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<p>[QUOTE=&quot;Rono, post: 1369180, member: 6492&quot;]Howdy,</p><p><br /></p><p>The relationship between the dollar and gold is complicated and changing as we speak.&nbsp; The dollar has been used as for decades as the worlds reserve currency and trade medium of exchange.&nbsp; Many countries are trying to move away from this but it&#039;s a very slow process.&nbsp; Because of this relationship, gold and the dollar often move in opposite directions.&nbsp; </p><p><br /></p><p>Gold is traditionally thought of as a store of value and inflation hedge.&nbsp; As the dollar becomes less of the global reserve currency, it will function less as a store of value and gold should benefit.&nbsp; Note that gold is only flat this past year relative to the dollar.&nbsp; It is up relative to most other currencies.</p><p><br /></p><p>Now, the issue at home is that at the federal level, we face a bar tab of over $100 trillion freakin dollars in Unfunded Liabilities (social security, medicare/aid, various trust funds, debt service, etc.).&nbsp; Similar debts exist at the state and local levels.&nbsp; Private industry has been voiding their debts and promises via bankruptcy court (the pensions get picked up by the taxpayers via the Pension Benefit Guarantee Corp (PBGC)).&nbsp; The problem is that there is no politically feasible way to sufficiently reduce or default, as it were, on these debts NOR is it politically feaible to sufficiently raise taxes to pay it.&nbsp; And the kicker is that they can&#039;t even cut benefits AND raise taxes sufficiently to pay it.&nbsp; Their only option is to monetize it.&nbsp; Ah, there&#039;s the rub.&nbsp; In laymans terms, they&#039;ll just print green backs &#039;til **** won&#039;t have it and pay the tab with those shiny new bills.&nbsp; They call it Quantitative Easing.&nbsp; Ain&#039;t it great to be the gov&#039;t.?!?</p><p><br /></p><p>I&#039;ve seen estimates that in order to get this debt down to a size they can deal with they will have to print so much money</p><p>that they will halve the value of the dollar over the next ten tears in the process.&nbsp; Note that since the Federal Reserve was created back in 1913, the dollar has lost 96% of its value.</p><p><br /></p><p>Now, this would normally resort in some hideous double digit inflation and if out of control, could devolve into Hyper inflation.&nbsp; Right now, they&#039;ve got a lot working to keep the inflation meanies away - globalism and internet shopping, continually shipping jobs to lower cost labor centers, a velocity of money around zero AND good old fashion book juggling.</p><p><br /></p><p>Globalism and the internet have eliminated most all consumer good pricing power, flat screen TV and smart phones are all being made overseas and it&#039;s gotten so that the citizens of japan, korea and tailand are *****ing that their jobs are being sent to vietnam, bengladesh, etc.&nbsp; The velocity of money is around zero right now because the big banks are not lending it out.&nbsp; They&#039;re not lending it out, because interest rates are artificially being kept low by the Fed.&nbsp; It&#039;s called Econ 101 Supply/Demand curves for Price Controls.&nbsp; When the official price is lower than the market feels fare, supply disappears or premiums increase.&nbsp; Nixon gas controls, bullion a couple of years ago, etc.&nbsp; No banker is going to write you a mortgage for 30 years at 4% - sorry, they are all out of money.&nbsp; Now if you want to pay 6%, they&#039;ll talk (or with 30% down payment and an 800 credit score).&nbsp; Anyway, because money is not being loaned out, it&#039;s not circulating.&nbsp; Therefore, inflation is not being felt across the board.&nbsp; As for book juggling, visit</p><p>&nbsp;</p><p><a href="http://www.shadowstats.com/" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://www.shadowstats.com/" rel="nofollow">http://www.shadowstats.com/</a></p><p><br /></p><p>He calculates the basic gov&#039;t stats they way they do today AND how they did them in 90 and how they did them when Reagan was Pres.&nbsp;&nbsp; Right now, unemployment is about 22% and inflation over 6%.&nbsp; If they start loaning money, inflation will go over 10% in a heartbeat.</p><p><br /></p><p>I guess inflation can be described by me going to the store for a loaf of bread in 1960 with a quarter and that same silver quarter today is worth $6-7.&nbsp; Or, they used to have Five and Dime Stores where most items were less than a dollar and many were five or ten cents.&nbsp; Today we have Dollar stores.</p><p><br /></p><p>I believe that we&#039;ll have serious inflation within the next 10-15 years AND it will be stagflation - The Great Austerity is what it&#039;s been labeled.&nbsp; Give it until 2023 to be a flatline sort of bad dream.&nbsp; Probability?&nbsp; 60%.&nbsp; Or, things could finanically implode in some form or another - Probability?&nbsp; 30%.&nbsp; Or things could just be a wonderful economic wetdream of a recovery with a chicken in every pot.&nbsp; Probability?&nbsp; 10%.&nbsp; Note that I&#039;m planning on the former, guarding against the middle and hoping for the latter.</p><p><br /></p><p>peace,</p><p><br /></p><p>rono[/QUOTE]</p><p><br /></p>

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