where our currency is also free falling, we only have expensive Euroland to go to.

And you cheap paradise is only just down the freeway

[gdcox]

Why complain about the dollar. You have beautiful cheap Mexico on your doorstep. In the UK , where our currency is also free falling, we only have expensive Euroland to go to.

And you cheap paradise is only just down the freeway

[gdcox]

Why complain about the dollar. You have beautiful cheap Mexico on your doorstep. In the UK , where our currency is also free falling, we only have expensive Euroland to go to.

And you cheap paradise is only just down the freeway

[gdcox]

Why complain about the dollar. You have beautiful cheap Mexico on your doorstep. In the UK , where our currency is also free falling, we only have expensive Euroland to go to.

And you cheap paradise is only just down the freeway

[SHILOH]

“And you cheap paradise is only just down the freeway…”
It’s not exactly paradise when — as soon as you drive back over the border you are saying “thank God I am a U.S. Citizen and that I made it back safely.”

[SHILOH]

“And you cheap paradise is only just down the freeway…”
It’s not exactly paradise when — as soon as you drive back over the border you are saying “thank God I am a U.S. Citizen and that I made it back safely.”

[SHILOH]

“And you cheap paradise is only just down the freeway…”
It’s not exactly paradise when — as soon as you drive back over the border you are saying “thank God I am a U.S. Citizen and that I made it back safely.”

[SHILOH]

“And you cheap paradise is only just down the freeway…”
It’s not exactly paradise when — as soon as you drive back over the border you are saying “thank God I am a U.S. Citizen and that I made it back safely.”

[SHILOH]

“And you cheap paradise is only just down the freeway…”
It’s not exactly paradise when — as soon as you drive back over the border you are saying “thank God I am a U.S. Citizen and that I made it back safely.”

[DWCAP]

HAHAHAHAHAHA, (ghasp) HAHAHAHAHAHAHAHA. Beany baby market! Perfect. Thank you for that. I needed to laugh today. What better symbol is there for an entire market built on the idea that everyone else is doing it, so I should too!

Also, I agreed with alot of what jonny said, but not all. But what I really have to disagree with was the real estate as a hedge against inflation second comment. Not that he isnt correct, but that we should look to tradition. This is the most untraditional downturn since 1929. Real estate and its bubble popping are the real problem. So much capital was blown on non-productive investment that it is killing us. You can recycle a machine or use a store as a resturant, you can switch from Cotton to corn to soybeans, but you cant go from housing to Ag or industrial. The idea that the best way to invest is to follow tradition in an untraditional market is retarded.
Dont expect your rapidly depreciating house to be a good hedge against inflation. If anything, you should wait, as both your dollars and that house will be cheaper in the future.

[jonnycsd]

DWCAP – I was not suggesting that anyone should go buy real estate now. The OP sounds like a worried home owner, and I just pointed out that if someone is really worried about inflation – well real estate is a traditional inflation hedge. It has worked really well in that capacity for thousands of years.

For me and my unique situation, buying last year made sense, and still does. The ability to open a decent size dollar short position with no carrying costs is just great. The house is cool, and is a long term luxury. I don’t much care what valuation does over the next 15 years. My son will inherit our beach house some day, it will likely never be sold.

I am not following your ideas on “non-productive” investment. Are there thousands upon thousands of empty homes somewhere? For the few (in percentage terms) that are empty, will not a growing population soak that up pretty quick? If not, don’t we need a ton of new construction every year just to replace old homes that are torn down or converted to coffee shops or whatever? And since homes are long lived assets, even if a few extra were built the last three years won’t they eventually find a good use? I mean really, its not like we just built 1 million homes that will be empty, never-lived-in and rotting away 5 years from now, right? New home supply may have gotten ahead of its self a little, but, IMHO it is nothing like the valuation overhang we have.

[jonnycsd]

DWCAP – I was not suggesting that anyone should go buy real estate now. The OP sounds like a worried home owner, and I just pointed out that if someone is really worried about inflation – well real estate is a traditional inflation hedge. It has worked really well in that capacity for thousands of years.

For me and my unique situation, buying last year made sense, and still does. The ability to open a decent size dollar short position with no carrying costs is just great. The house is cool, and is a long term luxury. I don’t much care what valuation does over the next 15 years. My son will inherit our beach house some day, it will likely never be sold.

I am not following your ideas on “non-productive” investment. Are there thousands upon thousands of empty homes somewhere? For the few (in percentage terms) that are empty, will not a growing population soak that up pretty quick? If not, don’t we need a ton of new construction every year just to replace old homes that are torn down or converted to coffee shops or whatever? And since homes are long lived assets, even if a few extra were built the last three years won’t they eventually find a good use? I mean really, its not like we just built 1 million homes that will be empty, never-lived-in and rotting away 5 years from now, right? New home supply may have gotten ahead of its self a little, but, IMHO it is nothing like the valuation overhang we have.

[jonnycsd]

DWCAP – I was not suggesting that anyone should go buy real estate now. The OP sounds like a worried home owner, and I just pointed out that if someone is really worried about inflation – well real estate is a traditional inflation hedge. It has worked really well in that capacity for thousands of years.

For me and my unique situation, buying last year made sense, and still does. The ability to open a decent size dollar short position with no carrying costs is just great. The house is cool, and is a long term luxury. I don’t much care what valuation does over the next 15 years. My son will inherit our beach house some day, it will likely never be sold.

I am not following your ideas on “non-productive” investment. Are there thousands upon thousands of empty homes somewhere? For the few (in percentage terms) that are empty, will not a growing population soak that up pretty quick? If not, don’t we need a ton of new construction every year just to replace old homes that are torn down or converted to coffee shops or whatever? And since homes are long lived assets, even if a few extra were built the last three years won’t they eventually find a good use? I mean really, its not like we just built 1 million homes that will be empty, never-lived-in and rotting away 5 years from now, right? New home supply may have gotten ahead of its self a little, but, IMHO it is nothing like the valuation overhang we have.

[jonnycsd]

DWCAP – I was not suggesting that anyone should go buy real estate now. The OP sounds like a worried home owner, and I just pointed out that if someone is really worried about inflation – well real estate is a traditional inflation hedge. It has worked really well in that capacity for thousands of years.

For me and my unique situation, buying last year made sense, and still does. The ability to open a decent size dollar short position with no carrying costs is just great. The house is cool, and is a long term luxury. I don’t much care what valuation does over the next 15 years. My son will inherit our beach house some day, it will likely never be sold.

I am not following your ideas on “non-productive” investment. Are there thousands upon thousands of empty homes somewhere? For the few (in percentage terms) that are empty, will not a growing population soak that up pretty quick? If not, don’t we need a ton of new construction every year just to replace old homes that are torn down or converted to coffee shops or whatever? And since homes are long lived assets, even if a few extra were built the last three years won’t they eventually find a good use? I mean really, its not like we just built 1 million homes that will be empty, never-lived-in and rotting away 5 years from now, right? New home supply may have gotten ahead of its self a little, but, IMHO it is nothing like the valuation overhang we have.

[jonnycsd]

DWCAP – I was not suggesting that anyone should go buy real estate now. The OP sounds like a worried home owner, and I just pointed out that if someone is really worried about inflation – well real estate is a traditional inflation hedge. It has worked really well in that capacity for thousands of years.

For me and my unique situation, buying last year made sense, and still does. The ability to open a decent size dollar short position with no carrying costs is just great. The house is cool, and is a long term luxury. I don’t much care what valuation does over the next 15 years. My son will inherit our beach house some day, it will likely never be sold.

I am not following your ideas on “non-productive” investment. Are there thousands upon thousands of empty homes somewhere? For the few (in percentage terms) that are empty, will not a growing population soak that up pretty quick? If not, don’t we need a ton of new construction every year just to replace old homes that are torn down or converted to coffee shops or whatever? And since homes are long lived assets, even if a few extra were built the last three years won’t they eventually find a good use? I mean really, its not like we just built 1 million homes that will be empty, never-lived-in and rotting away 5 years from now, right? New home supply may have gotten ahead of its self a little, but, IMHO it is nothing like the valuation overhang we have.

[jonnycsd]

DWCAP – I was not suggesting that anyone should go buy real estate now. The OP sounds like a worried home owner, and I just pointed out that if someone is really worried about inflation – well real estate is a traditional inflation hedge. It has worked really well in that capacity for thousands of years.

For me and my unique situation, buying last year made sense, and still does. The ability to open a decent size dollar short position with no carrying costs is just great. The house is cool, and is a long term luxury. I don’t much care what valuation does over the next 15 years. My son will inherit our beach house some day, it will likely never be sold.

I am not following your ideas on “non-productive” investment. Are there thousands upon thousands of empty homes somewhere? For the few (in percentage terms) that are empty, will not a growing population soak that up pretty quick? If not, don’t we need a ton of new construction every year just to replace old homes that are torn down or converted to coffee shops or whatever? And since homes are long lived assets, even if a few extra were built the last three years won’t they eventually find a good use? I mean really, its not like we just built 1 million homes that will be empty, never-lived-in and rotting away 5 years from now, right? New home supply may have gotten ahead of its self a little, but, IMHO it is nothing like the valuation overhang we have.

[DWCAP]

HAHAHAHAHAHA, (ghasp) HAHAHAHAHAHAHAHA. Beany baby market! Perfect. Thank you for that. I needed to laugh today. What better symbol is there for an entire market built on the idea that everyone else is doing it, so I should too!

Also, I agreed with alot of what jonny said, but not all. But what I really have to disagree with was the real estate as a hedge against inflation second comment. Not that he isnt correct, but that we should look to tradition. This is the most untraditional downturn since 1929. Real estate and its bubble popping are the real problem. So much capital was blown on non-productive investment that it is killing us. You can recycle a machine or use a store as a resturant, you can switch from Cotton to corn to soybeans, but you cant go from housing to Ag or industrial. The idea that the best way to invest is to follow tradition in an untraditional market is retarded.
Dont expect your rapidly depreciating house to be a good hedge against inflation. If anything, you should wait, as both your dollars and that house will be cheaper in the future.

[DWCAP]

HAHAHAHAHAHA, (ghasp) HAHAHAHAHAHAHAHA. Beany baby market! Perfect. Thank you for that. I needed to laugh today. What better symbol is there for an entire market built on the idea that everyone else is doing it, so I should too!

Also, I agreed with alot of what jonny said, but not all. But what I really have to disagree with was the real estate as a hedge against inflation second comment. Not that he isnt correct, but that we should look to tradition. This is the most untraditional downturn since 1929. Real estate and its bubble popping are the real problem. So much capital was blown on non-productive investment that it is killing us. You can recycle a machine or use a store as a resturant, you can switch from Cotton to corn to soybeans, but you cant go from housing to Ag or industrial. The idea that the best way to invest is to follow tradition in an untraditional market is retarded.
Dont expect your rapidly depreciating house to be a good hedge against inflation. If anything, you should wait, as both your dollars and that house will be cheaper in the future.

[DWCAP]

HAHAHAHAHAHA, (ghasp) HAHAHAHAHAHAHAHA. Beany baby market! Perfect. Thank you for that. I needed to laugh today. What better symbol is there for an entire market built on the idea that everyone else is doing it, so I should too!

Also, I agreed with alot of what jonny said, but not all. But what I really have to disagree with was the real estate as a hedge against inflation second comment. Not that he isnt correct, but that we should look to tradition. This is the most untraditional downturn since 1929. Real estate and its bubble popping are the real problem. So much capital was blown on non-productive investment that it is killing us. You can recycle a machine or use a store as a resturant, you can switch from Cotton to corn to soybeans, but you cant go from housing to Ag or industrial. The idea that the best way to invest is to follow tradition in an untraditional market is retarded.
Dont expect your rapidly depreciating house to be a good hedge against inflation. If anything, you should wait, as both your dollars and that house will be cheaper in the future.

[DWCAP]

HAHAHAHAHAHA, (ghasp) HAHAHAHAHAHAHAHA. Beany baby market! Perfect. Thank you for that. I needed to laugh today. What better symbol is there for an entire market built on the idea that everyone else is doing it, so I should too!

Also, I agreed with alot of what jonny said, but not all. But what I really have to disagree with was the real estate as a hedge against inflation second comment. Not that he isnt correct, but that we should look to tradition. This is the most untraditional downturn since 1929. Real estate and its bubble popping are the real problem. So much capital was blown on non-productive investment that it is killing us. You can recycle a machine or use a store as a resturant, you can switch from Cotton to corn to soybeans, but you cant go from housing to Ag or industrial. The idea that the best way to invest is to follow tradition in an untraditional market is retarded.
Dont expect your rapidly depreciating house to be a good hedge against inflation. If anything, you should wait, as both your dollars and that house will be cheaper in the future.

[Author]

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