Armed Polite Society
Main Forums => Politics => Topic started by: lee n. field on May 14, 2012, 06:57:40 PM
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can be depressing sometimes (http://bayourenaissanceman.blogspot.com/2012/05/of-politics-economics-and-reality.html)
- The US economy is recovering very slowly indeed from the 2007-09 recession - much more slowly than in previous recessions. This is crippling economic growth and - most importantly - job creation. In fact, as I've mentioned before, official unemployment statistics are a bare-faced lie from beginning to end. The Washington Post has just published an excellent exposé of one aspect of this reality. Our real unemployment rate, right now, is almost certainly significantly higher than 20%. (http://www.washingtonpost.com/blogs/ezra-klein/post/the-incredible-shrinking-labor-force/2012/05/04/gIQANXAy1T_blog.html?hpid=z1)When official statistics put it at just over 8%, they're understating the true position by about two-thirds. No President can fix a problem of that scale without a vibrant economy to provide jobs - and that economy simply doesn't exist right now.
- There are so few investors willing to purchase US treasuries (i.e. bonds to fund US government debt) that the Federal Reserve is currently 'buying' 70% of them (http://inflation.us/hyperinflationwarningsigns.html),. They aren't really being 'sold' at all, of course: the Fed is offering them for sale, then 'buying' them itself by creating money (literally generating strings of digits in a computer system). No actual money is changing hands at all, but the US government is spending hundreds of billions of dollars every single month that are financed by this method. It's nothing more or less than a financial house of cards. So bad has the situation become that last week, respected investment analyst Peter Schiff called US treasuries 'junk bonds' and warned that the dollar was headed for collapse. 'Printing money' like this must, repeat, MUST inevitably lead to serious inflationary problems - to pretend otherwise is to deny mathematical and fiscal reality. Just ask the National Inflation Association.
- Europe, which as a joint entity is a larger economy than ours, is in even worse economic shape than we are; yet our economy is inextricably interdependent with theirs. If they go down, we go down with them - and that's very likely to happen. Daniel Hannan pointed out last week:...
The bolded linkety parts I find worrying.
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You & me both.
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So what's the best course of action for us suburban wage slaves? Gold? Guns? Prayer?
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Quite seriously, I don't understand people's obsession with gold. It sucks as an investment (investment being defined as intended to hold longer than 10 years). If you want to speculate, you can make a lot of money on it, just like any other commodity. But over a 30 year or longer span it's rate of return is usually little or no better than inflation.
If TEOTWAWKI happens you're much better served with a large stockpile of distilled alcohol (whiskey, rum, vodka, whatever) and ammo (.22lr, 9mm, .223, .30-06, etc). They have incredibly long shelf lives and everyone will want both of them. One truth of humanity is a desire to get drunk. Another is having the ability to defend yourself and hunt for food. When TEOTWAWKI happens those will be the two biggest drivers of most peoples lives. The people that are hording gold, but nothing else, now will give you A LOT of that gold in exchange for your supply of drunkeness and bullets.
Trade your stash of booze and bullets for the gold that others are hordeing and when the economy restores itself you'll be incredibly rich. If you live that long anyway.
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Long shelf life food will increase in value if things truly collapse. Same for medicine, ammo, fuel, and everything else people will need. Gold may hold its value, but many other things will be guaranteed to go up in value, and many of those things have obvious high value to the person holding it, while gold's value only goes so far.
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agree.
I would add ciggs to that list, or cans of that bugler roll yer own tobacco.
I would buy gold however, but not the large coins, the small ones the same size as a dime. easier to trade/carry.
I'll have to get around to reading preachermans blog sometime, to depressed to do much right now.
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It's important to note that the "unemployment rate" is the percentage of people who want a job and are currently without one. If you are out of work, and trying to get a job, you are part of the unemployment rate. If you quit trying to work and retire or just become a bum, you are no longer a part of the unemployment rate. Infact, you just made the unemployment rate go down a little bit. Good job of contributing to economic recovery.
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Gold is good to have because it is the ultimate barter item. Having gold in discrete and easily understood amounts and formats i.e. in dust, coin, or bar as opposed to fillings, earrings and other ornamental items form aids in trade in a situation where a government supplied currency is either deeply discounted or not being accepted in trade. The jewelry is still useful but it's not as frictionless as coins etc are.
There is a concept in barter called "coincidence of wants" which means to exchange each person needs what the other has. You have a display case that is in bad repair and you want some measure, weight, and color of fabric. Finding someone with the fabric who also wants a broken display case is a high cost and perhaps impossible situation.
The next step is triangulating. You take your case and trade for anything that is more acceptable to a wider range of people. Foodstuffs, cosmetics, ammo, alcohol. Now it just got easier to get your fabric. However you likely still have a few more steps to go so what you need is something anybody will take. Even if they don't care for it they know they can trade to the next person.
Historically a few items became the ultimate trade item. For example cows, salt, tobacco, nails, silver and finally gold.
Gold won out because it does not rust,corrode or rot, it's infinitely malleable and easy to determine how valuable any given piece is.
Any system of trade needs a foundation and for over 5000 years gold has been in that foundation and has been the most important item. When people ask "why gold?" Because you cannot eat it, you cannot use it to shelter yourself, it doesn't do anything and it has no warmth to impart so why have it? Why is it valuable?
The answer is it's valuable because it's job is to be how we count success. Gold coins and bars are like the tokens in game. The more you receive the better at the game you are. We need playing pieces in the great game and gold, while not perfect, is the best we've got. And our need for this measurement is what imparts the mostly subjective value to this yellow metal.
So refusing to own gold is essentially turning your back on a proven technology. Which is not to say you should only have gold. Having a bunch of other stuff is also vital.
That said, you don't need a lot. In a currency crisis prices will adjust to match what people can offer. The situation may be massively deflationary and quite full of suck but if you have some gold or silver coins you might be able to ride it out.
Also, there is a concept called "freegold" which is the idea that gold prices will shoot up very rapidly hitting $25,000-30,000+ Oz in just a few days or weeks. However the prices of most everything else will lag some so that the Oz you bought at @ $1600 is suddenly worth 15x it's value in goods you may need. So You quickly sell your Oz and then go on a buying spree to get all the food and ammo and whatever else will get you and yours through the hard times before the prices reset.
So if you are thinking about giving gold a pass, maybe think again and tuck a little bit away. Even if it (like mine) is in jewelery form. (My wife wants to keep the jewelery instead of trade it for coins, eh..what can you do?)
Of course all these problems stem from the fact that some people think that it is possible to increase the wealth of a country through currency manipulation. Put an end to that and many of the problems disappear.
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All the people hawking gold today seem to be a bit, well, desperate to unload their holdings. I think owning some gold/silver is OK, but I wouldn't make it the centerpiece of my retirement plan . . . especially if I'm buying at today's prices.
So what's a good defensive investment strategy for today if we do have an economic upheaval tomorrow, but we don't descend all the way into an utter-collapse-of-civilization-Mad-Max scenario?
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All the people hawking gold today seem to be a bit, well, desperate to unload their holdings. I think owning some gold/silver is OK, but I wouldn't make it the centerpiece of my retirement plan . . . especially if I'm buying at today's prices.
So what's a good defensive investment strategy for today if we do have an economic upheaval tomorrow, but we don't descend all the way into an utter-collapse-of-civilization-Mad-Max scenario?
My coworker just made 30% profit in 8 weeks SHORTING gold.
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My coworker just made 30% profit in 8 weeks SHORTING gold.
Win.
The smart money has found a way to profit from the depression.
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It's important to note that the "unemployment rate" is the percentage of people who want a job and are currently without one. If you are out of work, and trying to get a job, you are part of the unemployment rate. If you quit trying to work and retire or just become a bum, you are no longer a part of the unemployment rate. Infact, you just made the unemployment rate go down a little bit. Good job of contributing to economic recovery.
And as Rush and other radio guys have pointed out the last few months, that is the only reason the published unemployment rate has gone down, fewer people counted in the work force. It isn't widely reported, but I think most voters aren't overly excited about current economic prospects.
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Gold is a hedge. It is not an "investment", it is a wealth protecting measure. Some people can make money on trading gold or holding gold. That is not the purpose of purchasing gold for "TEOTWAWKI".
As for "gold will be worthless in TEOTWAWKI!!!111!1!", what kind of breakdown in society do you expect where gold has no value? There may be a short time (just like during any other disaster) during which only food or ammo is valuable, but so long as you already have enough food/ammo/other consumables for that time, society will re-emerge.
Human societies almost universally have used gold for trading. Any society that emerges post-societal collapse will have an extemely high likelihood of similarly valuing gold.
And, food/ammo are not all that good in value to weight/volume, when compared to gold. Similarly, not all that good in longevity.
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You & me both.
Make that three.
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I don't understand people's obsession with gold. It sucks as an investment...over a 30 year or longer span it's rate of return is usually little or no better than inflation.
Its an inflation hedge, as you point out. If you major concern is having your wealth evaporate due to hyperinflation, gold can be a good PART of a hedging strategy.
My hangup is I just don't know where I can go to buy gold in tradeable form. If I could go to walmart and buy krugerrands for some small percent over spot, I would just start buying a few per paycheck, but I don't know how to actually buy the stuff. I don't trust the internet.
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Its an inflation hedge, as you point out. If you major concern is having your wealth evaporate due to hyperinflation, gold can be a good PART of a hedging strategy.
My hangup is I just don't know where I can go to buy gold in tradeable form. If I could go to walmart and buy krugerrands for some small percent over spot, I would just start buying a few per paycheck, but I don't know how to actually buy the stuff. I don't trust the internet.
Small coin shops. There's at least one in Billings, so there is likely one or more near you.
Pay cash ;)
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Pay cash ;)
And buy less than 5000 dollars worth at a time.
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As for "gold will be worthless in TEOTWAWKI!!!111!1!", what kind of breakdown in society do you expect where gold has no value? There may be a short time (just like during any other disaster) during which only food or ammo is valuable, but so long as you already have enough food/ammo/other consumables for that time, society will re-emerge.
Define "no value"?
In a TEOTWAWKI emergency, you'll be able to buy a tin of food for some gold... but for much more gold than it was worth before, or after TEOTWAWKI.
Now what gold is good for is for preserving your wealth for the period of civil war/post-nuclear apocalypse/whatever so you' can be moderately-wealthy again when civilization, inevitably, reasserts itself.
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Define "no value"?
In a TEOTWAWKI emergency, you'll be able to buy a tin of food for some gold... but for much more gold than it was worth before, or after TEOTWAWKI.
Now what gold is good for is for preserving your wealth for the period of civil war/post-nuclear apocalypse/whatever so you' can be moderately-wealthy again when civilization, inevitably, reasserts itself.
Isn't that exactly what I said?
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Bah. I am low on caffeine.
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Bah. I am low on caffeine.
Better stock up on coffee for the coming apocalypse ;)
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All material goods and skills will have value in the face of economic collapse. With gold you can concievably convert it back to someone else's non-collapsed fiat currency then buy the stuff you need. Much handier to cross a border with the gold rather than all the stuff. Still security concerns obviously. I want more of everything, not just gold.
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Better stock up on coffee for the coming apocalypse ;)
5 days of mood swings and constant napping, and I'd be over it. (I've done it before.)