patrick.net

I think the case can be made the recession started in the 1970s.

We abandoned fiscal probity in 1983 or thereabouts, and have been living on credit and our reserve currency float since then. The current recession is a continuation of the tech recession which was a continuation of the 1991 recession which was the after party of the 1980s debt binge

Troy says

I think the case can be made the recession started in the 1970s.

Maybe it is just semantics here, but I don't see today's recession starting in the '70s, but certainly policy changes starting back then have made large contributions in creating the environment for a recession today.

At any point along the way we could have changed our direction, and perhaps avoided the recession today. So, what "started" in the '70s could have been avoided by changes in the '80s, '90s or even '00s.

theoakman says

holy crap...Ron Paul really corned Bernanke today. It was pretty funny.

Yeah, Benny got really upset.

If gold is so unimportant, why do central banks go out of their way to keep it?

thunderlips11 says

If gold is so unimportant, why do central banks go out of their way to keep it?

central banks all around the world are net buyers of gold. Clearly, even they are losing faith in their own fiat currency.

thunderlips11 says

Yeah, Benny got really upset.

If gold is so unimportant, why do central banks go out of their way to keep it?

There really is no getting around that one. Not one person who argues against a rising gold price and gold as a monetary asset can explain why central banks all over the world insist on keeping all that gold locked in their vaults. I guess its just for the hell of it. Oh wait...we have central banks increasing their gold reserves now. Again, I'd like to have anyone explain this one if gold is indeed, not money, and not important.

thunderlips11 says

What about all the unemployed inner city blacks and poor rural whites?

Farmers just don't want to pay free market wages.

Yep, that is a big part of the problem. That and Americans don't want to pay free market prices for their food.

This is great. Hopefully the democrats grow a pair and keep this pressure up. Let the republicans put their money where their mouth is and start making difficult cuts. Not tweaking a million here and a million there out of a multi trillion dollar budget, but real cuts.

They can cut the military, social security, or medicare. Everything else is minor and if they eliminated ALL of it (NASA, Dept of Ed and Energy, etc.), there would still be a big deficit.

Good luck trying not to cut any of those to a substantial degree without raising tax revenue. I don't believe it possible.

austrian_man says

Where is the irrational exuberance?

See quote below.

All factors point an upward momentum for gold.

There is an old saying, "when the shoe shine boy starts giving you stock tips, it's time to get out of the market." Back in 2000, Anna Kuornikova, the hot tennis player, was making commercials advocating stocks. She was the shoe shine boy. Next, every shoe shine boy was talking about real estate. Today it's gold.

Sure, gold prices could continue to rise for years. But they could also reverse at any time. The reasons I think gold is in a bubble are:

1. Interest rates are so low that there are no other investments that money is chasing (except bonds to some extent).
2. Everyone is harping about how great gold is. Perfect shoe shine boy behavior.
3. The price of gold relative to other commodities like food, copper, and toilet paper is high. If inflation is solely responsible for the price of gold, then one would expect all commodities to rise more or less the same.

There are also 11 Signs That Gold Is In A Bubble That Is Going To Burst according to the Business Insider in sharp contrast to the idea that "All factors point an upward momentum for gold."

Motley Fool also warns that gold is in a bubble and has debated both sides of the issue.

The gold bubble has been discussed in Seeking Alpha and the Wall Street Journal with scary graphs like

and conclusions like "Gold is a high-risk and potentially dangerous speculation. Anyone thinking of investing needs to do some serious thinking first."

There is even a Gold Bubble Blog -- not affiliate with Patrick.net.

Generally, by the time people start talking about a bubble possibly existing, it has already become prime to burst. Of course, I don't know when the gold bubble with burst, but I do know it will, and I am strongly against buying into bubbles late in the game. Sure, you could still make a lot of money, but that opportunity comes with high risk.

To be fair, some of the increase in the price in gold is justified. I just don't think the lion's share is.

You have to remember that gold isn't going up. Dollars are going down.

Debt-free Renter says

You have to remember that gold isn't going up. Dollars are going down.

The two are not mutually exclusive. I think that gold is going up AND the dollar is going down. That's why I think it's better to look at gold priced in terms of other commodities that are less subject to speculation. Commodities that are relatively abundant. For example, copper, semi-precious stones, labor, wheat, etc. Discount things that are subject to huge bull/bear markets like oil. Also discount things that by their nature depreciate rapidly due to technological advancement like computers, televisions, and other electronics.

The problem with Obama is that he is surrounding himself with some really bad people when it comes to job creation... people like Jeff Immelt. How the heck did the Secret Service let Immelt into the White House anyway?

Dan8267 says

1. Interest rates are so low that there are no other investments that money is chasing (except bonds to some extent).

Interest rates are artificially suppressed in Western Nations (such as United States) and they are artificially tinkered with in places like China and India to beat inflation. If the market was setting or at least had maximum control over dictating the interest rates, I would agree with you. But given the debt levels and given the fact that if the US raised its interest rates - it will be an outright default, this point is actually a positive for gold. So you just gave a classic case of why you should own gold.

Dan8267 says

2. Everyone is harping about how great gold is. Perfect shoe shine boy behavior.

Most people that I know don't even own an ounce of gold. Moreover, they don't even know what value it brings to their portfolio. There was a graph that was done by Casey Research recently that showed how little of the investment money goes into the gold market.

Dan8267 says

3. The price of gold relative to other commodities like food, copper, and toilet paper is high. If inflation is solely responsible for the price of gold, then one would expect all commodities to rise more or less the same.

Another way to look at this is if gold were to be money (which it is, obviously otherwise why are central banks not selling gold right now?), then price all commodities in gold, that means the prices of commodities are all falling. So we are having a deflationary depression in gold, while the central bankers are printing away to an inflationary environment.

thunderlips11 says

... poor rural whites?

Those ARE the FARMERS.

What do you want us the privileged to be AMEEEERICAN to work hard in the fields!!!!?

leoj707 says

thunderlips11 says

Yep, that is a big part of the problem. That and Americans don't want to pay free market prices for their food.

I'am an AMEEEERICAN, I'm entitled to everything subsidized: food, housing, healthcare, education. I do not care they all are "subprime" quality, just keep it cheap. Sell more debt to those Chinese succers and subsidize, subsidize, subsidize, meeeeeeeeeeeeeee!!!

A lot of currencies are overprinting and going down in value, not just the dollar. This is a worldwide event. Also there are currencies pegged to the dollar so these would be going down versus gold as well.

michaelsch says

Those ARE the FARMERS.

Every family in rural America owns a few score acres? Who lives in all those trailer parks, then?

Debt-free Renter says

A lot of currencies are overprinting and going down in value, not just the dollar. This is a worldwide event. Also there are currencies pegged to the dollar so these would be going down versus gold as well.

Yes. Almost every large economy is indulging in money printing. Gold may be in a bubble but it will continue for a while yet. If Bernank Clown continues with yet another QE look for gold to go over $2000. It may do so anyway. What has been done in regards to money printing is unprecedented and what happens with gold will be unprecedented.

I agree. Old people vote. Anyone who compromises their ability to get their pills will get voted out of office. Old people have no tolerance for not getting their entitlements -- or their senior discounts -- and they can be damn nasty when they don't get their way. Trust me, I live in Florida.

I think it's cool that they shut the rag down, altho it's sad for the workers.

I remember when gold was in a bubble at $600 an oz and our March 08 "double top". Bubbles characteristically move up very rapidly. Gold, despite its increases, has moved up sluggishly over the past 10 years. Up and down....up and down.... Bubbles only go up without pullbacks. We had 20 years of gold going no where since 1980. It's entirely possible that gold has simply played catch up this entire time and will continue to play catch up as long as they keep doubling the monetary base.

When Gold and Silver crashed in the early 80s, the Stock Market had finally reached new highs and kept on climbing, unlike in the 70s when it moved sideways. In 1981-82 Volker killed inflation.

When these two events coincided, people got out of gold in order to take advantage of the Bull Market, fearing to miss out on a boom more than in potentially resurgent inflation.

Look at historical charts for the Gold Price, YoY Inflation, and the S&P 500 and you will see a clear correlation of these factors.

Until we see the S&P move above 1600 and continue to rise, there will be no gold bust, only corrections to an upward trend.

IMHO.

Troy says

We abandoned fiscal probity in 1983 or thereabouts, and have been living on credit and our reserve currency float since then.

The debt binge is responsible for us kidding ourselves about the incredible growth of our economy from then until 2007. That is we kidded ourselves that manufacturing was no longer as essential as it had been and that we could run massive trade deficits forever, and have a huge economy built primarily on services.

I believe that the huge credit boom was a mistake in some ways, but that a significant part of the growth that credit bought us, is real. That is, there isn't any denying that the credit boom bought us incredible growth, so I don't agree with the notion that we have been in a recession since the 70s.

But, had we lived within our means since then, we would have taken more pain (via recessions) and we would have grown less and we would be more humble, healthy, and less corrupt than we are now.

Maybe we could have survived taking on huge credit, corresponding with the boomers entering the economy, but without overdoing it, with better regulations, and especially without overdoing the excessive mortgage debt, and government debt.

It's those two that did the most damage, although I know other consumer debt also got way out of hand.

More than anything else, I think gold has a strong inverse correlation to interest rates. Interest rates being high encourages capital accumulation and savings, so people are comfortable storing their wealth as cash, short term fixed income instruments such as CD's. Note that interest rates have to be higher than the rate of inflation as well, for encouraging capital accumulation . Given that interest rates are so low, and they will continue to be so as far as the eye can see, the environment is set up for a bullish gold market.

Besides one, two others, austrian_man is the only one on this thread that will dodge the Fuddster lumpen-investorate breadline.

APOCALYPSEFUCK is Tony Manero says

Republicans won't win in 2012 unless they have the guts to advocate eating the elderly!

I cannot imagine that would taste good. Stale, old meat? Yuck.

Speaking of coins, read this interesting article on how some people have scammed the system to gain travel miles!

http://finance.yahoo.com/banking-budgeting/article/113129/fly-for-free-us-mint-forbes?mod=bb-budgeting

immigrant, that's freakin' BRILLIANT.

thunderlips11 says

immigrant, that's freakin' BRILLIANT.

I can't believe they were dumb enough to allow people to use credit cards to buy coins, and ship it free!

Obama and Reagan have the EXACT same policies: Increasing revenue. Reagan raised taxes 11 times.

I'm not opposed so much to the concept of dollar coins, as I am their incredible size and weight. It is completely impractical, especially for guys who don't carry purses, to carry in practical amounts for daily use.

I agree about getting rid of the penny, and possibly the nickel.

If they would have simply stopped producing dollar bills, the coins would have succeeded in time because there would be no alternative. But, alas, we are a wasteful people and we are attached to tradition. We like our greenbacks (that only remain in circulation around 21 months due to wear and tear), our Lincoln head copper-looking pennies that are mainly zinc (with metallic composition valued at 1.79 cents), and our Jefferson nickels (with the metallic composition valued at 7.1 cents).

Most of us would only let go of our greenbacks, pennies, and nickles when the goverment would pry them from our clutched cold dead hands.

I have to admit, that I'm a little attached to pennies and nickels in particular. When I was growing up pennies and nickels actually were worth something. I used to collect the in my piggy bank until I wanted to get some matchbox cars or candy.

The dollar bill doesn't have the same emotional attachment to me for some reason. I couldn't care less if it got replaced with a coin.

Saying that, they should have done a much better job at designing the dollar coins so that they are significantly different than the size and feel of a quarter. Also, they should be produced in a metal that doesn't tarnish so quickly. They look like crap after only a few months.

Again, if anyone was serious about replacing the dollar bill with a dollar coin they would have simply stopped producing dollar bills. In almost 2 years, everyone would be using coins because the dollar bills would have been pulled from circulation.

thunderlips11 says

I'm not opposed so much to the concept of dollar coins, as I am their incredible size and weight. It is completely impractical, especially for guys who don't carry purses, to carry in practical amounts for daily use.

I agree about getting rid of the penny, and possibly the nickel.

Poppycock! LOL! :-)

I lived and worked in Paris for a while. I had no trouble keeping a fair amounts of 1, 2, 5, and 10 franc coins in my pocket. I was there as they were phazing out the 20 franc bill in favor of a new 20 franc coin. I found that coins were more convenient to use for smaller purchases in pastry shops, fromageries, cafes, etc. The 10 franc coin was the most commonly used, it seemed. The value of the 10 franc coin was roughly $2 on average.

I saw many men with wallets that had coin pockets in them. I simply let the coins float around my right front pocket. I never had trouble with heavy pockets, honestly. They had 50 franc, 100 franc, and 200 franc bills to carry larger values that worked well with the franc coins to keep my pockets relatively light.

Think about it. Do you carry tons of change now? Do you carry tons of one dollar bills now? I know I don't. Generally I don't have more than 5 one dollar bills at one time because I spend them. I use a money clip too. My wad of 5s, 10s, and 20s is thick enough to use the money clip without the need to have one dollar bills to fatten my wad of bills. Most likely, my habits wouldn't change, I'd most likely never have more than 4 to 6 one dollar coins in my pocket at a time. That's not very heavy or bulky at all.

A dollar coin would make parking machines, pop machines, and especially washers and dryers easier to use. You would need fewer coins. I hate having to lug around heavy huge amounts of quarters to pay for $1.75 wash and $1.25 dry. That's 12 quarters per load!. If we could use dollar coins, perhaps my place would round things out to be $2.00 wash and $1.00 dry which would still be $3.00 per load, but I'd only have to carry 3 one dollar coins to get a load done instead of 12 quarters. Even if they didn't change the price for a wash or dry I'd only have to use and carry 6 coins instead of the 12 I use and carry now to get a load of laundry done.

leoj707,

Wa?

I like having around $20 in dollar bills. It keeps my spending under control, as I see my dollar stash dwindling, I'll skip the afternoon coffee and wait till I get home.

$20 worth of Golden Dollars feels worse in the pocket than a whole roll of quarters in terms of weight and bulk.

I don't need quarters to use soda or snack machines because most of them take dollar bills, so all I need is a quarter. If they make the Dollar Coin the about the same size or small than a quarter, I could deal with that.

The money spent to print money is minimal, it's not even close to 1% of the federal budget. Sometimes I think the banks just want us to use the card so they can charge fees.

I'm sure Europeans don't get out of kilter for having to use $1 bills instead of 1 Euro coins for the two weeks they're in Disney World. What does drive visitors nuts is the ancient, obtuse measurement system. Even the military gave it up decades ago

Simcha, Geologic Strata is a trick by Satan and Goodless Atheists to fool man.

Age of the Earth

Young Earth Creationism proves that the earth is approximately 6,000 years old. That logical conclusion is based on observations and the accurate eye-witness account of history in the Bible, in particular the Book of Genesis. Numerous studies by creation scientists have corroborated geologic events with their Biblical accounts, such as the Great Flood, the destruction of Sodom and Gommorah, and the crossing of the Red Sea. Old Earth Creationism, like atheistic junk science, claims that the earth and universe are billions of years old.

From "Geology" on the Conservapedia

http://conservapedia.com/Geology

thunderlips11 says

If they make the Dollar Coin the about the same size or small than a quarter, I could deal with that

Yes, all they would have to do is make it smaller in diameter than a quarter and thicker than a quarter (and thicker even than a nickel) with smooth edges. Also if they made it bimetallic, that would differentiate the coin even more from a quarter.

That 10 franc coin I was talking about that seemed to be the most frequently used coin was bimetallic, smaller than a quarter, but thicker than a nickle. It sounded vastly different than the other franc coins in my pocket and it felt entirely different. I had no trouble fumbling for a 10 franc coin. And, since it didn't weigh very much (about as much as a quarter or a little less) it wouldn't weigh down your pockets.

Not actual size (obviously):

thunderlips11 says

I'm sure Europeans don't get out of kilter for having to use $1 bills instead of 1 Euro coins for the two weeks they're in Disney World. What does drive visitors nuts is the ancient, obtuse measurement system. Even the military gave it up decades ago

What confuses foreigners the most about our currency system is that our our coins have no numbers on them. You must be able to read English in order to determine the value of an American coin. In order to understand the value of a dime, must understand that "one dime" is 10 cents. On the dime the only indication of it's value are the words "one dime." The quarter doesn't even have a word that is a number. It reads "quarter dollar." One word indicates a fraction and the other word indicates a unit of currency, that's it. The penny says "one cent." And the nickel says "five cents."

Also we Americans never use the number value in words to refer to our coins. We say "penny, nickel, dime, quarter." If you don't speak English, this is very frustrating if you are trying to count change or ask for help to count change.

When I lived in the dorms in college with natives from Europe who came here to go to university who had just arrived, I would watch them struggle to use the vending machines in the lobby without much success for at least the first few weeks up to a month after their arrival because they couldn't deterimine the value of the coins in their hand. I remember explaining our coin system to them over and over trying to help them to make sense out of it.

If we were to become more internationally friendly with our coin system we would have numbers on them, "1 cent, 5 cents, 10 cents, and 25 cents" respectively. That would help visitors greatly.

immigrant says

Speaking of coins, read this interesting article on how some people have scammed the system to gain travel miles!

http://finance.yahoo.com/banking-budgeting/article/113129/fly-for-free-us-mint-forbes?mod=bb-budgeting

You guys realize that people have been doing this for years, right? Check out FatWallet or some similar site.

My impression, however, was that credit card companies had started cracking down on this too -- e.g. in some cases calling this a cash transaction instead of a normal purchase, or alternatively excluding these sorts of purchases from points.

Truthplease says

The guy didn't get into a major conflict and crushed our biggest enemy. Brilliant!

Hmmm. Are you certain that the Soviet Union wasn't ending anyway ?
Technically didn't they end during George Bush senior's admin ? Why doesn't he get credit ? Is it just because Reagan did a massive Miliary expansion that the soviets went broke trying to keep up with ? That seems like an oversimplification to me.

But even if it's true and it worked, does that mean that the risk (economic and otherwise) was worth it if they were going to end sooner or later anyway ?

My opinion is that when history is written, Reagan won't get that much credit for the demise of the USSR, except maybe in Texas high school History books.

Was it brilliant to cut and run from Lebanon after Bin Laden killed all those Marines?

Regan may have defested the Soviet Union, but he did something far, far worse in the process: He created Al Qaeda back when he funded the resistance to the Soviet invasion of Afghanistan.