World Financial Collapse Imminent

[macker]

Originally Posted by giver99

"I think we are all doomed. I think what will happen is that we are in the midst of a kind of a crack-up boom that is not sustainable, that eventually the economy will deteriorate, that there will be more money-printing, and then you have inflation, and a poor economy, an extreme form of stagflation, and, eventually, in that situation, countries go to war, and, as a whole, derivatives, the market, and everything will collapse, and like a computer when it crashes, you will have to reboot it."

Marc Faber

http://www.zerohedge.com/sites/defau...02.25.2011.pdf

I think we are seeing the starting signs of this in countries like Egypt, Tunisia, Greece, Libya and soon many others to follow.

Dr.Doom......so are you also thinking we have a K-wave comming in the near future? http://kondratieffwinter.com/blog/january-18-2011/ I can't even imagine the world if things don't continue to recover so that we can have another healthy recession in the next year or two and not something more substantial. Guess in that scenerio you can't rule out a system that was described by Alan Greenspan in 1966 "Gold and Economic Freedom."

[mikey_the_redneck]

Originally Posted by oilyfan

Protectionism is a dirty word. Show me where it has been implemented and I will show you a failed state or on the verge of failing.

Workers will be paid a wage to support a family, for how long? People have choice, and they choose to buy the better product, not necessarily the cheapest product. Japanese vs. American cars is a good example.

Well what America is doing right now is the exact opposite of protectionism, and clearly it is not working for Americans.
I think a nice middle ground can be found between all-out protectionism and all-out free trade, that can benefit everyone.

[Tinordi]

Protectionism never works anywhere (unless you're a developing country following export based development - and even then it's tenuous).

Protectionism hurts everyone except small interest groups. THere is no good 'middle-ground' of protectionism. Either you are competitive or you're not, and if you're not competitive then do something else where you are competitive. All protectionism does is keep prices artificially high and delays the inevitable price adjustments.

[macker]

Last month with scant media coverage JP Morgan announced that they will now accept Gold collateral for loans. It can be argued that JP Morgan is the worlds premiere bank. By doing this JP Morgan is basically telling the world that Gold is gaining traction as a medium of exchange. Just another tell along the way.

[Morozee]

Originally Posted by macker

Last month with scant media coverage JP Morgan announced that they will now accept Gold collateral for loans. It can be argued that JP Morgan is the worlds premiere bank. By doing this JP Morgan is basically telling the world that Gold is gaining traction as a medium of exchange. Just another tell along the way.

I never heard this, VERY interesting...

[valo403]

Originally Posted by macker

Last month with scant media coverage JP Morgan announced that they will now accept Gold collateral for loans. It can be argued that JP Morgan is the worlds premiere bank. By doing this JP Morgan is basically telling the world that Gold is gaining traction as a medium of exchange. Just another tell along the way.

A tell of what? That the gold market is more liqid than it has previously been? That investors holding gold as a hedge would like to utilize it in the market as opposed to simply locking it away? It's certainly an expansion of the role of gold in the market, but it's not a dramatic market shift.

[macker]

^
That major central banks are in the midst of a campaign of prolonged currency debasement. To help avoid this hidden tax it is prudent to hold some of your savings in something other than fiat currencies. Banks such as JP Morgan are starting to recognize this desire.

[valo403]

Originally Posted by macker

^
That major central banks are in the midst of a campaign of prolonged currency debasement. To help avoid this hidden tax it is prudent to hold some of your savings in something other than fiat currencies. Banks such as JP Morgan are starting to recognize this desire.

You must have built quite the ramp to make that jump

There's certainly changes happening, but the whole 'sky is falling' routine is getting a bit tired.

[Tinordi]

Currency debasement is a tax...

Are you reading those Gold Standard Glory Days blogs?

[J pold]

I love this gold standard reinsurance of late. Yes there are a handful of politicians (Ron Paul) and academics who believe going back to the gold standard would be a helpful thing but the other 99% of the world knows that such an assertion is beyond ridiculous. It was the old gold standard that made the 1930's go from recession to great depression. The moment major countries abandoned the gold standard was the moment that recovery began. And there where people back than that said going off the gold standard would result in a global financial collapse.

[Tinordi]

Exactly, why should the value of money be linked to the physical weight of gold mined from the ground? For what reason

Shouldn't the value of money reflect the demand for that money on the global market and not what central banks think the dollar should be worth with respect to an ounce of gold?

[mikey_the_redneck]

Originally Posted by Tinordi

Exactly, why should the value of money be linked to the physical weight of gold mined from the ground? For what reason.

I think the intent of the gold standard was to prevent (or minimize) inflation.

I don't really support a renewed gold standard. Gold prices can be manipulated by the big players. Before you know it nations would be at war over gold mining sites...

At the end of the day, a fiat currency could work if monetary policy was controlled and monitored by representative government, rather than having all the Federal Reserve Wall Street cronies in control of it with no transparency.

[macker]

Originally Posted by valo403

You must have built quite the ramp to make that jump

There's certainly changes happening, but the whole 'sky is falling' routine is getting a bit tired.

I didn't say the sky is falling so you can put away your ramp.....who is making that leap It is however not a bad idea to consider what asset classes are going to perform well in this type of environment. Am I 100% in precious metals.....not even close......Not a matter of the sky falling or reading gold bug blogs at all. This is nothing new either as I have had realatively the same weighting of precious metals for the past 10 years. Not trying to sound your alarm bells....sorry....

[J pold]

Originally Posted by mikey_the_redneck

At the end of the day, a fiat currency could work if monetary policy was controlled and monitored by representative government, rather than having all the Federal Reserve Wall Street cronies in control of it with no transparency.

Really? I find this view, especially from you, rather interesting. You would really want Barack Obama, or any politician for that matter at the head of your central bank? Personally I'd much rather have a room full of the smartest and most educated people in the world, who don't have to worry about being reelected or voter popularity determining the money supply.

[mikey_the_redneck]

Originally Posted by J pold

Really? I find this view, especially from you, rather interesting. You would really want Barack Obama, or any politician for that matter at the head of your central bank? Personally I'd much rather have a room full of the smartest and most educated people in the world, who don't have to worry about being reelected or voter popularity determining the money supply.

Haha, yeah the problem with all the "smartest and most educated" people that run Wall Street and the Fed is that they don't represent the interest of Americans.

When the Federal Reserve Act was rammed through congress in 1913, the promise was that a central bank would eliminate dramatic economic downturns, bubbles etc. They have really failed to do that. All they have done is inflate the currency over time and created massive federal debt.

I know politicians are easily manipulated and corrupted, but the U.S. constitution placed the control of money in the hands of the elected. The founders warned of the consequences of placing money creation power into private hands. It seems to me that Ben Bernanke calls the shots and congress has no oversight on monetary policy. They just keep borrowing and borrowing.....

If nothing else, atleast an audit could be done, and monetary policy would be transparent, as opposed to the Fed of today that operates privately and secretly.

[Azure]

So, question is, if sub prime mortgages had never existed, would the economy have crashed?

Even the free market goes through a tough time....at some point.

Everyone knows that the US has a major debt problem. They just don't talk about it when times are good.

[robocop]

Originally Posted by Azure

So, question is, if sub prime mortgages had never existed, would the economy have crashed?

Even the free market goes through a tough time....at some point.

Everyone knows that the US has a major debt problem. They just don't talk about it when times are good.

I think sub prime mortgages was only one part of the deregulation in the investment banking industry. It was the deregulation that caused the problem and it could be the end of the American dollar.

The free market does go through tough times as its very nature is cyclical, but the US is far from a free market anymore. The core ideas of properly run institutions and businesses surviving on their own has been corrupted. The political manipulation by lobbyists and banks using money as leverage has corrupted the free market to benefit the wealthy, it's kind of a symptom of a free market where those who are able to be successful use the resources gained in their prior successes to insure their future wellbeing by manipulating the system away from a free market.

The debt was bad before, but now they are absolutely screwed:

1.eventually the interest on the debt will be more than the net income from taxes, result being printing more money and massive inflation. This could be prevented with a number of solutions which leads to problem numero
2.the same people who drove the US economy into the tank, the investment bankers and economists (greenspan, bernanke, henry paulson), remain in power. the source of the problem has not even been assessed by the political system let alone solved. Taxes on the rich remain too low and philosophies on wall street have changed too little for there to be any chance of a turnaround.

Once they can't pay off the interest on the debt they are done, the dollar will be gone forever. That's really the bottom line, you can argue philosophy and history all you want, but once the interest on the 14 trillion dollar debt is too much to pay the dollar will drop in value and the world will switch to some other reserve currency and hyperinflation will occur.

[macker]

http://online.wsj.com/article/BT-CO-...01-714544.html

[mikey_the_redneck]

^^Yeah alot of people forget that the U.S. has to make interest payments on $14 trillion dollars.

I think alot of people are suffering from the "normalcy bias"....

http://www.google.ca/url?sa=t&source...ukWvvGRu1NF6Lg

[robocop]

yeah I agree, a lot of people think the US is some unmovable behemoth that nothing could ever change.