Old Geezer that listened to parents that lived through the Great Depression. Am a USAF veteran and proud grandpa of twelve grandkids. I am trying to learn enough to be a good investor and have met many great and tolerant (I ask a lot of questions) people here on SA.
The Chinese already got rid of their US dollars and US bonds by getting loans and credit lines from American and European banks collateralized against US bonds (thus US dollars). That's how the Chinese HID the fact that they already spent the dollars they have so as not to crash the dollar's exchange value before they got rid of them all.
The Chinese are buying natural resources and profitable Companies throughout the world. They will announce the effective extinction of their dollar reserves once they're done shopping with the last of their (borrowed) US dollars and crash the US dollar(s that they own outright) in the process while revaluing the Chinese Yuan 200-300% in one fell swoop and thus greatly enhance their purchasing power instantaneously.
(The US bonds that the Chinese now hold on paper are mere instruments of financial mass destruction to be used at the most opportune moment. Do you really think that the Chinese are that STUPID and did nothing to protect themselves when we are screaming in their faces 'til we ourselves are blue in the face that we are going to INFLATE the dollar into oblivion and repay our debt to the Chinese with electronic digits that are worth NOTHING?)
On that day (which will be in early 2012 but possibly before that), your wealth will disappear if it was still denominated in US dollars.
Why do you think the Fed lowered US interest rates to practically ZERO? On the face of it, such interest rate policies are counterproductive for (1) they scream market manipulation and economic irresponsibility and (2) they reek of irrationality, for any viable business can generate 5-20% return on capital and thus is perfectly capable of absorbing 2-3% interest rates as the cost of doing business. The REAL reason for the Fed's zero interest rate policy is the Chinese. The Chinese DEMANDED and obtained zero interest rates, for they are not interested in holding depreciating US bonds which only represent the "faith and credit" of a bankrupt people who reneged on their own contractual and legal obligations -- including the US Constitution. The Chinese acquiesce to playing the monetary musical chairs game as long as America (the Fed) gives them dollar credits that they can freely spend, collateralized against the US Bonds that the Chinese own. This way, everyone gets to have their cake and eat it too -- for a little while longer at least. The Chinese get to spend their dollar-denominated reserves without crashing the dollar's value and the Americans can pretend that foreign investors are willing to invest in US debt because the dollar is as good as gold...
The US dollar is a PLAGUE and pure FRAUD.
FRAUD=NOT a good investment.
Leave the sinking ship behind! Save yourselves from USA Titanic by jumping into the economic lifeboat known as GOLD (and SILVER)!
What a disingenuous article.
Gold is a flat line between 1900-1972 because the currency was, by law, fixed to it.
So lets use your math and go back and recalibrate our answer.
Gold rose from $35 to ..hmm.. current prices.. we'll call it $1350 to close the year out in 38 years. Or an increase of 3857% ... Meanwhile the DJIA was 900 in 1972 ... and is about 11500 now. Or an increase of 1277%
My simple math tells me that the Dow hasn't kept pace with the price of gold over the entire course of US history where we've had a fiat currency.
I'm sorry.. you were saying something? You're either wholly disingenuous, in which case this article is malicious. Or you're a moron, in which case please. PLEASE keep selling gold. We need you on the other side of this trade."
I Am A Concerned Citizen As Well As A Manufacturing Engineer Heavily Involved In Distressed Real Estate.
Points To Ponder:
Function Derives From Structure.
Debate Is The Distillation Of Reality.
Reality Will Be Reality Whether Believed In Or Not.
Pretending In Dire Circumstance Usually Results In Catastrophe.
Complexity Favors The Sinister.
To Assume Benevolence Is Foolish.
Safety Is A Function Of Awareness.
Pessimism Is "Optimism With Contingency"