Dumb question about hyperinflation ... or maybe not

It turned out that many of those AAA ratings were a complete fiction. If financial institutions bought them on the basis of rating with no additional analysis, then they got what they deserved. That's what happens when you buy something you don't understand. Japan also doesn't use mark-to-market with very poor results. So you can blame the regulators or blame the rating agencies or blame the financial institutions and you will be correct in every case. This is a story with no heros, only villains. The entire system is broken.:hammer:

 

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Agree...many of these assets ARE significantly impaired. I would like to see Mark-to-Market resume once an orderly marketplace can be established...as long as there are provisions in place to respond to inactive markets.

 

This whole mess makes my blood boil. :headbang:

I mostly blame those in Congress that were charged with oversight...the guys taking the kickbacks. I have no idea why they're still in Congress...let alone, not in jail.

 

We will not have inflation such as that,

We will not have inflation such as that, this is after all America, when we get down we rise again - it's our nature, it's what we do.
People may doom and gloom all they want but this country will survive and prosper.
I know next to nothing about economics I admit and frankly do not care but America is great at "beating the odds" we have done so for every crises in our history so the next time you hear doom and gloom turn it around - after all what have you got to lose by doing that. The main stream media is so poluted by bias this way or that way, whatever will sell product and keep ratings is the only objective.
To my way of thinking the very fact that we can carry so much debt tells the truth of it otherwise we would not be able to do so.
It's easy to say "oh woah is me, or them or us" lets covet everthing we can so we will not lose out but did you ever stop to think that may be a part of the problem and not any solution at all.
One out of 2 countries in the world want to be us, people risk their lifes to be here still. We are not great because of the lack of serious problems, we are great because we have had them, delt with them and come out of them. It is this type of problem (say our economy today) that make us survive and prosper not the lack of problems.
We are the comeback kid incarnate, it's how we started, formed and survive. It's simply what we do and do better than any other country in the world, it's in our blood. We are great because of diversity, because we listen to and acknowledge all opinions and somehow reach a middle ground, sometime right on, sometime a little this way or the other.
Say what you want, hold on to that gold, or land, or whatever in the end it's all just stuff, just like dust but this country will endure and prosper.

That's pretty conservative and patriotic comming from such a liberal ain't it?

 

Ok, I'll bite. First off, we've never really seen h-inflation here like you're asking. There's a broad difference between the crash of the 30's that led to a depression, and h-inflation. Other countries have seen it, Argentina coming to mind, and gold did not move with their currency because the value of gold was and is based on a global market rather than a local one. So, even with a super inflated economy I don't think gold would move up as much as the dollar unless it was doing so all across the globe.
Guy~

 

In this economy timing is everything!! "Know when to hold up, And when to fold um!"

 

Interesting. So with that said, gold prices can rise (compared to the US dollar) whether or not there are buyers correct?

I want to try to get a good understanding of this. So for example, gold can rise to say $3,000 / oz with buyers or no buyers, if inflation starts to rise. (if I understand, it has more to do with the purchasing power of our USD, not if there is a market for gold buyers at $3,000, $4,000 etc etc...)

 

So you are saying that if a dollar inflates by 1,000 times, gold will do the same? Has it done that historically?

BTW, the word "'value'" was in quotes, using the standard textual method to indicate that it was not being used in its normal meaning, that is, to show that I understand the word "value" connected with paper dollars is a misnomer. I hope I answered your comment.

 

Thank you very much. That is the kind of answer and explanation I was looking for.

All I have ever seen (not just here, but in many places) have been the same kinds of tautological answers I got here, like gold being an indicator of inflation, etc.

Thanks again

 

No problem, Billincol. I also should have mentioned that contrary to what some may think, gold hasn't really increased in value much at all recently, but world currencies have decreased in value, making it cost more to aquire gold, and all goods, therefore making it seem like the value has increased. It's an illusion caused by deflating currencies.
Guy~

 

It is more likely that there will be more buyers and perhaps fewer sellers than you expect since many folks who already own gold will tend to hold it as an inflation hedge.

I read someplace that gold historically has about an 80% correlation to changes in the purchasing power dollar. That sounds about right.

 

Gold will rise a lot if the dollar inflates a lot. But I don't think you can reduce it to a mathematical formula.

 

Other things being equal, devaluation of the dollar means the dollar price of gold goes up. If the dollar becomes worthless, the dollar price of an ounce of gold will be infinite.

Other things will not be equal in a worldwide disaster such as US hyperinflation would be. If the dollar-to-groceries ratio changes by a factor of a thousand, then the gold-to-groceries ratio probably won't stay constant as people become more interested in groceries than in jewelry, which would tend to push the ratio down, and as people panic out of other investments, which would make it go up.

 

know when to walk away know when to run lol i think were all in the same boat
you in the us me in the eu .
and yet china holds all the cards well they have a reserves that are not printed
as of today $2399bn now that is a lot can i say that again $2399bn wow
now the dollar is makeing a rally at the moment but what would happen if china were to dump the dollar or the euro and side with others that i wont mention
that would make both sides wake up and stop our euro and your $ going aganst each other .
and the reason i say this is very simple i went without water through the christmas and now i dont feel the same of any pms that i own
as they would not unfreeze my house this is just my op
dave

 

Not to be too materialistic (which I'm not) but if we get inflation, and say gold rises to around $3,000 - $4,000.

Would the price of automobiles go up or down? Or does it depend on your POV if you're holding gold or USD?

The average new Honda Civic costs $15-$16K.

So would it shoot up to $20K?

 

Man, sorry about your water situation. Hope it's fixed now!

I have thought of that problem in the "survival" money area. If the dollar goes down for the count, worthless, and the price of gold is "infinite," as someone said, how can you use the gold to pay for a tank of gas? Who could give change? (Guess I'd better buy in one-gram bars instead of Sovereigns and Eagles!)

Not that I'm a survivalist, but ya never know for sure!

 

I got a 1 gram bar you can buy...I would rather have something worth while...

 

See that's the thing, people have their own POV and reasons for investing in gold. So really, depending on your outlook of the future, depends on what you do with gold.

Honestly, if you think we're going to have a "mad max 2012 end of the world" scenario, then gold is the last thing you want to be spending any money on.

If you really think things are going to get bad (anarchy), then you need to invest in some place in the middle of the forest like a log cabin, plenty of ammo, food, water etc...that's more important than gold.

My absolute only reason for holding on to gold is for pure purchasing power. I believe prices will get higher and higher in all things we do and touch. So all gold/silver will do for me is to help hedge against that as much as possible.

The USD is dripping purchasing power, gold (logically) should therefore go up. It would be absolutely illogical for gold prices to go down simultaneously with the USD. If it does in some odd manipulation, then you didn't lose anything, but if it goes up, while the dollar goes down, you're doing the best you can fighting inflation.


OT: The average interest you get in checking/savings account is around 0.50%, seriously, that is an absolute joke.

 

If the dollar "goes down for the count," don't worry. There won't be any food or gasoline or electricity or water, so you won't need any money. The reason for buying gold should be because the fundamentals look good for the metal, and they do. It is very unfortunate for serious gold investors that a small but vocal number of survivalists make everyone sound nuts.

 

The whole post was well said, thanks for that. There is a pretty easy test to tell if you are a bit too ideological, ask yourself if you know anyone either more conservative or more liberal than yourself, if you cannot then you might be advised to moderate your views a bit.

I am glad that the moderators on cointalk do not let the content devolve into the eternal right vs left, liberal conservative rasslin match.