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I appreciate you posting your thinking on this. I suspect others share your model. I strongly reject the metaphor of oil and water, that there are different mon
by jsmcgd 6y ago
I appreciate you posting your thinking on this. I suspect others share your model. I strongly reject the metaphor of oil and water, that there are different monies. In fact if there was such a thing I wouldn't be as worried. Problems could be contained to specific domains. But as you will see one crisis will beget another and another, and no sector will be spared. One will infect the other. There are no barriers. Investors are not constrained in anyway exchange bonds for stocks in a closed system. They can, and do exchange any items of value (cash, commodities, shares, bonds, ETFs, derivatives) and they can do so in multiple markets. Governments will actually try to prevent this through shuttering markets, capital controls etc but they will be too late to prevent economic harm, to say nothing of long term damage to sentiment. Any measures taken merely delay the problem which will be waiting for them when the markets do re-open.
Economies are very much complex systems, not a steady state systems. At times it behaves like a steady state, but at other times there are significant shifts that break the previous paradigm. You only have to consult any history book of the 20th century to prove this to yourself. I strongly suggest that this a Pascal type wager that you do want to take. You want to assume my argument is correct and hedge against massive inflation. Your livelihood, and possibly your life depends on it.
One way you might convince yourself is if you look at similar situations in economies that were not governed by the Fed. There are many: https://en.wikipedia.org/wiki/Hyperinflation#Notable_hyperinflationary_periods https://en.wikipedia.org/wiki/Hyperinflation#Notable_hyperin...
I would argue that the Fed, IMF etc actually agree with my position and that is what is driving their desire for new Central Bank Digital Currencies (which IMO are a sham to profit of the public ignorance of actual cryptos and provide a smoke screen while a new global currency is rolled out that will be used to economically control everyone) however I strongly doubt that they will be able implement such a thing before the collapse begins (and it merely delays the inevitable anyway).
Therefore governments (where they can) will default to precious metals to back their currencies. The major winner will be China, as it has the world's largest actual gold reserves (despite the official figures). The US will then be using a gold dollar and China will dictate its price. China now effectively rules the world.