patrick.net

Owneroccupier,

Really? I know some people who went to MIT and they're quite laid back and well adjusted. In fact, I'll go so far as to say they're some of the most well adjusted people I know. It's a bit intense, but pretty cool if you're smart and well grounded.

The fact that Ben Bernanke actively campaigned for his job means:

1) He is not very smart, at least from the big picture perspective. If I were offered such a position, meaning I am competent enough to fill a lot of other positions of similar power and significance, I would have turned it down over a heartbeat. The informal job description of Fed Chairman at this point should be: to assume full responsibility for Greenspan's blunder.

2) He is very political, meaning he will cave in to political pressure during election years. So I do expect him to drop $$$$$$$ from the helicopter just based on his being political.

Perhaps there is a big difference between undergrad and grad programs, but the undergrads I know are not the happiest persons on earth either. It depends on whether they are doing it for themselves or for their parents, you know lots of Asian parents force their kids into engineering.

Owneroccupier,

Yes, the "biology" majors...I've heard the stories.

I guess I'm friends with people who are happy nerds who really wanted to be at MIT.

Top tier tech schools are definitely sink or swim propositions. I heard about a story about the MIT math grad student who wouldn't let her study partner see her (extremely detailed) study schedule...maybe it gets a little out of hand in grad school...

When these guys maliciously tried to keep our deposit, and I took the letters and small claims route, they pulled some intense legal thing-a-majigger to get the case moved to “big boys court”, where it was going to take 4-5 years to get hearing and I’d need a real lawyer to do the filings. They got my $.

I do not want to take people to court. Karma will get them just as quickly. Really.

Peter P,

With karma, you may have to wait several lifetimes, and payback will come in totally unrecognized forms...trust me, small claims court is much more satisfying.

With karma, you may have to wait several lifetimes, and payback will come in totally unrecognized forms…trust me, small claims court is much more satisfying.

How is that satisfying? Sometimes Karma works quickly.

He is very political, meaning he will cave in to political pressure during election years. So I do expect him to drop $$$$$$$ from the helicopter just based on his being political.

Knowing this, being a homedebtor is not that bad after all, right?

I've taken people to court because I don't want the bully to get away with my lunch money. If I let people bully me around, then I need to stand up for myself....not to teach them a lesson...to teach me a lesson. I hate court...nobody wins but the lawyers...but I just can't bring myself to reward unethical behavior.

But Bernanke won't drop money at the debtor level. The impact of inflation works differently on different classes of assets, it is not an 1:1 effect on housing.

If he were to drop $$$$ directly on the street, then our consumable price would be affected right away. Unfortunately he will be dropping $$$ at the institutional level through financial instruments, which means, most Americans with no exposure to these financial instruments won't benefit much. The only way for them to benefit in the last few years was through exposure to RE, but RE has a limit, because it must be supported by the income level, no matter how cheap money is, it has a cost. So borrowing does have a natural limit.

However, some assets may see no end to spike, especially those that has very little to do with consumption. They act as the perfect channel to "drain" the extra liquidity, precious metals being one of them. Anything else that is leaked into the consumption channel will hit a natural ceiling level constrained by people's pay.

Gold!

There will be much political will to stablize oil price. However, governments do not care about gold price any more. It can be of any price.

NOT INVESTMENT ADVICE

That is of course in theory, because in the end all the gold hoarders would like to exchange gold into something that bring them satisfaction, houses, cars, etc. Gold is just a denomination of value, I can't chew on it (or I die of poisoning), I can't sleep on it, so if it is not exchangeable into consumables in the end, it will be worthless.

Originally we hoard money, but as we lost trust in money because our earning speed cannot surpass the printing speed, we start to hoard gold. So gold is just a way of slowing down the pace of inflation in the hoarding process. Once we are done with hoarding and start spending, price will be affected. So whatever we do, hoarding commodities or gold or oil, is just a way of deferring the price hikes into the future. Money printing will come back to bite our ass no matter what.

That is of course in theory, because in the end all the gold hoarders would like to exchange gold into something that bring them satisfaction, houses, cars, etc. Gold is just a denomination of value, I can’t chew on it (or I die of poisoning), I can’t sleep on it, so if it is not exchangeable into consumables in the end, it will be worthless.

Gold has no intrinsic value. But people are irrational. And they see value in gold.

Money printing will come back to bite our ass no matter what.

Then we should borrow as much as we can. The question is: what to buy with the debt.

NOT FINANCIAL ADVICE

Unfortunately, people who are financially smarter than me have already discovered what inflation is in store for us. Gold is already at a 25 year high. Am I not a bit too late to the party ?

I read a news last week, where some commodity Guru was saying there is no bubble in Gold. The contrarian indicator should in such situation mean, very little upside left. I think Gold will move up, but from this point onwards, the gains may not keep up with inflation.

Psychologically, gold has a huge intrinsic value.

First, it is distinguishable, unlike silver and platinum, they are not as shiny, and you cannot easily tell the difference between silver and platinum, a platinum buyer certainly doesn't want to be tricked into paying platinum price for silver. Second, gold is very inactive with most chemicals, making its appeal lasting and storage care-free. Third, it is dense, it is impossible to counterfeit a larger piece of gold just based on density alone, gold-coated lead won't work if the mass is larger.

So in terms of store of value, especially something that can be readily comprehended and embraced by the mass, it is a perfect pick.

SFWoman,

does the article mention the cost for such service? thanks.

I do see gold as first and foremost a speculative instrument. I'd like to keep a bit of it around and dump it when everybody else goes crazy over it. Ultimately, fossil fuel (and stuff made with fossil fuel like agricultural commodities, plastics, and metals) is what makes everything run.

Not advice of any sort, consult your own paid spiritualist/financial advisor before acting.

Gold is already at a 25 year high. Am I not a bit too late to the party ?

I cannot answer that. However, the dumb money has not left housing in force yet. When this happens, whatever left of the dumb money will go into another dumb asset class. Gold seems to be a good candidate.

To BA,

25-year high? Are you sure? You have to adjust the price with CPI. A dollar in 1980 is about 2.6 dollar today, adjusted for CPI published by our DOL.

"whatever left of the dumb money will go into another dumb asset class. Gold seems to be a good candidate."

Bubbleheads think alike :P

I won't hold gold long term, but I think there's still huge upside potential ahead of us. And the downside isn't that bad, when you think about how much it went for in 25 years ago.

o.t.,

Small claims courts are pretty straight forward and goes in front of a judge. The true craziness comes in with jury trials.

Ultimately, fossil fuel (and stuff made with fossil fuel like agricultural commodities, plastics, and metals) is what makes everything run.

However, this also means that governments will move heaven and earth to keep prices down. If oil goes to $300 a barrel (300% increase), our economy will likely to crash. If gold goes to $2500 an once (same 300% increase), it will just top the last peak in real term.

NOT INVESTMENT ADVICE

gold is always this alternative currency since we invented fiat money. Whenever we lose confidence in the fiat money, it roars back with full force. When the government and money printing agencies get their acts together and clean up the fiat mess, gold retreats into the background.

I personally think that Ben is not someone I trust in terms of taking care of the worth of my money.

I personally think that Ben is not someone I trust in terms of taking care of the worth of my money.

The question is: will inflation upset more voters than deflation.

Inflation = lower pay in real terms, deflation = no jobs, I think the answer is pretty clear.

Peter P,

Yup, political risk. Always scares the bejesus out of me. But what can I do? I'm essentially a third party person (true Progressive) trapped in a corrupt corporatist duopoly. Hopefully, things won't go crazy so fast that I have no time to respond. That's why I'm chosing to live my next five years out light and unencumbered.

Oh, what the hell, I'm flat broke right now (student loans = IRA), I AM the proletariat, what can the angry masses do to me?

Owneroc and Peter P,

Good points.

BTW, I think I jumped the gun on contrarian indicator. Hardly anyone is asking people to buy Gold. There is no Time article yet on "Why Gold will shine forever".

But it's so hard to truly eveluate real price of the Gold. What ratios to look for ? What metric to use ?

Owneroccupier,

There's just not enough gold to fill in for fiat money. Gold is still psychologically valuable because of its past history, but it just can't work as a carrier of value in any real sense.

But it’s so hard to truly eveluate real price of the Gold. What ratios to look for ? What metric to use ?

Finding the "real" fundamental price will do you no good because people are emotional beings. One must anticipate their next stupid move.

SFWoman,

I always felt the brown-nosers were living the unexamined life. While I've admired that unthinking quality in some of my weaker moments, I think I'd go complete stark raving mad if I had to live like that.

BTW, if you do buy gold, you need an exit strategy because gold really has less intrinsic value than corn (you cannot eat it).

NOT INVESTMENT ADVICE

Did anyone pay attention to what Heli Ben said today ? He gave a signal, that Fed may pause increasing the rates.

Not to parse what he is really trying to say etc, but how about the a new thread on "Let's assume Fed has paused the hikes. How will that affect economy in general and housing in particular ?"

Peter P,

There's no doubt in my mind that energy, either fossil or nuclear, will be the ultimate holder of value, followed by IP, access to clean water, good agricultural land, minerals, etc. By that measure, California is not doing too badly (windmills and solar cell farms)...if it'd only fix up its government...

To BA,

check out the oil/gold ratio. Right now either gold is too cheap or oil is too expensive, you can judge for yourself. Google oil/gold ratio and there are plenty of historical charts.

SFWoman,

I completely agree with you that strict parent planning is the worse one can do for his kids. It doesn't mean that the parents shouldn't provide excellent education, just that the parents should refrain from planning out the career path for their kids just because the career path seems profitable, today. Everyone is unique, one needs to be in touch with his own talent and happiness.

The ultimate determinant in an unstable world order will be arms...

Owneroccupier,

Going completely OT. You know, I've always maintained that Mainland China cannot possibly invade Taiwan forcibly because of all the crazy Mainland dams built. If they ever invade Taiwan, the Taiwan government can force their hands by calling for air strikes. Since the Taiwanese air force is superior that anything the PLA has yet to put together, they really can't "forcibly reunite" China.

Peter P and OO
You guys may have a point with gold. I remember when it was at $600 before(I won a contest for an oz of gold and they kept waiting to pay because the price was so high)
About 3 years ago a friend of mine got divorced. She decided to rent because apparently we were at the top of the housing market. Well, we all know what happened to the market . It grew to extremes we couldn't even imagine. I wonder if that will happen to gold? It's been here before...but not much beyond...maybe it too will break it's own barriers. Hmmmm
I'll have to seriously consider this one......

ryan,

I am just speaking from a general conception point of view. Investors needn't be convinced, they are already in and they usually have the knowledge.

Just from a visual point of view, something that people attach value to must stand out from the crowd. That is just how our mind works. Btw, SLV hits the market tomorrow if you are interested in silver.

astrid,

not quite getting your point. I thought China couldn't invade Taiwan because of the American military power in the Pacific (or the American consumer market that is open for trade). Can you elaborate?