The Housing Bubble

Very cool.

“First, a ban by large governments in unison would add a huge amount of pressure to the price in countries where it isn’t banned. So if the US, UK, Russia and Uzbekistan decide to ban the ownership or trade of gold, you can believe that Malaysia, the Emirates, and New Zealand would see a large increase in demand.”

Are you really an economist? Because that argument just doesn’t make a lick of sense.

“Are you really an economist? Because that argument just doesn’t make a lick of sense.”

Can’t see why not. It’s the same principle as when alcohol gets banned in certain counties, or fireworks in certain states, etc. The demand picks up in the neighboring counties or states. Higher demand equals higher prices, especially for a commodity with a limited supply.

Econ 101 man.

I agree the argument doesn’t make sense. Now, I WILL say that a ban by certain countries might have the effect of changing the demand curve worldwide for other reasons but this argument is focusing on quantity demanded instead of the demand curve as a whole.

“Can’t see why not. It’s the same principle as when alcohol gets banned in certain counties, or fireworks in certain states, etc.”

Uh, no. You are confusing consumption demand for an addictive drug (alcohol) with speculative demand for a commodity (gold) — apples and oranges. I tried to explain this in greater detail below…

I think people would affix chains to them and call them jewelery.

I’ve got 5k USD on the neck, as does the wife. Plus, she has 6k on the wrist and our two year old has 1k on the neck and has a few in storage as he’s grown. And new baby is slated for her share (she’ll be born in about two weeks). Mom is Thai.

Beware of muggers.

I find price controls immoral and ineffective tools of an illegitimate government but to each his own…

Price controls on gold? Enlighten me. please.

“I find price controls immoral and ineffective tools of an illegitimate government but to each his own…”

Indeed — there is no accounting for tastes. But I do prefer asset classes which the government has not declared illegal to trade.

>> Price controls on gold? Enlighten me. please. <<

I think it is like price controls for bread back in the early 1980’s in USSR. All the bread you want for $1/loaf, but none in stock. Perpetual out of stock. But oh so affordable1

I wouldn’t count on the Swiss given the state of their banking system.

“As an anecdote - I see two CD’s in Everbank’s world markets are actually at 0% - Japan and Singapore. That to me says they’re in high demand as safe currencies. This is reflected in the currency trends - the Yen has done very well lately.”

The standard interpretation of this situation is that investors believe relative appreciation in the values of those currencies will offset the absence of a nominal return on holding them. I persuaded my wife to go in with me on the purchase of a Swiss franc CD a couple of years back. She was initially puzzled over how it could be prudent to invest in a CD with a nominal return below 2 pct. By the time the CD had matured and we converted it back to dollars, we were up 20 pct. We got lucky, as shortly thereafter the trend in the Swiss franc-dollar exchange rate reversed.

Same here, though I reinvested in SWF and am now back to even dangit. I’m still holding though - I think in the end the problems in the U.S. will outweigh the problems in Europe (especially Switzerland - despite the UBS problems).

If nothing else - it’s kind of fun explaining to someone how you can make money investing in a 0% CD.

The Swiss are actually a country of sharpshooters. Nearly every able body male keeps an assault rifle in their home and they hone their skills with said weapon on the weekends. One of the reasons Germany didn’t invade. Switzerland aka Sniperland.

Germany did not invade because Swiss runs the world banking cartel, and Germans (Hitler) were financed from there.
Fed is partially owed from Switzerland and partially from UK. (look up at BIS role).
So in a way are owed from Switzerland too (unless you paid your mortgate and credit card debt).

Agree about the banking. Millions of Europeans made lots of gold deposits in Swiss banks funneled from Germany during WW2, they just didn’t live to get a receipt. All those gold fillings and what-not financed a lot of Panzers. But I’m pretty sure Hitler always had a covetous eye on Switzerland but didn’t want a 3rd front. There is a story, possibly apocryphal but awesome nonetheless, that a ranking German general was visiting and watching the Swiss military on their summer maneuvers. He asked the Swiss commander, “How big a force do you command?”

The Swiss general confidently replied, “I can mobilize one million men in twenty-four hours.”

The German asked, “What would happen if I marched five million men in here tomorrow?”

The Swiss replied, “Each of my men will fire five shots and go home.”

The topography would’ve been somewhat problematic if Hitler wanted to invade. Tanks work pretty well on flat surfaces, but much less so going up and down mountain peaks. That said, a lot of high ups in the Reich had their money stashed away there and who knows what the gnomes would have done to it if the panzers started rolling through Zurich.

The jobs are on the back end - the planning, permitting, and design…

Ladieeeeees & Gentlemen:

In the Green trunks, weighing a bit more than nothing, boxing in the featherweight division, the king.

vs.

The contender in the Yellow trunks, weighing in heavily thanks to it’s specific gravitas, boxing in the Heavyweight division, the Aureus kid.

Let’s get it on!

RE: I’m thinking that investing $20,000 in quality firearms will be a better investment than an equivalent investment in gold. They have similar storage issues, similar risks for government confiscation and/or restriction of sales, but firearms are more “liquid”.

Spot on Gulfie!

20 oz. of gold dust in a vial or a gun locker split between 10 Colt .45’s (varying models) and 10 AR 15’s?

It’s a no-brainer.

Pass the Colt’s please…

The last time Dem’s controlled Congress the price of an average assault rife rose 5x before the ownership ban law finally lapsed under Bush.

Watch for a return when the anti-gunner/2nd Amendment Right crowd returns to power.

RE: the ownership ban law

Incorrect…it was a purchase ban not “ownership per se”

Do $10K in each and you’ll be sitting pretty.

“….10 Colt .45s and 10 AR-15s….”

Actually, I was thinking more along the lines of 9mm Sig Sauers and or Glocks, and Springfield Armory M1As, with maybe a few Reminton 1100s thrown in for good measure.

(Yeah, I know…..I prefer the .45 too, but the kids thing the Glocks are cool…….)

‘RE: the ownership ban law

Incorrect…it was a purchase ban not “ownership per se”’

Details, details…

Banning purchases has the same effect in my story. If you own gold for speculative reasons, you join the supply side of the market (much like a real estate flipper circa 2005). If a purchase ban is implemented, demand is softened and the price of gold falls.

Is this really that hard to grasp, because I feel a little bit like I am talking to the wall here…

When it hits the fan, nothing beats a high capacity, pump action shotgun, given you know how to use it.

As I recall, Cali and a few other states had “purchase bans”
(that didn’t stop anyone from purchasing them if they really wanted one……..did they even charge anyone with breaking that law, that wasn’t being charged with some other major crime at the same time?)

The Feds put out regs making semi autos that “looked like” assault rifles illegal to manufacture. Which led to removal of “bayonet lugs” and ugly-ass “keyhole stocks”

One of the stupidest laws ever passed……the AR-15 (in “military” configuration) was banned, but the Ruger Mini-14 was legal……both semi-auto rifles, both capable of accepting 30 round magazines, both firing a 5.56mm round.

The “pre-ban” guns tripled in value for a while, but the price has gone down since the law was not extended.
Hopefully, if the Dems win the White House and the Congress, they will have more important issues to deal with than starting a pi##ing contest with the NRA.

And the sound of a round being chambered in a pump action shotgun is universally understood.

“When it hits the fan, nothing beats a high capacity, pump action shotgun, given you know how to use it.”

Sure–out to 30 yards or so, then waddayagonna do? My Romanian AK-47 can deliver a lot of lead in a hurry out to 200 meters, it can punch through thick wood, cinder blocks and tear up a vehicle, the ammo is cheap, it’s reliable as all hell and–yes–I know how to use it.

But as a home defender, true, the pump scattergun is a poor man’s SMG–hard to beat.

I guess it all depends upon which SHTF scenario you envision.

Got ammo?

You guy’s need to get your 03FFL Curio&Relic license. Great milsurp weapons and ammo at dealer prices shipped right to your door with no tax (most cases) and no forms. Just keep a log of all firearms purchased in your logbook. You can buy a Mosin Nagant and 300 rounds shipped for about $135, a CZ82 9×18 makerov for less than $200 (this is a great pistol!). “It’s best to have and not need than need and not have.”

“And the sound of a round being chambered in a pump action shotgun is universally understood.”

Sure . . . shortly followed by the sound of two safeties clicking off somewhere in your living room.

I’d rather stay silent and keep the element of surprise than to give away my location.

Got ammo?

RE: 9mm Sig Sauers

The general acceptance of the 9mm pistol caliber was the result of pressure from Beretta Arms to supply a side-arm for NATO.

The acquiescence to accept the caliber and dump the .45ACP by the US military was followed by US law enforcement agencies until 3 FBI were killed in a nasty Florida shoot-out in the mid 80’s.

Scene reconstructionists noted that the the intial hits on the shooters by the agent’s 9mm’s did put them down, but allowed them to continue firing resulting in the eventual deaths of the FBI men.

So, adios to the 9mm for those who wanted to outgun the bad guys.

In order to save face on the trashing of the .45ACP, the .40 caliber evolved as a poltical panacea.

But for me, I’ll take the .45CAP, which is what the US Marines used as a “man stopper” in the Phillipines during the Spanish American War to thwart all those doped up Moros running out of the jungle lookin’ to hack of some heads with their machetes.

Best evidence I can offer for the .45 auto.

RE: the intial hits on the shooters by the agent’s 9mm’s did put them down,

Bad proof-reading…

should read “did NOT put them down

eom.

hd74man,

If you get the chance read: “The Magnificent Children”

It’s about the young Teddy Roosevelt wannabe’s sent to the southern P.I in that era. Really gut-wrenching but fast read. The local Moro’s were so “hopped up” they’d get hit by .38 rounds and keep on coming!

Really was the start of guerrilla warfare and as much the preface for “Apocalypse Now” as “Heart of Darkness” ever was?

One of the clever tactics the “Children” learned once firearms fell into enemy hands was to always leave defective/tampered rounds when they broke camp.

The Moro’s would collect them, chamber them and when they fired… the round blew the chamber apart maiming or killing the native. ( This is also where the practice of burying the dead with the head of a pig was born )

Like I say, definitely *not for the squeamish.

My Border Patrol relative brother sent me some “Rules for Gunfighting” Just a few:

-Bring a gun. Preferably, bring two guns. Bring all your friends who have guns.

-Anything worth shooting is worth shooting twice.

-If you can choose what to bring to a gunfight, bring a long gun and a friend with a long gun.

-Someone may kill you with your own gun someday, but they should have to beat you to death with it because it is empty.

-Only hits count. The only thing worse than a miss is a slow miss.

(Not that I’m really worried about ever actually having to use a gun to defend myself, but besides being a lot of fun, it gives you a little peace of mind if worse comes to absolute worse).

I can’t believe no one has brought up:

Better to be judged by 12 ( than carried by 6 )

Hopefully it will never come to that. I would only add that it’s a danger to assume that you don’t have anything “worth stealing”. I usually only carry a few dollars in cash but with as cheap as meth is these days..?

RE: The local Moro’s were so “hopped up” they’d get hit by .38 rounds and keep on coming!

Really was the start of guerrilla warfare and as much the preface for “Apocalypse Now” as “Heart of Darkness” ever was?

DinOR-

Thank you for your book tip and the corroboration of the circumstances involving the Moros.

You throw out this stuff-and most people look at you kind funny, LOL.

But I came across exactly those “failure to stop the hop-head” stories years ago while researching what handgun to purchase.

Sealed the deal on a 45ACP for me.

RE: but besides being a lot of fun, it gives you a little peace of mind if worse comes to absolute worse).

Disclaimer…

My advocation of weaponry here is based as much on collection potential and a store of value as it is on personal safety and self-sufficiency in the event of some sort of social upheaval.

Good advice from Dad:

“When in doubt, empty the clip.”

The official story given out in some USAF firing ranges about why the Beretta M9 was chosen was that it would never fire on accident. That is, they were more worried about people accidentally shooting themselves in the foot with their sidearm still at their side (in the holster) than they were about effectiveness.

“To get Gold, you also prowl deep in the bowels below, and can expect to extract a tiny, miniscule amount of it, from every ton of ore brought up for air.”

There are much easier ways to get gold supply into the market than mining it. One way is for central banks to unload their vaults. A second is to change the rules of the game in order to incentivize households hoarding gold to unload their under-the-mattress supply (see my longer post on this point below).

“One way is for central banks to unload their vaults.”

Professor et al,

I’ve been watching the Central Banks sell the vaults down to the walls over the past 25+ years, and it had to end up in somebody else’s hands, wouldn’t you think?

Like who ended up with England’s glitter @ $280 per oz?

“…and it had to end up in somebody else’s hands, wouldn’t you think?”

I have no way to groundtruth my theory, but my subjective belief is that it ended up under households’ mattresses the world over — a standard flight-to-quality move in the face of a financial panic.

When you think about it, the world’s sovereign monetary authorities are playing it smart by selling gold into a financial panic. They can buy it back for a song later on when the panic has subsided and flight-to-quality demand has waned. Sell high, buy low!

Many aren’t aware of what a Sovereign is…

First issued by King Henry VII, in 1489. They are still struck today and each coin contains almost 1/4 of a troy ounce.

Wouldn’t it be most interesting if “Sovereign Wealth Funds” was actually stating it’s financial ambition in it’s name, cloaked a little bit?

We are talking about a government entity. More likely to buy high while selling low.

You can also sit by the river on a pretty day, drink beer and sift sand looking for those gold flecks.

For me, buying gold is neither a hedge against inflation, nor insurance against a dollar crash. Gold is, to me, a stabilizer in a purely emotional sense.

I buy gold for one reason: to reduce my ability to burn money easily. If I have cash, or easy credit, it will likely get spent. I refuse to put cash in a bank account (fractional reserve banking is immoral). I refuse to put cash into the public stock market (lack of dividends paid is ridiculous). If I have cash, I do one of three things:

1. Purchase profitable assets for my business, or assets that save me time for my personal life. I’m currently buying business assets at 9 cents on the dollar from competitors, and those assets are paying for themselves in 12-18 months.

2. Purchase profitable real estate assets that return at least 14% net per annum. These are hard to come by, but they exist. The downside is that you really have to be aware of external forces on the profit return (rising taxes, regulations, etc).

3. Store in gold to increase an emotive sense of stability.

If gold’s price versus the dollar goes up, it means nothing to me. If it goes down, it means nothing to me. Why?

I value my gold based on a personal basket of goods that I monitor. For the last 13 years that I’ve been actively buying gold and silver, I also monitor my expenses. From my high deductible health insurance, to the amount of fuel I use, to my food costs, travel costs, entertainment costs, and other costs. I can instantly see a graph of how much my bullion is worth in terms of MY life.

Over 13 years, the value of my “savings” has gone up versus my costs to live. I’ve become more efficient in some cases. In other cases, the cost of certain services or goods has fallen versus my bullion’s value. Whatever it is, I know that my bullion has given me a strong value against my personal living needs.

If the value of gold falls versus the dollar, it often has happened at the same time that certain of my costs have also fallen. If I look at my overall graph over 13 years, it has never skyrocketed up or crashed down. I’m not concerned about inflationary or deflationary pressures.

The most important thing to me is to diversify my own income. Instead of working for one employer, I’ve started a multitude of businesses over the years. As they grow, I find new people to buy into these businesses. I don’t necessarily hire employees, I find shareholders. They get a nice dividend on their investment, and they work hard to keep the business profitable and competitive. I now run 6 businesses in a variety of markets, markets that are diversified from one another so I am relatively protected against any particular industry crash.

I am now starting an apartment management company for deadbeat landlords. We incorporated 2 weeks ago, and have already acquired 4 landlords. Every building and every tenant gets a log-in to their own account online. They can request service, inquire to their security deposit value, post payments via Paypal, see if their check was received, and monitor their lease terms. They can track service requests online.

We only ask for 3% of the monthly net rent, and it’s profitable from the get-go. I believe with 4 “employees,” we can probably manage somewhere between 400 and 700 units, which is a gross income of $16,000 - $28,000 per month, and that’s in 2 weeks. My net expenses are under $12,000, so we’re profitable. Yesterday alone we sent out over 400 postcards to deadbeat landlords, and I expect to acquire 10 more landlords in the next few weeks. It’s a growth industry, with almost no competition. We’re Web 2.0, everyone else is old-fashioned.

So that’s a new business opportunity I jumped on. Next week, I’ll be meeting with a magazine publisher to develop a new magazine format that I already have possible advertisers for. People say print is dead, but I’ve found a niche. My initial investment will be under $20,000, and I expect to make it back by the 3rd month. Again, there’s money to be made.

So with my profits, I will buy more profitable assets. I will advertise for my businesses when others are not. I will buy gold as a hedge of only my own excess spending. And I’ll monitor my daily costs, while looking for new opportunities to diversify my income.

All of you can do this. But what did you do last night? Watch Project Runway and yell at the winner? Nice. Don’t scream to me about lack of options.

Got damn AB why cant i met someone like you in NYC….

i need a job badly. no capital to work with …but i do own 1/3 of my moms house free and clear……

aNYCdj: I’ve been watching your situation lately with a great deal of sadness. You’ve got one of those situations that is a perfect “example” of having all your eggs in one or two baskets, and then feeling the pain when those baskets are unwanted.

I’m not sure what I’d do in NYC. I have friends who left Chicago last year to move to NYC to pursue a career in some hobbled field. None of them are working. One is now selling pot to make a living, the other is whoring herself out, although doesn’t believe she is. Sad.

I don’t think you NEED capital to start a profitable business. In fact, a recent business startup was kicked off with less than $600 and is generating about $300 a week in net profit. Not too shabby. There’s not a lot of upside unless I branch it out to more locales, but it’s a test project. I also recently helped a friend move into a new market with under $2000 in capital (I invested that amount), but I don’t foresee it being profitable because the friend has no skin in the game. Luckily, our contract stipulates that they have 180 days to turn a profit of any sort, at which point I can buy them out for $1. And buy them out I will. I hate deadbeats with fantasies instead of responsible people with reality in mind.

You should email me offline — abdada at unanimocracy dot com. Let’s talk, maybe I can come up with some ideas.

Nice read AB. Thanks.

PB, respectfully, do you think if marijuana became legal the price would rise? Doesn’t making something illegal have a tendency to increase the street price of the thing?

Alcohol is another example. Maybe there are examples to refute that trend but I can’t think of them right now. I will consider it further today.

Bluprint,

The price of marijuana would fall if it became legal. The reason the price is high is due to the fact that (1) marijuana is a rather addictive drug, implying high consumption demand elasticity with no close substitutes, and (2) the illegality of growing and trafficking it has the effect of restricting supply.

By contrast, other than creatures like Gollum who derive consumption benefits from gold ownership, most people only wish to possess it for its capital gains potential. If you own gold, you join the supply side of the market, and the price is driven by the demand side. What do you think making gold sales illegal in most of the developed would would do to global demand?

With regard to the addictive issue, two thoughts:

1) I think maybe maryjane is less addictive than you think it is. I have a rather addictive personality and have to be careful about drinking for example, but my experience is that weed seems different in that regard. *shrug* I’m not a scientist or expert…just an observation.

2) Very few people are born addicted. Additionally, many people don’t really have the same tendency toward addiction, so those people may use a lot of drugs during, for example, teenage years but then give them up completely later in life.

So when you consider the demand for illicit drugs, consider how much of that demand consists of non-addicted users. I think it’s unfair to just lump the entire demand into “they are addicted and can’t help themselves”, that’s clearly not true.

Maybe you’re right about this however, it’s hard to say and like I said I’m going to give it further consideration. To answer your question, my feeling is that if it were illegal it would increase in street value. Obviously in such a situation if you were bartering with gold there are legal issues to consider…

“…perform critical analysis.”

How am I doing so far?

To further my argument, note that marijuana can be grown in virtually unlimited quantities. Imagine what would happen to tobacco fields all over the southeastern U.S. if marijuana were legalized — soon it would be a major export crop!

By contrast, gold is a nonrenewable resource. It cannot be grown in the ground, and the inexpensive sources of supply are fully exploited (it was not long into the California gold rush before large nuggets were no longer lying around stream beds just waiting to be picked up by the first prospector who saw them). One might argue that the main source of short term supply has more to do with gold stuffed under mattresses, than new supply mined out of the ground.

Suppose the Fed and its partner central banks in other developed world countries announced they were planning to crack down on bubbles, and gold was the first one on the list. To execute this new bubble popping policy, they announce that gold sales will become illegal six months hence. What do you think would happen to the short term quantity of gold supplied from under mattresses? What effect would this have on the gold price?

In my opinion, BB’s announcement yesterday represents an option to carry out the above measures at some future point in time, in case the price of gold gets uncomfortably high.

So then why would there be any measurable demand from those who don’t believe they need it (or non-addicted) or rather smart enough to know that using garbage puts them at risk?

“…perform critical analysis.”

Roach-clip reasoning?

“Roach-clip reasoning?”

If you have no logical argument to counter mine, you can always play the ridicule card.

1) marijuana is a rather addictive drug, implying high consumption demand elasticity with no close substitutes

My mother and aunt were both subtance abuse counselors and researchers for a number of years, and I can assure you–marijuana is not a “physically” addictive drug, and is only psychologically addictive to a minimal degree. Most users are recreational, and do not find that their use interferes with their lives in any way, shape or form (I am not a user)–unless they get pinched for possession. The “addictiveness” of marijuana is a myth.

Prof, we agree that marijuana would become less expensive b/c of the supply side variation in the world where it becomes legal.

It’s pretty clear historically (to me, but then I’m not really much of student of history) that government bans don’t do much to shift the demand curve down. It may be that if such a ban took place, some holders of gold would perceive that the gold will be worthless in a few months and sell. It seems to me that there would also be a contingent which would buy gold because of the impending illegality, perhaps some of whom had never bought before.

My feeling is there would be more of the latter and less of the former. Most people who hold physical gold now do so (in my feeling) because of some distrust of fiat money or the current banking or monetary system. Would those people’s feeling change? Unlikely. It seems likely however that those people would then take advantage of the 6 month window to enhance their stocks.

To answer your question directly, if gold were to become illegal 6 months hence, what would happen to the price of gold in the short run? I think it would go through the roof and that the short term supply you speak of would dry up (for the reason mentioned above).

I’m curious, what do you think is the answer, because it’s not clear to me by your post.

The only good way I have to evaluate this, is with the supply/demand curve. I don’t see how illegality of a substance shifts the demand curve down much, we can see lots of cases where demand is still significant (and arguably in some cases actually increases) after things become illegal. I think gold may be one thing which would increase in demand (the curve, not just quantity) if it became illegal. (Is there any way to measure this in the context of post-1933 America?)

On the other hand, because of the increased “price” (you might go to jail, get fined, etc) of supplying the substance, the supply curve should shift downward dramatically. This is inline with your position (and mine, I agree with you on this) on the maryjane issue, that the supply curve is significantly affected.

Downward pressure on the supply curve and upward or flat pressure on the demand curve that leaves higher prices, no?

I think everyone is forgetting that gold jewelery can never be banned.

I think gold would merely be formed into a more wearable form (as it has been done in the developing world for ages) if coins and ingots were made illegal.

In fact, it has been months since I have seen a gold coin, but I see my co-workers gold bling all day long.

By the way prof, my critical analysis comment wasn’t really aimed at you, I see people on both sides talking crazy. I feel like your consideration is mostly fair, although I guess I disagree on what you think the impact of certain events will be on supply/demand.

But one thing I can’t figure out, amidst all the talk of inflation/deflation is why none of the hard-core deflationist/fiat cheerleaders will address the issue that the man currently running the money supply is well known to believe that inflation essentially fixes everything.

I mean, I get the deflationist argument. There are good points and I’m betting thats what we will experience (and are experience now in fact) in the short run. But among people that think that’s the end game, how do you just ignore the man with the printing press?

Gold being illegal is possible, but its also possible that it doesn’t become illegal. How does that scenario play out for you? Is gold a good choice then?

If gold becomes illegal, it’s almost certain that dollars get inflated like hell too. In that situation, maybe the best bet, if you don’t want to deal with handling an illegal substance, is some other asset (perhaps land at that point would be a good choice, or guns they do store decently well).

Ok, post before the last one didn’t show up…so my last post might not make sense.

Important point: Govt illegality doesn’t seem to shift the demand curve downward much, but we agree it dramatically shifts the supply curve downward. This would tend to push prices up, no?

I wouldn’t mind moving this discussion to the board.

“(perhaps land at that point would be a good choice, or guns they do store decently well)”

Land, yes, guns no. You can’t make any more land, but a big increase in gun demand would fuel a supply response, leading to a gun glut (kind of like the way a big spike in housing demand resulted in a glut of recently built McMansions).

But guns are more liquid. Everything has posiives and negatives; we are at this point of course discussing the qualities of what is the best currency.

What has value in it’s own right (e.g. land, guns, etc) aside from its value of a currency, and has attributes that make it ideal for currency? (easily divisible, one item is the same as the next, etc)

“But guns are more liquid.”

Like fiat currency, one can make more guns if the price gets very high (analogous to printing more money when deflation makes the real price of money higher than what the monetary authority desires). Unlike fiat currency, there is no monopoly supplier of guns controlling the supply in order to achieve price stability. Hence when the price of guns rises, the natural tendency is for supply to respond until market equilibrium is restored. The price may still be higher than it was before the increase in demand, but the supply response drives it back down somewhat.

“You have no idea how mellow yellow is deeply ingrained in so many cultures as wealth, as to be commonplace as far as buying and selling goes.”

Oh but I do. I am quite sure it is at least as deeply ingrained as ‘real estate always goes up, in the long run’ is a tenet of faith in Southern California.

dude,

You have no idea how much mellow I personally sold to Indians (Bombay persuasion, not Arapahoe) in the 1980’s & 90’s, and they were taking it all back to the motherland.

Sometimes an extended family of grandparents-parents-children would show up, grandma in her flowing robe and scents…

The English was a bit tortured, but I can still hear them say…

“howwmuuchamebleleaf” = 1 oz CML

I guess you subscribe to the decoupling theory

Feel free to ignore the data which show the flight to quality in currency markets is into the $US and Japanese yen…

Russia, China, and the Emirates are all seriously discussing a currency at least partially backed by gold. Russia has been retaining mine production for, if I remember correctly, the past 2 years.

Repetitious maybe, but most of the rest of the world is heartily sick of us: of our my-way-or-the-highway insistance on dominating international decisions, bombing the crap out of whatever we choose, whenever we choose, of our corporations decimating areas of countries ecologically (Ecuador and Nigeria for examples).

The “Europe would be defenseless without the U.S.” is a typical delusion, when it is us, the US us, which dictates how NATO operates….at least till now. Sure we pay for much of it, but it is our strategic interest(s) NATO supports.

By the time this financial debacle fully unfolds, those of you who don’t “believe” in gold had best be on your knees ref the “value” of the (currently safe-haven) dollar.

Cognitive dissonance defines my days: stuff looks pretty much the same, but underneath, CDSs and other debris rumbles. So I have a bit of physical gold, a chunk in GLD in my husband’s IRA, and a GoldMoney account. But I’ve gotta tell you, my biggest concern, should actual shortages materialize, is toilet paper. Boy, do I have toilet paper.

At this point who can guess. I thought there would be support at $720, but things are unwinding so fast…

If silver is the canary in the gold mine, you are being optomistic.

aladinsane,

If you must know, I revere the Creator, whom I note you have a grudge with. I’ve no idea why, but it doesn’t affect me.

I don’t object to your “investment vehicle” but rather to your siren song. I object to the delight you take in calling others onto the rocks. A sure thing sometimes isn’t.

I have gold and silver. Some of it has been in my family for four generations. Some of it was aquired a decade ago. It’s a stash, it’s not my one and only hope for security. If it were to come into its own, I’d be set, but maybe it will not this day or this generation, so other possibilities should be considered for my security.

As for my investments, I find I am most fortunate in some of the things I am not invested in, thanks to reading here.

Earlier post doesn’t show….

I’m not the one selling. Someone else must be doin the knockin.

Why are you afraid to tell us what you believe in?

“If you must know, I revere the Creator, whom I note you have a grudge with.”

I knew you’d been baiting the red herring for some time now, because you know your argument about metals rings hollow.

Why’d you pussyfoot around for so long, only to divulge it now?

I’ll tell you why. Very soon anything involved in ’ssshrubery’s reign of error is going to be subject to the blame game.

You and yours elected a scoundrel by the thinnest of margins 2 times, he couldn’t have done it without you.

You were very vocal on the way up, and you’d do well to be quiet as church mice on the way down, and not draw a lot of attention to yourselves…

She did. The Creator.

Aladinsane,

Your bald hatred of those who believe in something you do not doesn’t further the discussion we are here for. It doesn’t further anything really. You bait like a cowardly schoolyard bully.

So, all Christians are to blame for the mess in DC? You belong in a uniform with jack boots.

Well… crazy Brits!? The gal (36) was fired from her publishing job and the incident sounds “alcohol fueled”.

I was Navy for years and yes, not following local customs is a quick way to lose a stripe. Remember though we’re talking about people that are 18 y.o ( *not 36! )

They claim they were “only kissing” to which I can only respond as Peter Falk in Columbo “Please don’t do that in front of me..? ( I’m a married man )”

“only kissing”

WHERE were they kissing, is the question……:)

Lol Gulfstream.

I COMPLETELY agree with this. “When in Rome” should apply here as well.

It’s almost halloween. Wheel out your hobgoblins!

Party on Palmetto,

“When in Rome be a Roman candle.”

If you owe the bank $100,000–You have a problem.

If you owe the bank $10,000,000–The bank has a problem.

Xpovos,

Thanks ( I didn’t want to be the guy that had to say that? )

Just ask ( as someone mentioned yesterday ) Donald Trump! Look, all I’m saying is throughout this entire debacle every FB and their long lost brother was cashing in on the “Debt=Wealth” scam/scenario.

Trust me, every underwater mortgage payer is “weighing their options”. WE HAVE OFFERED SOLUTIONS! Plenty of them here at Ben’s. Obviously they’ve been ignored. If they won’t let us be part of the solution..?

Correct. Leverage kills.

However, fractional-reserve means implicit leverage. Hence, it will fail every single time.

The system will not change. The sheeple are clueless. Best to figure out how to negotiate it.

“Joe the Plumber” sounds like some Mafia hit man.

Speaking of Mafia….

Google: “Anthony Thomas Civella”

Read the Wikipedia page…….then read the KC Star obituary.

Bub, not to pick on you, but “never, ever, be able to retire” sounds a lot to me like “never, eve, be able to save”.

If you can learn to live on less than you earn, you can save. If you save and invest wisely, you can build up a nest-egg over time that will make it possible to retire. I suggest 10% minimum to start, and learning to increase your standard-of-living slower than your growth of earnings, so that your savings rate grows over time.

I’ve always assumed SS will not be around to pay me a dime, and I’m well on my way to not caring a whit about it (used to make me angry when I was younger, tho).

Well, part of it is I have a problem with the whole idea of “retirement” anyway. Moving to the sunbelt to live surrounded by other geezers doing nothing is not appealing to me. Neither is slaving away my whole life in the hope that I will finally be able to enjoy myself only once I’m in my 60’s. I don’t think that’s a healthy attitude.

Too many people work at jobs they hate their entire lives, only to either a.) die before they reach retirement age, or b.) finally retire, only to find that they are lost without having to go to work everyday. Either because they are just boring people who never developed any outside interests, or they enjoyed their job and were left without a purpose once they quit going.

Maybe I just need to find some happy retirees, but I don’t seem to run into that many. Seems that most are just waiting around to die.

Who are the young people supposed to vote for? There are two puppets to choose from, and both are always a bad choice.

The other choices aren’t good. One is a preacher or minister or whatever, scratch him out. Not even sure who else is left.

There is the write in of Ron Paul, but I’m not sure that people in all states can even write him in.

If you are in Virginia Beach, pick one of the top two and be grateful that you have in a vote that matters.

In a non-swing state, I’m thinking of writing in George Costanza.

Bub, I TOTALLY agree with you! We have a very unhealthy attitude toward work and retirement in this country.

Working your whole life at a job you hate in order to fund a retirement in which you don’t know what to do with yourself sounds HIDEOUS. Many people die right after retiring because of the shock of the sudden & dramatic life change.

I’d like to see us move to having _gradual_ retirement as an option: work 5 days/wk, then 4 days/wk, then 3, 2, 1, 0. That way you’d have plenty of time to adjust to the slower pace and develop other passions that help keep your life a full one.

Alternatively, you’re onto a good alternative: find something that you enjoy doing so much that you LIKE the idea of doing it until the day you die. But even in that case, I’d recommend saving and growing a nest-egg to get you through the lean times. It also gives you an escape-hatch in case you change your mind and don’t like doing it so much anymore; being FI makes it much easier to change jobs/careers!

RE: The group most screwed is the late-boomers, or older gen-X-ers, who are in their 40’s and 50’s. If you are younger, when the financial system collapses, you still have some time to get something scraped together before you are too old to work. If you are 51 and you just got laid off and your 401k went up in smoke, you will have a much harder time in the next decade or two.

Me, I’ve already made peace with the fact that I will never, ever, be able to retire. I have tried to have my fun while young, and find a career that I actually enjoy, since I figure I will be doing it until I croak.

I’ll tell ya, Bub…I am a smack dab in the middle boomer age bracket, and I’m epathetic to your feelings.

I think the main lesson I’ve come away with during my time on earth, is that life is pretty much a total crap-shoot.

There are winner’s and there are losers in every facet.

Some people die at birth. Some people live to a hundred.

Some people earn a fortune. Some people die broke.

And the downside may be completely beyond your control.

At the age of 48 I pretty much lost everything earned from 25 years of bustin’ azz when my cheatin’ -ex filed for divorce. Things were pretty bad for a couple of years but time passes.

The only way I’ve kept my sanity is by reading history.

I can gurantee if you read enough of it, especially the travails encountered during the world wars, you’ll feel very wealthy by comparsion.

Having a bad day?

Go pick up a copy of “The Last Battle” by Cornelius Ryan, or Guy Sajer’s “The Forgotten Soldier”. What we’re goin’ thru now is piker stuff compared with what happened to the German civilian population when the Russians poured in Berlin. Granted they had it comin’, but
what they experienced sure can put things into perspective.

Take a foreign trip and visit a place like the American Airmen’s cemetary at Madingley in Cambridge England. Row after row of crosses marking the resting spots of boys with an typical dying age of 20.

They all never even got out of the starting block. Why and how did they die? An 88 flak or 20mm cannon shell knows no favorites…all were just at the wrong place at the wrong time.

Advice I can give ya, from the curmudgeonly age of 55, so you can look back with no regrets?

Live financially smart; don’t follow the crowd-be your own person; read vociferiously; lift weights-stay in shape; get a couple of good hobbies; stay close to friends; and ALWAYS, ALWAYS put the big hustle on any gal that flutters her eyes at you in the grocery store or comes up and stands next right to you in a bookstore on a hot July afternoon.

And if you don’t, HE knows where to find you.

So ironic, Laddie, that you are called a satan, while your delightful ability to play on words give you god-like status in my eyes.

Ahhh but my son, the poor lad, is an Arsenal fan…..

Would be interesting to compare the terms available from GMAC vs. Chrysler Credit (assuming Cerebus owns Chrysler Credit along with Chrysler Corp).

A handy way of sabotaging sales for a major competitor.

Maybe it’s a backhanded way to pressure GM to take Chrysler off their hands.

“(assuming Cerebus owns Chrysler Credit along with Chrysler Corp).”

They do. In fact, I’ve wondered if they just wanted the finance arm to combine with GMAC, then ditch the car-making operations.

Blano - good point.

Not a clue. Not the kind of statistics I keep on top of.

Atlas Shrugged made me shrug.

But Little One & Sparkle + Spin by Ann Rand are works of lovely, happy, genius:

http://www.amazon.com/Little-1-Ann-Rand/dp/0811850048

It’s not easy to write an engaging poem about numbers!

Ah ayn’t confused. Ann Rand wrote Sparkle + Spin and Little One. I posted a link, but it hasn’t cleared yet.

Of course it is going to fizzle, that is why it is an academic exercise. come on fpss, you are a lot quicker than this! Didn’t you ever have to do an academic exercise? It is something to keep the mind occupied with no value. lol

Yep.

Every good trader knows that extreme volatility and declines are synonymous.

Undoubtedly, some economist made a career out of “proving” this rather obvious point via a buncha regressions or some such cr@pola.

lmao

Wait — you said real terms. How much inflation are you predicting before a bottom is reached? I guess if inflation reached 50 pct cumulative since the peak (Nov 2005), that would get you back up to $200,000. That is starting to sound more plausible…

Inflation-adjusted.

Let’s make a bet. I’ll even predict the timeline - circa 2014 or so.

I agree with you FPSS. 80% is a downward target.

PB, the only difference that FPSS and I have in our calculations is the start date of the housing bubble. I believe 1994, FPSS believes 1983. (There are good reasons for specific years.) The difference in price 1983 & 1994 in San Diego is ~5%. I won’t quibble over a few thou. There are huge differences in other areas of the country that did not get smacked like the housing downturn in Southern California in the ’90s.

Hoz, FPSS: do you guys have a prediction on equities?

Early on, I was guessing 40% down as a ballpark, but now we’re already there and I think this thing has nowhere near run its course.

“Let’s make a bet. I’ll even predict the timeline - circa 2014 or so.”

Fair enough. I am going to my investments to reflect that you might well end up being right (and I note that so far, the median opinion of the blog regarding future home prices has kicked b^tt compared to MSM ‘expert’ opinion…).

going to target my investments

The difference in price 1983 & 1994 in San Diego is ~5%. I won’t quibble over a few thou.

LOL

Why quibble over a few thou when we can quibble over a few hundred thou?

ROTFLMAO

Yeah, I read that—-and thought it was priceless!

Downright DEEEE-lightful!

I _was_ surprised to see that in the MSM though…