World in Crisis?? 19 posts by 9 users

Posted: 11/15/2008 at 04:58AM

The world will survive the economic crisis. This crisis is entirely self-inflicted and will require drastic fundamental change to correct. That change certainly won't occur until there has been a complete collapse (which has already happened many times in history). Did you know that in 1781, a pair of shoes in Virgina cost $5,000 and a full set of clothes cost $1 Million? That was caused by the same fiat currency system and the same over-borrowing that we have today. The entire financial system collapsed and they essentially started over.

So, yes, this turmoil will eventually lead to collapse and anarchy. Then, we'll start over. The end result is that we'll be forced to live within our means; to actually save money; to have a lower standard of living; to actually start manufacturing things again in the US; and to be more self-sufficient (without all the government handouts).

If you want to see for yourself exactly what will happen, all you need to do is read about the history of the United States. It's all happened many times before.

Mike

Posted: 11/15/2008 at 07:04AM

If you've got a big pile of extra money, then I think buying some gold is a great idea.

Certainly, the credit card companies are in trouble (look at American Express), but so is nearly every other industry. The auto industry, the airlines, the hedge funds, the housing industry, and even states and cities are now asking for bailouts.

I certainly wouldn't hide with your shotgun in a bomb shelter, but I certainly would have a shotgun and some shells in the basement!

Mike

Posted: 11/19/2008 at 04:24PM

gold, silver, cash, food and water to start. Free and clear properties and no debt. This situation would make you feel comfortable.

Posted: 11/19/2008 at 04:43PM

I knew this market had a lot of potential, too bad it’s in the wrong direction.

Great graph.

Posted: 11/19/2008 at 07:25PM

OTOH, the two later bear markets turned around at those low points. This time wasn't nearly as quick as in the great depression. What's it mean? Beat's me.

Posted: 11/19/2008 at 08:40PM

hahahaha..... I liked that one

Posted: 11/20/2008 at 04:28AM

Jack,

I'm no economist, but I believe that deflationary concerns are valid, in which case debt would be horrible.

Posted: 11/20/2008 at 10:03AM

You guys are correct, but the problem is it just depends.

1. Right now platinum / gold coins are difficult to trade because they are hard to move and floating will over $100 over spot. However there is some speculation that the paper gold markets may dislocate due to the lack of underlying physical supporting these markets. India has already went through this scenario.

2. Deflation - Yup, we are going through a huge deflationary crunch right now. Having debt in deflation is bad. However Bernanke has repeatedly said he will do whatever it takes to fight deflation. >IF< this includes currency debasement (which he stated is an option), this can cause hyper-inflation. In a hyper-inflationary environment you would want to leverage up to your eyeballs in debt.

Posted: 11/21/2008 at 01:23PM

Rich - good point, it is much more advantageous if the debt was used to purchase real assets then say a bottle of Louis XIII at the night club. :) Of course all dollar denominated debt would still be less relative to your earning power.