Some thoughts on gold:20 year chart of gold prices36 year chartHow you can look at any single asset class and say "aha we are fucked!" is beyond me. Gold like any other investment class is not immune to speculation. Even though that is a nice increase from 1995 to 2009, what is to say this is not just another speculative bubble? Those numbers also ignore inflation. If you factor out inflation using for example the CPI-index it will show a lower gain. Yes, as far as I can tell, gold beat inflation during that period but did it beat other asset classes? For a more dramatic effect you could probably find better indicators, than gold, that the shit is going to hit the fan. Try official statistics on the size of the money supply or data on currency trades.
Some thoughts on debt:Anyway this is not about gold as an investment. This is about debt... Spiralling national debt is a bitch isn't it... Interest slavery(more taxes), more to eventually pay off(more taxes), the threat to currency stability(inflation & buying power). It all adds up to a rather unsavoury situation but it cuts both ways. Creditors are exposed to greater default risk and debtors to an unsustainable whole in their collective bucket. No matter how you spin it there will be pain for both sides when things get out of balance and the correction comes. You could increase taxes or use inflation (the buzz word being "quantitative easing") to ease the load but nobody will ever be voted in on a promise of many lean years to come. That is probably why the proverbial whole in the bucket got so big in the first place. Another option which came up recently, which the Chinese would like, is to transfer ownership of national natural resources. Also not very popular.
An outright default is unlikely in my opinion. The damage will probably come as an erosion of purchasing power through a triple-whammy-combination of inflation, increased taxes and the dollar tanking against other currencies over a longer period of time. But hey shit like this doesn't happen overnight... Chances are you will wake up one morning and realise you got shafted by irresponsible monetary and fiscal policy and that the monumental shift has already taken place. This realisation may be accompanied by a feeling of being violated and the terrible realisation that there is fuck all you can do about it now. Alternatively you could be kicking back in Canada, more on that later.
I like this quote from an evil genius: "Give me control of a nations money supply, and I care not who makes it’s laws". This is what it boils down to. Don't let the evil genius guard your money no matter which way he spins it. To understand why you may want to have a closer look at the definition of
money supply. It may seem like a stupid question but try to define money then have a look at the link. As new money enters the economy it dilutes the value of all the money in circulation. If we modify your example and throw in a doubling of the money supply with real world purchasing power denoted in strippers(yes I am tired and horny today) we get:
You give $1000 to your low life son, and $5000 to your responsible daughter. Furthermore the money supply doubles. Now you realise you are 6000$ out of pocket(when you earned it you could buy a 6000$ stripper), your son and daughter have 1000$ and 5000$ respectively but now they can only buy a 500$ stripper and 2500$ stripper respectively. The difference is whoever got their hands on that new 6000$ first gets a damn fine lap dance on you. Actually if the strippers didn't know the monetary supply was increased they might still give 1000$ and 5000$ worth of lapdances. In the end it might be the strippers that pay the price.
Which brings us to the fact that inflation is a bitch too. If the powers that be inflate away the debt it means crappier strippers for the average Joe. I wonder if I went offtopic there a little... damn strippers messing with my cognitive thought processes.
My conclusions: Rather than try to prevent it, for which it might be too late anyway, how do you like the weather in Canada? It's not too late to start rolling your R's and dressing like a lumberjack.
Debt and inflation are both bitches. This still gets
nobody
closer to a solution for the problem though. Kinda annoys me nobody answered my question about tax reform
Oh well.
