johngonole

Are We More Like 1932 - or 1923?

Allan,

I'm afraid that stagflation might be the best thing we can hope for. If the Fed times everything just right we might get it. Otherwise I can completely see the Fed pressing down on the gas too long only to realize they are about to run the car off the road when its too late to stop. I see the Fed printing and printing until the velocity of money begins to normalize. The problem is with all the fear mongering the press loves to do (this bad economy story will never die.....Obama should have been careful what he wished for.....and he clearly wished it) people are going to increase their savings rate and the unemployed will greatly reduce their spending. The Fed will continue to print money far to long. When good times begin to emerge their will be far too many dollars in circulation. Foreign held dollars may also start to find their way back into this country. The Fed can try to buy back all those dollars but with what???? Will all those toxic securities be worth anything? And we know the federal government isn't going to be paying down the national debt anytime soon. So once things take off I think they will really take off. Then the medicare and social security crisis will happen and tax rates will go way up slamming the breaks on the economy. The point is that I think the Fed has lost its ability to control the money supply and the economy via money supply control because they really won't have the options. Medicare and social security will require more money be printed.

My advice is to save up about a year or two worth of money so you can survive unemployment with reasonable security. After that spend you money on assets of any kind that will hold their value. Over the next ten years buy real estate, precious metals, and anything else you think you will really need (lawn mower, new fridge, new stove....whatever) Spend it because prices must go up.

How the Fed's Decision Impacts You

The bankers are thiefs pure and simple. Those of us who wish to keep the purchasing power and security we worked hard for are forced to speculate just to keep what is ours. There too wallstreet and the bankers profit from us.

Bankers get a large cut of GDP simply for allowing us to trade. Our society has become slaves to the bankers in a very real sense.

Using the Gold to Oil Ratio to Monitor Gold Equity Investments

Don't know if the ratio is correct or not. The author from his previous comments was wrong and gold went up instead of going down. Then in this article he posits that either gold goes up or oil goes down. Then he goes on to say we might have to expect hyperinflation if the FED keeps printing money. Hyperinflation should lift Oil prices so gold should follow. I fail to see how gold or oil go down if we have currency inflation. Also I'm assuming when you conclude that we will merge with a stronger dollar that you mean relative to other currencies. Prices of items and services we buy on whole have never come down in my lifetime and I don't expect them too. Silver is a good inflation hedge since supply is pretty constant. Silver should hold its real purchasing power.