

Why the Global Financial System is About To Collapse [2006] - david927
http://johnlaw0.wordpress.com/2011/08/23/why-the-global-financial-system-is-about-to-collapse-2006/

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weagle2001
I don't think this is remonetization, but I do think the dollar bubble is
popping. QE has caused excessive supply, so massive inflation is coming.
Moving to gold is a good way to avoid the dollar bubble and also all of the
other bubbles (real estate, debt, etc). Gold is also a bubble, but it will pop
after the dollar adjusts.

~~~
chalst
From a Keynesian perspective, one accepted by many non-Keynesians, QE is not
yet in danger of driving inflation, because there is still deficient demand in
the US economy.

Bigger dangers to the dollar come from two directions: (i) America's massive
debt burden - the joint public and private sector debt burden is around 350%
of GDP, and (ii) America's declining (relatively and perhaps absolutely)
competitiveness. The goldbugs are staging a theatre that distracts from what
matters.

A very brief summary of the case against the gold standard:
[http://www.j-bradford-
delong.net/politics/whynotthegoldstand...](http://www.j-bradford-
delong.net/politics/whynotthegoldstandard.html)

~~~
weagle2001
Just for clarification, when I said "moving to gold" I meant in your portfolio
and not as a currency. I'm certainly not in favor of moving back to the gold
standard...I think that ship has sailed. As I understand it, an increase in
dollar supply can take 1-2 years to cause inflation. A 300% increase has to
cause inflation, and they're still printing (paying banks to keep excess
cash).

The bubbles in real estate, personal debt, and stocks are just the beginning.
The government debt and dollar bubbles are coming next. That's why I'm buying
precious metals and foreign currencies...I don't see how the recovery will
happen before a massive correction occurs.

~~~
chalst
QE is not printing money, rather it is making lots of very short-term credit
available. There is no increase in the narrowest sense of money supply
directly coming from QE, and the increase in broader definitions of money
vanishes within days of QE being stopped. There are (highly controversial)
arguments that QE leads to inflation, but they are about indirect effects of
QE's cheap credit.

The point of QE is to do with deleveraging, i.e., the reduction of that 350%
aggregate debt burden. Deleveraging is inherently deflationary, since money
spent on paying off debt is money that is not spent on consumption. QE is
supposed to smooth out that process, to allow demand to grow while this
deleveraging process goes on.

I think there's a case for investing in precious metals, but it is about the
worst case scenario: it can't lose _all_ its value, and there are scenarios
where it appreciates where practically nothing else does.

My investment tip: I think German property is _still_ undervalued, despite
over a year of boosterish talk in the financial media. It's fairly volatile,
and rents in Germany are low so the value case is long term, but that long-
term case is pretty strong. See
[http://online.wsj.com/article/SB1000142405311190448090457649...](http://online.wsj.com/article/SB10001424053111904480904576497972650562748.html)

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sek
Who wrote this? I don't think that the first result on Google is by accident.
<http://en.wikipedia.org/wiki/John_Law_(economist)>

This blog was created when it was posted on HN so i assume this is yours
david927

Why so secretive?

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sek
Here on USA Gold, a gold seller (now it makes sese) is a part of this text
quoted. <http://www.usagold.com/amk/usagoldmarketupdate042307.html>

This seems not very trustworthy and should animate people for an impulsive
gold shopping spree.

~~~
ChuckMcM
Yes, this appears to be an attempt at social engineering.

As far as I can tell the piece is complete fiction.

The 'goal' of the article is to convince people to buy gold.

The fiction is that it was written at some time in the past and purports to be
as true today as it was in 2006 (although it was written 5 years later).

I can assure you that in 2016 I will be able to write a piece which, had I
written it today, would have given you all the advice you needed to invest
wisely.

I expect it would be simpler to invent time travel, pop ahead 5 years, look
around and then pop back.

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macavity23
Argh, grey text on white background. Thank god for firebug.

