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The USA has devalued the dollar so much, it may have to repudiate the debt
The interest in Buying our debt is waining and has been for some time.
We cannot borrow at affordable rates or inflate out of this problem in any controlled manner.
Result global financial collapse.
Which could be the only thing to shrink the size of the federal government.
YouTube - Hyperinflation Nation Part 1/3
The U.S. was able to sell another large amount of debt at low rates this week, as investors flocked to Treasurys to hedge against the risks of a slow economic recovery.
Foreign investors bought Treasurys this week even as the dollar sustained losses against a broad range of currencies, a move that erodes the investment value of holding U.S. government debt. Above, the U.S. Department of the Treasury, with the Washington Monument in the background, in Washington, D.C., is pictured last month.
The uncertainty about the expected pace of the rebound also is damping inflation expectations, encouraging investors to buy bonds. Long-dated Treasurys such as the 30-year bond bear the biggest risks in an environment of rising prices because inflation eats into bonds' fixed interest payments over time.
Foreign investors bought Treasurys this week even as the dollar sustained losses against a broad range of currencies, a move that erodes the investment value of holding U.S. government debt.
The indirect bids, a proxy of foreign demand for Treasurys, showed solid interest in the three auctions this week. The government sold a total of $70 billion in debt, including $38 billion of three-year notes, $20 billion of 10-year notes and $12 billion of 30-year bonds.
The indirect bids for the 10-year note auction Wednesday, a resale of the August issue, came at 55.4%, the highest on record for any such repeat offerings.
I own a lot of gold.
Gold hits record high
The precious metal, considered a safe haven, surges above $1,000 as the dollar plunged to a one-year low.
Gold settles at record high of $1,006.40 - Sep. 11, 2009
Thanks.
I'm betting it goes much higher though.
"This is new significant level for the dollar, said Kathy Lien, director of currency research for Global Forex Trading. "The dollar hasn't been this weak since September 2008."
In a jittery economy, commodities priced in dollars, such as gold, are perceived as "safe" investments and typically gain ground when the greenback wanes.
The dollar has declined against the yen for the fifth straight week and is at its lowest level against the euro since December 2008, according to Global Forex Trading.
"Gold prices have been holding up better now than in previous occasions when they tried to rally high. Many [investors] were waiting for the $1,000-mark to be broken," said Carlos Sanchez, a precious metals analyst at CPM Group. "The dollar has been weakening so that's been a supportive factor."
Gold will hold.
Analysts think gold will continue its upward momentum, at least for the next few months. CPM's Sanchez said he expects prices will hold above $1,000 mark as the year ends, even if the dollar rallies.
"You may see the dollar recover somewhat and put downward pressure on gold prices. But even if there's a pullback, gold will go back up the last 2-3 months this year," Sanchez said.
And if the dollar is headed lower, as Lien anticipates, gold prices could remain strong even longer.
"There will be relief rallies along the way, but I expect a 2% depreciation of the dollar against major currencies" over the next six months, Lien said.
At some point, we may have trouble borrowing and interest rates may be higher, but that is certainly not happening now.
I stand corrected, last QTR according to GAAP they lost money. Forgive me if I am still bearish as hell - The P/E ratio of the SP500 is now 130 x earnings. That is overvalued by any standard.Actually, that is almost true but not quite.
Here is the official data from S&P.
http://www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLS
Earnings fell to $6.86 at the lowest point at the end of 2008. At one point in time, analysts' forecasts were such that earnings would have been negative had earnings not come in better than expected. Expectations were for negative earnings but it did not happen.
Stocks are being propelled by a recovery in earnings, and the fact that Depression and the collapse of the economy are off the table.
You can print all the money you want, it is CREDIT deflation that you are not factoring in. The fed can't monetize the debt fast enough to counteract the inevitable credit contraction. Banks are overextended and the "over leverage" that made them fortunes in the last 10 years is now destroying them just as quickly. Commercial real estate is experiencing the largest drop in history and the effects on valuations won't show up for a while. When they do, REITS will collapse along with a few large Banks (watch out for Wells Fargo/Wachovia and Chase- they are really weak!) and the psychology of the consumer will change from the "green shoots" fairy tale that Bernanke/Geithner/et.al have spoon fed them to"brown manure" reality in a heartbeat.There was also deflation off and on from 1873 through 1893.
I don't think we're going to get deflation. I think that the Fed is massively inflating the money supply to counteract the deflationary forces in the economy. That is the one big difference between now and the other deflationary periods in this country's history. I think the prices of gold, oil and other commodities are telling you that.
We may get deflation down the road but I think it is off the table for the next few years. I think the SP500 gets into the 1100s, perhaps going as high as 1200 before rolling over.
And gold? No idea. Probably $1500-$2000 when its all said and done, though $5000 is not out of the realm of possibility.
Fitnah, the value of the Dollar isn't even as low as it was leading into the crash last year.
I believe the USD index was somewhere in the 60's at that point.
Not that it won't still go lower, but that favors equities and makes it pretty hard to facilitate a market crash.
I'm certainly not one to defend the fiscal and monetary policies of this government whether it's democrat OR republican, but at the end of the day, we're still the world's lone super power.
You can print all the money you want, it is CREDIT deflation that you are not factoring in. The fed can't monetize the debt fast enough to counteract the inevitable credit contraction. Banks are overextended and the "over leverage" that made them fortunes in the last 10 years is now destroying them just as quickly. Commercial real estate is experiencing the largest drop in history and the effects on valuations won't show up for a while. When they do, REITS will collapse along with a few large Banks (watch out for Wells Fargo/Wachovia and Chase- they are really weak!) and the psychology of the consumer will change from the "green shoots" fairy tale that Bernanke/Geithner/et.al have spoon fed them to"brown manure" reality in a heartbeat.There was also deflation off and on from 1873 through 1893.
I don't think we're going to get deflation. I think that the Fed is massively inflating the money supply to counteract the deflationary forces in the economy. That is the one big difference between now and the other deflationary periods in this country's history. I think the prices of gold, oil and other commodities are telling you that.
We may get deflation down the road but I think it is off the table for the next few years. I think the SP500 gets into the 1100s, perhaps going as high as 1200 before rolling over.
And gold? No idea. Probably $1500-$2000 when its all said and done, though $5000 is not out of the realm of possibility.
Fitnah, the value of the Dollar isn't even as low as it was leading into the crash last year.
I believe the USD index was somewhere in the 60's at that point.
Not that it won't still go lower, but that favors equities and makes it pretty hard to facilitate a market crash.
I'm certainly not one to defend the fiscal and monetary policies of this government whether it's democrat OR republican, but at the end of the day, we're still the world's lone super power.
I dont see how the dollar is not more devalued now wit the printing press running full time and expenditure surpassing the entire amount of actual printed monies.
Are you familiar with the term Con-game? The "Con" is short for CONFIDENCE. Our entire monetary system relies on confidence. Ask yourself what is backing the dollar? Congress says the dollar is "legally" 1/42.22 of an ounce of gold. But it's not, and everyone knows that is bogus. If you bring a dollar to the treasury you will not collect any tangible good, much less 1/42.22 of an ounce of gold. You will be sent home. If you bring a dollar to the market you can still buy goods with it because the govt says (by fiat) that it is money and because of its long history of use has lulled people into accepting it as such.Fitnah, the value of the Dollar isn't even as low as it was leading into the crash last year.
I believe the USD index was somewhere in the 60's at that point.
Not that it won't still go lower, but that favors equities and makes it pretty hard to facilitate a market crash.
I'm certainly not one to defend the fiscal and monetary policies of this government whether it's democrat OR republican, but at the end of the day, we're still the world's lone super power.
I dont see how the dollar is not more devalued now wit the printing press running full time and expenditure surpassing the entire amount of actual printed monies.
Hi Mr. Fitnah:
GL,
Terral