Possiblity of hyper inflation / economic collapse

[ChefGuy89]

Further more, all currencies are fiat and aren't based on anything. Hedge against paper.

[softwareNerd]

Well if the Federal Reserve stops quantitative easing, what is going to keep the stock market looking positive and thus "reinforcing" any perceived strength in the dollar?

I doubt the stock market will do well if the Fed ends QE2 and does not embark on QE3.

So, are you predicting QE3 and more fiscal stimulus than has been currently planned? Are you predicting this to happen without an intervening realization of reality -- i.e. a "correction" that scares the Fed and the Congress to act?

[ChefGuy89]

I am of the opinion that the Fed will have to continue QE. China has recently become a net seller of U.S. Treasuries and the government is hard pressed to find other nations that will continue to buy our debt - especially with Japan currently destroyed and irradiated.

The Fed HAS to continue monetizing the debt in order for the government to continue spending to the magnitude that it is. A dose of reality, a real correction would involve raising interest rates significantly, not just cutting but slashing government spending across the board - eliminating whole wasteful departments, reducing our military presence abroad and allowing people the choice of paying for things with real money. This doesn't even address the issue of Medicare/caid and Social Security, but good places to start.

I don't predict we will see any of this done. The masses are too compliant, fewer than 5% of Americans own physical precious metals, public education has truly left it's mark, socialism is being viewed as acceptable these days and public hand outs as a gravy train by most.

If I were anybody on this forum I'd be buying the following in this order:

1. Silver and Gold

2. Firearms

3. Any books about economics, gold as money, the Fed, works by the Founders, farming

4. Food that will keep for a few years time (dried beans, pasta, rice, tomato sauce, etc.)

And just do your best to tell as many people as you can about what is happening. Will you find a large audience? Likely not, people don't want to hear that the world is on the brink of disaster and that the 500 dollars they just spend on their new Ipad could have been spent in a better fashion. But your close friends, family - do what you can with what you have.

I think that Americans have taken a lot of shit from this present and previous administrations, but I do not believe that we will allow our freedoms to be stripped from us - the Tree of Liberty has been looking ever more shriveled and dried up. I know plenty of tyrants, now how about patriots?

Edited April 15, 2011 by ChefGuy89

[softwareNerd]

China has recently become a net seller of U.S. Treasuries and the government is hard pressed to find other nations that will continue to buy our debt - especially with Japan currently destroyed and irradiated.

I'm not sure how broad you're assuming this will be. Are you also implying that the U.S.'s trade/service-deficit will turn positive since no countries (in the net) will be willing to hold any more dollars than they currently do, and will (in the net) be sending dollars back to the U.S.? Or do you think the trade/service deficit will stay largely negative and that the dollars will come back via the acquisition of other U.S. assets (i.e. other than Treasury Bonds) (i.e. on the "capital account", but in some other form than what is common at present)? or do you think this question is based on a false premise, and if so what is that false premise? Edited April 16, 2011 by softwareNerd

[ChefGuy89]

I'm not sure how broad you're assuming this will be. Are you also implying that the U.S.'s trade/service-deficit will turn positive since no countries (in the net) will be willing to hold any more dollars than they currently do, and will (in the net) be sending dollars back to the U.S.? Or do you think the trade/service deficit will stay largely negative and that the dollars will come back via the acquisition of other U.S. assets (i.e. other than Treasury Bonds) (i.e. on the "capital account", but in some other form than what is common at present)? or do you think this question is based on a false premise, and if so what is that false premise?

Sorry about the time delay on this response.

I do believe that we will be seeing a combination of both, though foreign acquisitions in this nation may result largely in real estate, and possibly infrastructure - given the state of the municipal bond markets. And other nations are already weary of buying more U.S. Treasury debt given the state of our economy and that we couldn't even cut 1% of our yearly expenditures in the recent budget charade.

Ultimately though I believe that both of these considerations are but blips on the radar screen in terms of what we are looking at. I do believe that we will see a world wide collapse of the fiat/debt based monetary system. A huge housing bubble is getting ready to burst in China, debts in terms of paper currencies are at unprecedented levels, governments are quite simply unwilling to cut spending to the levels necessary to reel in spending and to make the this fiasco manageable.

Flawed premise? I'd say the only flawed premise or idea in this argument is paper currency. Hands down, fiat money and central banking are at the heart economically of our problem with Keyenes being the commandant in chief. Our house of cards is standing in the way of a tornado. I am not certain what is going to trigger the collapse, with so much uncertainty on the economic and geo-political level it is hard to say what is going to be the trigger for the next Black Friday.

I don't know if the world understands the scope of what we are looking at. I believe that the next major correction is going to make the Great Depression look like a beach party by comparison. I am not trying to be a pessimist or Mr. Gloom - but the situation has never looked more dire than it does now. The dependency of so many governments on loans from the other with central banking making a penny off the whole story is disgusting to say the least. Bankers by and large will profit from the coming collapse while every day people will lose everything.

We live in a debt based society. Money doesn't exist in our current system without a debt obligation held by somebody.

Edited April 19, 2011 by ChefGuy89