6 ms·

I don't think this is remonetization, but I do think the dollar bubble is popping. QE has caused excessive supply, so massive inflation is coming. Moving to gol

by weagle2001 15y ago

I don't think this is remonetization, but I do think the dollar bubble is popping. QE has caused excessive supply, so massive inflation is coming. Moving to gold is a good way to avoid the dollar bubble and also all of the other bubbles (real estate, debt, etc). Gold is also a bubble, but it will pop after the dollar adjusts.

david927 15y ago
It's not just QE, either. The movement of pricing oil in alternate currencies is potentially devastating.
chalst 15y ago
From a Keynesian perspective, one accepted by many non-Keynesians, QE is not yet in danger of driving inflation, because there is still deficient demand in the US economy. Bigger dangers to the dollar come from two directions: (i) America's massive debt burden - the joint public and private sector debt burden is around 350% of GDP, and (ii) America's declining (relatively and perhaps absolutely) competitiveness. The goldbugs are staging a theatre that distracts from what matters. A very brief summary of the case against the gold standard: http://www.j-bradford-delong.net/politics/whynotthegoldstandard.html http://www.j-bradford-delong.net/politics/whynotthegoldstand...
- weagle2001 15y ago
  Just for clarification, when I said "moving to gold" I meant in your portfolio and not as a currency. I'm certainly not in favor of moving back to the gold standard...I think that ship has sailed. As I understand it, an increase in dollar supply can take 1-2 years to cause inflation. A 300% increase has to cause inflation, and they're still printing (paying banks to keep excess cash). The bubbles in real estate, personal debt, and stocks are just the beginning. The government debt and dollar bubbles are coming next. That's why I'm buying precious metals and foreign currencies...I don't see how the recovery will happen before a massive correction occurs.
  - chalst 15y ago
    QE is not printing money, rather it is making lots of very short-term credit available. There is no increase in the narrowest sense of money supply directly coming from QE, and the increase in broader definitions of money vanishes within days of QE being stopped. There are (highly controversial) arguments that QE leads to inflation, but they are about indirect effects of QE's cheap credit. The point of QE is to do with deleveraging, i.e., the reduction of that 350% aggregate debt burden. Deleveraging is inherently deflationary, since money spent on paying off debt is money that is not spent on consumption. QE is supposed to smooth out that process, to allow demand to grow while this deleveraging process goes on. I think there's a case for investing in precious metals, but it is about the worst case scenario: it can't lose all its value, and there are scenarios where it appreciates where practically nothing else does. My investment tip: I think German property is still undervalued, despite over a year of boosterish talk in the financial media. It's fairly volatile, and rents in Germany are low so the value case is long term, but that long-term case is pretty strong. See http://online.wsj.com/article/SB10001424053111904480904576497972650562748.html http://online.wsj.com/article/SB1000142405311190448090457649...

david927 15y ago

It's not just QE, either. The movement of pricing oil in alternate currencies is potentially devastating.

chalst 15y ago

From a Keynesian perspective, one accepted by many non-Keynesians, QE is not yet in danger of driving inflation, because there is still deficient demand in the US economy. Bigger dangers to the dollar come from two directions: (i) America's massive debt burden - the joint public and private sector debt burden is around 350% of GDP, and (ii) America's declining (relatively and perhaps absolutely) competitiveness. The goldbugs are staging a theatre that distracts from what matters. A very brief summary of the case against the gold standard: http://www.j-bradford-delong.net/politics/whynotthegoldstandard.html http://www.j-bradford-delong.net/politics/whynotthegoldstand...

weagle2001 15y ago
Just for clarification, when I said "moving to gold" I meant in your portfolio and not as a currency. I'm certainly not in favor of moving back to the gold standard...I think that ship has sailed. As I understand it, an increase in dollar supply can take 1-2 years to cause inflation. A 300% increase has to cause inflation, and they're still printing (paying banks to keep excess cash). The bubbles in real estate, personal debt, and stocks are just the beginning. The government debt and dollar bubbles are coming next. That's why I'm buying precious metals and foreign currencies...I don't see how the recovery will happen before a massive correction occurs.
- chalst 15y ago
  QE is not printing money, rather it is making lots of very short-term credit available. There is no increase in the narrowest sense of money supply directly coming from QE, and the increase in broader definitions of money vanishes within days of QE being stopped. There are (highly controversial) arguments that QE leads to inflation, but they are about indirect effects of QE's cheap credit. The point of QE is to do with deleveraging, i.e., the reduction of that 350% aggregate debt burden. Deleveraging is inherently deflationary, since money spent on paying off debt is money that is not spent on consumption. QE is supposed to smooth out that process, to allow demand to grow while this deleveraging process goes on. I think there's a case for investing in precious metals, but it is about the worst case scenario: it can't lose all its value, and there are scenarios where it appreciates where practically nothing else does. My investment tip: I think German property is still undervalued, despite over a year of boosterish talk in the financial media. It's fairly volatile, and rents in Germany are low so the value case is long term, but that long-term case is pretty strong. See http://online.wsj.com/article/SB10001424053111904480904576497972650562748.html http://online.wsj.com/article/SB1000142405311190448090457649...