If you are Russian or European, owning gold would have been beneficial in 2014. Our time will come.
“Whenever destroyers appear among us, they start with the money. Destroyers seize gold and leave to its owners, a counterfeit pile of paper.”
Ayn Rand
Bill Bonner had this to say about the claim we can grow our way out of debt.
“One way of measuring GDP is to add together consumption, investment, government spending and net exports.
The idea is to measure total spending. And in this way, also measure production.
Most things produced are sold. Add up how much spending there is and you get an idea of how much production there’s been.
US GDP is reported to be $18 trillion a year – with $3.5 trillion coming from US federal government spending. Add state and local government spending, and the total rises to more than $6 trillion.
This means that the private sector – the part that pays the bills – is only $12 trillion.
Total debt – government, corporate and personal – in the US is now $58 trillion. That’s nearly five times the real economy that supports it. And it helps explain why it is so hard to “grow your way out” of debt.
Assuming an annual interest rate of 2%, even if you could contain debt increases to 3% of GDP a year, the productive part of the economy would have to grow at 5% just to stay even.
No developed economy in the world is growing that fast.
At an interest rate of 3%, the annual interest on $58 trillion is $1.7 trillion. That’s slightly less than 10% of GDP. But it’s 14% – or one of every seven dollars – of the private sector economy.
And as recently as January 2002, the 10-year Treasury note yielded over 5%.
If the average interest rate were to rise to that level again – and sooner or later it will – it would take $3 trillion to service America’s debt – or one-quarter of private sector output.
That can’t happen. The wings would fall off first.”
Add to that China has pledged their lending help to Russia, Argentina and Venezuela, leaving the US and the IMF on the outside looking in, the illusion of the $US is running on fumes.
when-your-currency-crashes-what-will-save-your-ass?
Answer is- Your guns, your ammo, your wit, and your ability to do whatever it takes to survive.
FROM WM THE SHRUBBER AT ZH:
Twas’ two days before Christmas, and all through the Fed,
The minions were cheering,”Volatility is dead”.
Portfolios were leveraged, with nary a care,
With assurances that liquidity, would always be there.
The indices climbed to new record heights,
With visions of higher; the Fed you don’t fight.
My terminals blinking, and I at my desk,
I’d finally conceded, there was no more risk.
When in emerging markets there arose such a clatter,
I sprang from my seat to see what was the matter.
Away to the Bloomberg, I flew like a flash,
Reviewed all the headlines and began to raise cash.
Europe was crashing, with Japan in more trouble,
China was slowing, and our markets a bubble.
When what to the pandering press should appear,
Soothing words from the Fed, and again markets cheered.
The algos u-turned, there’d be no more sellin’,
I knew in an instant it must be Janet Yellen.
More rapid than eagles, her policies they came,
And she whistled and shouted and called them by name.
On stimulus, on TARP, on QEs 1, 2 and 3,
On Abenomics, on LTROs, the money is free.
$13TR and counting, we’ll print ’til we die.
Prosperity from nothing, it’s as easy as pie.
And then came the punchline, they’d found a new fix.
The Fed was preparing QEs 4, 5 and 6!
I often have asked, just how high is high.
I no longer question, I know to just buy.
The chairwoman smiled, a right jolly old elf.
The con worked again, she was proud of herself.
Fundamentals don’t count, only faith in the Fed.
Investors the world over have nothing to dread.
A world drowning in debt, weighed down with deflation,
Was saved once again by more asset inflation.
And I heard her exclaim, as she cranked up her press,
Wish your kids Merry Christmas, they’ll inherit this mess!
My apologies to Clement Moore. Merry Christmas, and God bless us, every one!
Sensetti: well put! The folks that can make things, do things, fix things will be invaluable. Sitting in front of a computer and choking yer chicken ain’t gonna hack it.
“Bill Bonner had this to say about the claim we can grow our way out of debt.”
Knew a guy at the local tavern that used to say he drank himself sober.
He was a hot ticket. How you doing Tony I used to say to him. ” Just Fine until that last drink; went and drank myself sober; and now will have to start all over again he said with a grin on his face.
https://www.youtube.com/watch?feature=player_detailpage&v=krk7WWphtNU
https://www.youtube.com/watch?feature=player_detailpage&v=iHzjfGF6MiU
What if one day everything drops in price?
Everything.
The most important thing of all is the ocean of IOU’s we call the Bond Market. More people have little appreciation for how many of those Paper Promises cannot be fulfilled.
When they default, or can’t be rolled over, the wealth value they represent will disappear, and people will FEEL poorer.
Poorer-feeling people stop buying. They stop buying everything they don’t need right now (and lots of stuff they do need right now.)
During the period that bonds collapse in value, gold is extremely unlikely to fight that trend. Not impossible, just extremely unlikely.
Once the ocean of bonds has turned into a few tidal pools of trustworthy IOU’s, then look out. I do not doubt that the “fix” will be to flood the world with banknotes, and stuff (including gold) may shoot to the moon in nominal dollar value.
Unfortunately, it will be a poorer world, and an angrier one, too. That’s my expectations, worth every penny paid to read them.
Marty will have a chuckle..
Marty actually thought Citigroup rented space in the Capitol building.
Where was Marty during the 12 consecutive year bull market in gold?
Oh yeah, he was in prison for fraud.
Marty is selling his newsletters, investing systems and movies. I find his diatribes interesting, but his purpose is to make money off of you. He’s no guru.