It looks like the dollar is losing value

[antagon]

A really major problem that is generally ignored is that innovation and productivity is deflationary. Central banks starting in the Netherlands and then the UK in the 1600s is designed to spread innovation quickly. As long as the main innovation was spreading food crops mostly from the Americas worldwide deflation was counteracted by rapidly growing populations. However the period of exponential population growth is behind us. Yes world population will hit about 9.6 billion simply through momentum around 2060 according to the UN but large parts of the industrialized world are depopulating so increasingly more products are chasing fewer buyers. Worse yet those buyers generally know and have adapted to Moore's law and analogous forces but our financial system hasn't.

I don't see any hope for off the shelf financial/monetary solutions like the QE used in the wars of Spanish and Austrian succession being much use in the modern era.

i like this observation about the population boom. i think we'll get another jump out of the boomers' retirement expenditure, but a drying labor pool and a swelling retirement benefit pool will characterize the next couple or three decades. what will it feel like?

 

[william the wie]

A really major problem that is generally ignored is that innovation and productivity is deflationary. Central banks starting in the Netherlands and then the UK in the 1600s is designed to spread innovation quickly. As long as the main innovation was spreading food crops mostly from the Americas worldwide deflation was counteracted by rapidly growing populations. However the period of exponential population growth is behind us. Yes world population will hit about 9.6 billion simply through momentum around 2060 according to the UN but large parts of the industrialized world are depopulating so increasingly more products are chasing fewer buyers. Worse yet those buyers generally know and have adapted to Moore's law and analogous forces but our financial system hasn't.

I don't see any hope for off the shelf financial/monetary solutions like the QE used in the wars of Spanish and Austrian succession being much use in the modern era.

i like this observation about the population boom. i think we'll get another jump out of the boomers' retirement expenditure, but a drying labor pool and a swelling retirement benefit pool will characterize the next couple or three decades. what will it feel like?

Generations Y (roughly 1982-2001 or 3 is the current range of guesses) and Z (2003- ...) have experienced net population increases so recovery should be quicker than you expect but with a twist. Periodic political reorganizations are driven by the four generation population cycles (This is true for all sexually reproducing animals "The Selfish Gene" by Dawkins mentions that maximizing great grandchildren, which is a four generation cycle, is the optimal goal that shakes out from modeling animal reproduction.) and that is causing a problem.

A purely internal political reorganization can be fission such as the revolutionary war, attempted fission such as the Civil War or peaceful as with the New Deal.

An external reorganization is also possible either linguistic nationalism uniting English speaking countries or "Natural borders" expanding and strengthening NAFTA.

It is extremely hard to claim that any of the possible reorganizations make even good nonsense but the post-post-Keynesian Hobbesian state is not doing at all well either. So it looks like a recovery tied to political instability is the most likely outcome.

 

[Toro]

How about buy around $500 and 4 years later is $1,300?

not impressed for the risk. i did buy a rapper-grade rope chain 5 years ago. just over 4 ounces @ 18kt... gold was around $550 at the time, i recall. i wouldn't have bought it if i couldn't wear it around.

i'm a young man, there's better ways to make a return on my cash than waiting 4 years for a triple up, and i'm not so wealthy that i have money laying around which my businesses or i cant think of what to use it for.

$500 to $1300 over four years is outstanding. You will be a very rich man if you can generate a 160% return every 4 years.

 

[Charles_Main]

How about buy around $500 and 4 years later is $1,300?

not impressed for the risk.

What risk man. In the current economic situation. There is almost NO risk at all in gold. That is why it is such a good investment right now. Almost no risk, and pretty good returns.


Sure you can make more other ways. But you will almost always have to take MUCH more risk to do it.

 

[loosecannon]

What risk man. In the current economic situation. There is almost NO risk at all in gold. That is why it is such a good investment right now. Almost no risk, and pretty good returns.

But between 1982 and 2007 gold hardly budged at all. That's the risk:
File:Gold price in USD.png - Wikipedia, the free encyclopedia

There are a lot of people saying that the gold bubble has nearly peaked and could fall a LOT like it did in 1980-81, losing almost 75% of it's value in 2 years.

That's the other risk.

As recently as two years ago there was considerable doubt whether precious metals were still capable of being used for reserves because there was considerable doubt about whether people would still accept their "intrinsic" value apart from industrial use.

Now that seems like foolishness in the present context, but take a good look at the present context: the hottest asset on the planet right now is the currency of a nation so deep in debt that only Zimbabwe surpasses them. Japan.

And the "safest haven" in the world is the dollar and US bonds even while we rack up deficits nearly 60% above revenues and our debt is nearly equal to a years GDP. Even while our deficits requires 2.5% of the entire world's GDP just to keep our government functioning.

In a world as crazy and full of shit as ours the craziest shit imaginable might be the most true, while that which most people share as "unimpeachable truth" might actually be nutburger.

I mean who in their right mind would slave away in the sun all week just to be compensated with a few colorful pieces of monopoly money?

US!

 

[william the wie]

In terms of the money base inflation, M1, gold has barely moved in the past decade. Write-downs in M3, the money people use, have swallowed up almost all inflation. When the write downs start slowing down that is the time to get out of gold and there are various measures of that triggerpoint but none of them have so far been met so will stay in gold until that does happen.

 

[loosecannon]

I think gold is a great long term strategy right now. I like to park my money and leave it sit.

But the arguments of the folks who say it is overvalued are compelling. I don't care. I doubt gold will depreciate as much as paper money. I figure gold is almost certain to best inflation over the long haul.

And the real risks are in stocks, bonds, and their derivatives.

But I haven't been able to predict economic trends with 100% certainty since 2007. I can either take risks that I just can't understand or I can sit someplace that all evidence suggests is at least quasi safe, and might turn into a jackpot.

It has worked out quite well so far. 300% appreciation over 8 years. I can afford to lose half of that if need be.

 

[william the wie]

I think it far more likely that the partial or total expiration of the Bush tax cuts will collapse the bond and stock markets by making residential rentals and agricultural land the more tax favored investment vehicles. That means that gold should swap 1 for 10 with the DJX if I wrote it down correctly in my notes sometime early next year.

 

[uscitizen]

How about buy around $500 and 4 years later is $1,300?

not impressed for the risk.

What risk man. In the current economic situation. There is almost NO risk at all in gold. That is why it is such a good investment right now. Almost no risk, and pretty good returns.


Sure you can make more other ways. But you will almost always have to take MUCH more risk to do it.

Lots more risk buying gold at 1300 than at 500.

In any case I only believe in gold in hand. I think there is far more gold "sold" than exists.

 

[uscitizen]

How about buy around $500 and 4 years later is $1,300?

not impressed for the risk. i did buy a rapper-grade rope chain 5 years ago. just over 4 ounces @ 18kt... gold was around $550 at the time, i recall. i wouldn't have bought it if i couldn't wear it around.

i'm a young man, there's better ways to make a return on my cash than waiting 4 years for a triple up, and i'm not so wealthy that i have money laying around which my businesses or i cant think of what to use it for.

$500 to $1300 over four years is outstanding. You will be a very rich man if you can generate a 160% return every 4 years.

naah my next say 5 yr investment would be in oil or some promising form of energy I think.
But I no longer invest.

 

[william the wie]

How about buy around $500 and 4 years later is $1,300?

not impressed for the risk. i did buy a rapper-grade rope chain 5 years ago. just over 4 ounces @ 18kt... gold was around $550 at the time, i recall. i wouldn't have bought it if i couldn't wear it around.

i'm a young man, there's better ways to make a return on my cash than waiting 4 years for a triple up, and i'm not so wealthy that i have money laying around which my businesses or i cant think of what to use it for.

$500 to $1300 over four years is outstanding. You will be a very rich man if you can generate a 160% return every 4 years.

hey Toro that's only 27% per annum in something as good as gold and I can show you advisors who claim an average 60% annual return and have numbers to back it up. Don't you think that's better?

 

[uscitizen]

Hey I can beat that.

Want to buy a bullion tree?
I still have a few gold and platinum ones left.

 

[william the wie]

Hey I can beat that.

Want to buy a bullion tree?
I still have a few gold and platinum ones left.

sorry I'm talking about an actual trading technique that I am fairly sure Toro knows and I would not be surprised if he knows the name of the advisor. If you are talking about large sums of money you can do this with the Dow. Take the 10 highest and 10 lowest dividend yield stocks of the Dow 30 (or earnings yield, the inverse of PE) go long the high yields and short the low yields and redo every 3-12 months. If you start with enough money you may come out way ahead after paying off your cardiologist, psychologist and broker and you rarely if ever lose big money in your portfolio but it is nerveracking.

 

[antagon]

How about buy around $500 and 4 years later is $1,300?

not impressed for the risk. i did buy a rapper-grade rope chain 5 years ago. just over 4 ounces @ 18kt... gold was around $550 at the time, i recall. i wouldn't have bought it if i couldn't wear it around.

i'm a young man, there's better ways to make a return on my cash than waiting 4 years for a triple up, and i'm not so wealthy that i have money laying around which my businesses or i cant think of what to use it for.

$500 to $1300 over four years is outstanding. You will be a very rich man if you can generate a 160% return every 4 years.

this is why i dont bother with marketized investment, toro. supposedly my chain is worth twice what i've paid for it five years later. i think that's comforting, especially when people thought it was irresponsible to buy and wear around like a pimp. i bought a backhoe in 2005, too, and i've netted more than i bought it for each and every quarter since then. who cares what that's worth now. easily half what i bought it for or less.

i just think taking $120k out of a piece of equipment in 5 years beats any $5k i'd have put into some commodity or someone else's business. ive invested in depreciated fixer-upper equipment and cost of sales. not for everyone, but a different league than staring at bullion or charts with respect to returns and risk.

 

[antagon]

How about buy around $500 and 4 years later is $1,300?

not impressed for the risk.

What risk man. In the current economic situation. There is almost NO risk at all in gold. That is why it is such a good investment right now. Almost no risk, and pretty good returns.


Sure you can make more other ways. But you will almost always have to take MUCH more risk to do it.

i think there's risk in everything, charles. how credible would someone claiming gold would flip over three times in 5 years have been in '05. how credible would that claim be now? talking about shelving cash to watch gold appreciate is risky to me at least in terms of opportunity cost.

 

[loosecannon]

not impressed for the risk. i did buy a rapper-grade rope chain 5 years ago. just over 4 ounces @ 18kt... gold was around $550 at the time, i recall. i wouldn't have bought it if i couldn't wear it around.

i'm a young man, there's better ways to make a return on my cash than waiting 4 years for a triple up, and i'm not so wealthy that i have money laying around which my businesses or i cant think of what to use it for.

$500 to $1300 over four years is outstanding. You will be a very rich man if you can generate a 160% return every 4 years.

this is why i dont bother with marketized investment, toro. supposedly my chain is worth twice what i've paid for it five years later. i think that's comforting, especially when people thought it was irresponsible to buy and wear around like a pimp. i bought a backhoe in 2005, too, and i've netted more than i bought it for each and every quarter since then. who cares what that's worth now. easily half what i bought it for or less.

i just think taking $120k out of a piece of equipment in 5 years beats any $5k i'd have put into some commodity or someone else's business. ive invested in depreciated fixer-upper equipment and cost of sales. not for everyone, but a different league than staring at bullion or charts with respect to returns and risk.

so you are a real capitalist. The problem with your approach is that you can't scale it up and it isn't a formula that anybody can copy, and you rely on deals coming along along with business.

But capitalism is supposed to be a risk and a meritocracy.

 

[william the wie]

24K a year in average profits is not much unless that is the return on a rental.

 

[loosecannon]

we interpreted this line differently:

"i've netted more than i bought it for each and every quarter since then"

 

[william the wie]

we interpreted this line differently:

"i've netted more than i bought it for each and every quarter since then"

120,000/5 = 24,000 which sucks as an owner operator at $12/hour on a 2000 hour work year. Renting it out for a net $24K after maintenance is damned good. I think we interpreted that line the same way.

 

[loosecannon]

like I said we interpreted that line to mean different things.

If he bought it for $120K and netted more than that every Q then he did OK. Rates for a backhoe + operator are more like $80/hr. A small road construction company with one backhoe and an 8 man crew can gross over a million/Q. At least here in CA they can, and do. Or did until the budget went dry. Of course the backhoe is only one of 5-6 similarly expensive pieces of equipment they rely upon.