Patrick.net

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Registered Dec 09, 2010

sundarrajan.b's most recent comments:

• On 12 Jan 2011 in Is this a gold bubble?, sundarrajan.b said:

  Nomograph says

  Incorrect. The value of paper currency is derived exclusively from it’s use as a medium of exchange for goods and services. It has no other use. Paper currency was not designed as a store of wealth; only a fool would use it as such.
  Economies run on the exchange of goods and services, not gold or paper. Focus on what actually has value to human life.

  Perfectly said Nomo. Now what if this medium of exchange (whatever it may be) is under the control of a government that is already well steep in debt. This government decides to monetize its debt by 'quantitative easing', literally translated as printing more money. That would be debasing the currency, so people need to fall back on something that has lesser likelihood of getting debased.

  Patrick - you're right that the price of gold is near the historical high, but where is the dollar debt headed and what is the likelihood that there'll be more quantitative easing?

• On 11 Jan 2011 in Is this a gold bubble?, sundarrajan.b said:

  M8R-8eneeq,

  That is a very interesting document.

  Specifically this statement: "U.S. monetary and fiscal policies directed at domestic priorities proved inconsistent with the maintenance of the dollar’s real value and hence the long-run link to gold, and triggered the move to floating rates. "

  As a corollary to this statement, if there is a finite supply of gold, then there is only a finite supply of debt, which would mean that growth is also finite. By removing this constraint, there was no limit on what can be borrowed and the exponential increase in debt stands as a testimony to this. True?

  You say "Ignore gold, as it pales in comparison as a long-term hedge against a significant US dollar dilution." Curious as to what you are basing this on?