Monday, January 11, 2010

Not Your Grandpa's Economy

Here's an excellent video presented by Inflation Nation...



Keep one thing in mind: this is not the ‘70’s! I keep hearing that, “We’ve been here before”, “Inflation is normal”, “Gold went to $850 and then the bottom dropped out”…… and so on.

A few things are different this time around.

1) There are over 2 billion more people on the planet than in the 70’s.

2) There’s a CRAP load more “currency per person” and all asset classes are highly leveraged.

3) There is more debt and other financial instruments than there is GDP in the world. Multiples and multiples. So much so that even taking 10 years of the world’s GDP wouldn’t cover all the monetary obligations of the world.

4) Gold buying in the 70’s was a novelty. Citizens (that is, the FREE citizens of the USA) were not permitted to buy gold from 1933 until 1975. So it makes perfect sense that when the WORLD went to strictly using fiat currency in ’71 and gold became legal to buy people would do so. People literally thought the world would fall apart back then because of the currency concerns. Gold got run up and met the amount of money in the US on a xdollar/ounce basis. When it became apparent that fiat currencies were here to stay for however long, the bottom fell out. There were other reasons as well such as Central Banks selling gold into the market to flood it with gold and intentionally bring the price down.

Anyone who would tell you that inflation is normal and acceptable and tells you that this is all a rerun of a past non-event probably has a lot to lose if the current economic system should fall into jeopardy.

Fear is quite blinding.

No comments:

Post a Comment