Its the difference between driving into a wall at 20mph, and smacking into it at 80.
If you look at what the markets are telling us in regards to :
1) The surge of Gold and Silver 2) The devaluing of the USD
It seems that there is the EXPECTATION that the Fed wants to foment robust inflation.
However, there is another angle --- Treasury investors seem to believe that despite its current inflationary disposition, the Fed will be able to either:
A) hold down interest rates for an extended period or B) withdraw its liquidity before things get out of hand.
To believe A and B above, one would have to not only believe that the forex and gold markets have it wrong, but also think that the Fed's printing press will lose its power to depreciate the currency.
I'm not sure if this assumption is valid.
Its the difference between driving into a wall at 20mph, and smacking into it at 80.
Pingalinglong
SOME THOUGHTS AND OBSERVATIONS:
The entire global economy is based on debt.
Money is Debt.
There is more debt owed than money exists.
Money is created from nothing, and is not reserves “lent out”.
All loans are brand new money.
If everyone saved even $200,000 for retirement, there would be no money in circulation.
Idaho voted down to have silver as legal tender.
There are now Gold Coin ATM machines.
In the 1800’s all silver was taken out of circulation reducing the money supply by 80% causing a recession and foreclosures.
Since the 1970’s, the last remaining gold standard was gone.
Fort Knox hasn’t been audited in decades.
When Ron Paul announced he was working on an audit Fort Knox bill, I don’t think that went anywhere. But I started to buy Gold as soon as this came out.
Since 2003 the amount of US dollars in circulation has increased dramatically. And, especially with the housing “boom” where you could pay almost nothing down, then your house goes up in “value” and then you can take out a new loan based on that new value. This was all new money, going into the economy. Then banks shut off credit, and the money supply of the citizens got smaller, so the government made up for it with a trillion dollars or so in “Stimulus”. But the REAL reason was to keep inflation going, since without inflation, the government is bankrupt. But with inflation, the overseas debts, and all debts are easier to pay, since all prices go up, but not the debt.
So, what can I say ? THE NUMBER 1 EXPORT OF THE UNITED STATES IS INFLATION !!
How? By Sending money overseas, to factory workers in China. This causes inflation, overseas as well. Many other nations export inflation as well. But the Us is just the biggest.
So, you can account at least 3 - 5% of the entire Dow of S&P 500 per year, compounded for 97 years. This is the real reason why buy and hold eventually “works out”. But, a gold coin holds its value almost as well as the Dow or S&P 500.
But prices are going up everywhere. And that inflation eventually goes into stocks too. That’s why stocks are going up, but the economy isn’t.
IMHO, It’s also why this is a very good opportunity to lock in record low rates on a house, in the 200,000 range. Because in 10 - 15 years, it could be worth $400,000 in inflated dollars. It won’t make a difference in “real terms”, but what might, is that rent also goes up, and you’ll start making a lot more in monthly rent than the monthly payments.
SO yes, , now is the best time ever to buy a house in a college town and rent it out. You eventually own if for free, or ever better. For free with monthly payments to boot.