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I think the bubble is the US dollar. Currently our debts are being serviced by issuing more debt! Safe places IMO are deflationary assets (gold, and to a much

I think the bubble is the US dollar. Currently our debts are being serviced by issuing more debt! Safe places IMO are deflationary assets (gold, and to a much more risky extent, bitcoin...I know this will start a flame war lol). Another option is foreign assets in countries that are not holding onto a lot of US debt. I'm not an oracle, so I can't predict timing, although I do think it will happen relatively soon in the next 1-3 years.

sheeshkebab 9y ago
Don’t forget how raising taxes in 90s wiped out all deficits and large chunk of debt in early 2000’. The worry back then was then how US would lose leverage in the world if all its debts were gone. Not saying that current level of debt is any good, there are just multiple levels to that story.
- topmonk 9y ago
  Raising taxes didn't do it. It was the horrendous hype generated by the dot com bubble. Having a net surplus was just a blip on the radar which quickly became unattainable as soon as the resulting crash.
  - lsniddy 9y ago
    coupled with Alan Greenspan's promotion of home ownership which eventually led to the subprime collapse
  - sheeshkebab 9y ago
    Capital gains tax was raised in late 80’s and 90’s.
    - topmonk 9y ago
      I'm not denying that. I just don't think the explanation for why the deficit was eliminated was because of that.
TheAdamAndChe 9y ago
I've always liked Warren Buffett's explanation on why investing in gold is pretty silly[1]. Basically, owning gold as an investment is purely speculation, because earning a return requires greater demand in the future. It doesn't have the potential to provide dividends or grow exponentially like ownership in a business does. Gold earns nothing for you over time. Instead of investing in gold, why not invest in a foreign market that's at least partially insulated from the US? [1] http://www.minyanville.com/trading-and-investing/commodities/articles/Warren-Buffett-brka-gold-investing-investing/10/3/2012/id/44617 http://www.minyanville.com/trading-and-investing/commodities...
- Boothroid 9y ago
  Part of the value of gold comes from the many industrial applications of the stuff.
  - logfromblammo 9y ago
    Such as the Indian dowry jewelry industry. All other industrial uses are completely swamped by the creation of human ornamentation. But the thing about jewelry is that the gold in it is usually very easily recycled. So it is not as strongly consumed as the gold used in electronics, which requires a greater effort to recover, if it isn't simply landfilled a milligram at a time. That jewelry use creates a soft reserve, such that it is usually not available to the market, but if the gold price rises high enough, it can start to liquidate, likely starting with the ugliest necklaces. So it would seem that the majority of the value of gold comes from the human desire to possess a tangible, portable symbol of one's wealth. It cannot be taken from you, unless someone finds you and pries it out of your fingers. Paper assets are more amenable to remote interference. Your ownership of a company via stocks may be diluted. Your fiat accounts may be devalued via monetary inflation or seized with the cooperation of your bank. Your bonds may suffer default. The title to your land may be transferred against your will. But that gold necklace is yours, as long as you're the only one that knows where it is. As such, failing to invest in gold is ignoring the risk of a major crash in the modern centrally-banked, fractional-reserved, and fiat-moneyed economy, which is subject to boom-bust cycles. Gold is the asset of choice for those that think that government bonds from too-big-to-fail countries are not actually the default lowest-risk investment. But even then, the gold bugs are undercut by the people who buy condos in underground shelters that anticipate the complete collapse of human civilization, along with barrels filled with small arms ammunition. Buffett's #3, #5, and #6--gold is going long on fear--is definitely true. But I don't think the other quotes are 100% accurate. They have the odor of the Labor Theory of Value about them. Things don't have value because they do stuff, but because people want them. Gold has value because some people want gold, not because it delivers billions of bottles of Coke, or ferries passengers across continents, or summons a driver for you on command. People want gold for different reasons, and some reasons are more predictable than others, but none of those reasons are required to be rational or useful. And that's why the Buffett analysis of gold fails, in my opinion.

sheeshkebab 9y ago

Don’t forget how raising taxes in 90s wiped out all deficits and large chunk of debt in early 2000’. The worry back then was then how US would lose leverage in the world if all its debts were gone. Not saying that current level of debt is any good, there are just multiple levels to that story.

topmonk 9y ago
Raising taxes didn't do it. It was the horrendous hype generated by the dot com bubble. Having a net surplus was just a blip on the radar which quickly became unattainable as soon as the resulting crash.
- lsniddy 9y ago
  coupled with Alan Greenspan's promotion of home ownership which eventually led to the subprime collapse
- sheeshkebab 9y ago
  Capital gains tax was raised in late 80’s and 90’s.
  - topmonk 9y ago
    I'm not denying that. I just don't think the explanation for why the deficit was eliminated was because of that.

TheAdamAndChe 9y ago

I've always liked Warren Buffett's explanation on why investing in gold is pretty silly[1]. Basically, owning gold as an investment is purely speculation, because earning a return requires greater demand in the future. It doesn't have the potential to provide dividends or grow exponentially like ownership in a business does. Gold earns nothing for you over time. Instead of investing in gold, why not invest in a foreign market that's at least partially insulated from the US? [1] http://www.minyanville.com/trading-and-investing/commodities/articles/Warren-Buffett-brka-gold-investing-investing/10/3/2012/id/44617 http://www.minyanville.com/trading-and-investing/commodities...

Boothroid 9y ago
Part of the value of gold comes from the many industrial applications of the stuff.
- logfromblammo 9y ago
  Such as the Indian dowry jewelry industry. All other industrial uses are completely swamped by the creation of human ornamentation. But the thing about jewelry is that the gold in it is usually very easily recycled. So it is not as strongly consumed as the gold used in electronics, which requires a greater effort to recover, if it isn't simply landfilled a milligram at a time. That jewelry use creates a soft reserve, such that it is usually not available to the market, but if the gold price rises high enough, it can start to liquidate, likely starting with the ugliest necklaces. So it would seem that the majority of the value of gold comes from the human desire to possess a tangible, portable symbol of one's wealth. It cannot be taken from you, unless someone finds you and pries it out of your fingers. Paper assets are more amenable to remote interference. Your ownership of a company via stocks may be diluted. Your fiat accounts may be devalued via monetary inflation or seized with the cooperation of your bank. Your bonds may suffer default. The title to your land may be transferred against your will. But that gold necklace is yours, as long as you're the only one that knows where it is. As such, failing to invest in gold is ignoring the risk of a major crash in the modern centrally-banked, fractional-reserved, and fiat-moneyed economy, which is subject to boom-bust cycles. Gold is the asset of choice for those that think that government bonds from too-big-to-fail countries are not actually the default lowest-risk investment. But even then, the gold bugs are undercut by the people who buy condos in underground shelters that anticipate the complete collapse of human civilization, along with barrels filled with small arms ammunition. Buffett's #3, #5, and #6--gold is going long on fear--is definitely true. But I don't think the other quotes are 100% accurate. They have the odor of the Labor Theory of Value about them. Things don't have value because they do stuff, but because people want them. Gold has value because some people want gold, not because it delivers billions of bottles of Coke, or ferries passengers across continents, or summons a driver for you on command. People want gold for different reasons, and some reasons are more predictable than others, but none of those reasons are required to be rational or useful. And that's why the Buffett analysis of gold fails, in my opinion.