In case you folks missed it..... http://www.theage.com.au/business/dump-your-gold-in-favour-of-shares-20110906-1jvl5.html What a bunch of turkeys. More gold for us during the re-evaluation I suppose.
I think so too GP. That article is morally criminal. The heading of it is telling people what to do "Dump your gold in favour of shares". A subliminal message in the form of a bold headline
Agree Geewiz, that the article is morally criminal, noting the beginning of the second paragraph that states 'Not surprisingly, they flocked to the so-called safety of gold, pushing its price past $US1,900 an ounce for only the second time ever and to a fresh all-time peak of $US1921.15.' So -called huh? THE CHF was just devalued by 10% 6 hours ago, real safe currency there, how long until RBA does something similar? Big agenda here, they keep calling gold an 'investment', not a 'hedge'.
I don't pretend to fully understand what gives with the SNB wanting to devalue the CHF - I have some more to learn on many fronts it seems. But, (in the interests of keeping the forums polite and clean) golly gee whillikers, there are some journalists whom I'd love to rub their own articles into their noses in some time to come! You guys are right - this diatribe borders on the criminally irresponsible. One can only explain it in one of two ways; (1) The journo's really are that blind/stupid, and actually believe this crap themselves, or (2) Someone at the top (of the media empires) is calling the shots and telling them what to write (which plays into the conspiracy theory stuff a bit - but I'm beginning to believe that there is some group/organisation/something that's trying to push the common bloke out of the picture mostly/entirely - and stuffed if I'm playing their hand of cards... they can park that lot where the sun doesn't shine). Blind Freddy in a dark mineshaft that's been sealed over after they blindfolded him and put a bag over his head can see that the international monetary system has a burning fuse on it - and it's not likely there's much fuse left. In the words of James Earl Jones just before NYE 1999 - "Stuff's gonna splode!"
Strong currency means your domestic product is expensive, making people less likely to buy from you. In the long run, this kills industry and chokes spending. When this happens, there will be deflation. But how can deflation be bad? Since it means the cash you have is worth more. Here is how: Deflation encourages money hoarding and kills spending, so overall economy gradually grinds to a halt. What happens then is people will start losing job, which translates to loss of income. Things might be cheaper but there is still living expense that will drain people's saving anyway, without income, there is no way anyone can survive prolonged dead economy.
I love these articles. I am no where near my oz goal in either metal, let them keep the speculators away as long as possible until I am done and can forget about my stack. Sound money will come back with a vengeance with or without twits like this talking to sheep at the Age.
This is the survey http://www.gallup.com/poll/149195/americans-choose-gold-best-long-term-investment.aspx
Well newspapers pontificate about many things and the the Age is a particularly bad left wing rag I don't bother with it. The fourth estate has in particular lost it's way. GK Chesterton had it right when he said Journalism "writing badly on an enormous scale" Journalist "one who is vastly ignorant about many things, but who writes and talks about them all." I manage our SMSF and a fair amount in gold and silver because since managing it I have seen that world economies and particularly the West are at the point of collapse. I think cheap product from China and elsewhere plus stupid management is killing us. I started investing in June of 2009 since then I have struggled to keep afloat in the markets. I am a little under which I think is really a success and will serve me well when they turn (if ever). Gold and silver on the other hand are going very well. More than 26% gain and currently returning $540 a day seven days a week. Can't go on at that pace but hell it feels good.
Totally disagree with this. Strong currency means your domestic product is expensive to foreigners, but makes it cheaper for australians plus we can buy cheaper products from overseas. So for manufacturers who think they lose out on exports will gain on domestic selling plus if they use imports for raw materials they will gain there too. Deflation does encourage money hoarding/saving sure, which means there is more capital to be lent out to business to expand or entrepreneurs to start new businesses and create more jobs or capital investment for innovation to make goods even cheaper etc. So all in all the people become more prosperous. In and inflationary economy, there is no savings so capital lent has to be created from thin air based on no savings meaning no capital. so its like a ponzi scheme hence why so many business fail. Inflation ends up pushing the middle class into poverty because when the money gets created it goes to a handful of people first so they purchase goods before the prices go up...by the time the general people get their hands on the money its worth less than before and has no purchasing power. hence we all are getting great incomes but live like crap.
The only problem with this is that the domestic Australian market is much tinier than the Global market...Also... If we can buy cheap goods overseas why buy local?
I try to buy as much local product with reason. Good for my environment, good for the economy, and usually less hassles if something goes wrong and I require customer service. Back to that stupid article the writer says its unscientific to use past performance to predict future results yet contradicts himself using past stock returns over decades as a reason to buy shares. So I guess past performance is only relative to stocks in a positive and pms in a negative!
Yes, it gets cheaper to manufacture, but without spending, you can manufacture all you want but without buyers how are you going to realise profit? Without spending and economy slows down, there will be less borrowing to invest in business. People don't invest during decreasing demand. Not all capital is created out of thin air, the role of banks in the economy is to keep the money moving. Inflation does not make us poor, bad financial management does. Say inflation is at 4.75, savings rate is above that, so in theory you are ahead of inflation if you put your money in ubank. A little inflation is good for the economy. Deflation on the other hand sounds good to us personally. Because we think we can spend less while keep earning. Well deflation hits everyone including wages, so at the end of the day prolonged deflation is wealth destroying. Don't trust me? Read up on japan local economy and great depression. without globalisation, Japan would be experiencing depression since last decade.
I dont agree that deflation would encourage hoarding and eventually crash the economy. Hoarding may occur only if people are expecting the deflation to be of a very temporary nature. if they know that prices will remain flat or gradually decrease with time then there is not much incentive to hold out (hoard) and the "i want it now" syndrome will reign supreme. it would seem that you have fallen for the greatest lie perpetrated by central bankers and other numnut "economists" who [del]believe[/del] want you to believe that eternal inflation is good for you and the economy... BALLLS!!!
You are regurgitating some of the bullshit they pass off as "economics" here and in other western countries. Try reading up a bit on Austrian Economics ... Also. I'd suggest you subscribe to these two daily financial newsletters: http://www.moneymorning.com.au http://www.dailyreckoning.com.au/ Read these contrarian newsletters for a couple of months and see how you feel about your viewpoints on inflation/deflation afterwards.
I have been reading them. Like I said a little inflation is good. Now read on great depression, remember during those times, money was gold standard but over investment happened (arguably some inflation during these period), followed by long period of deflation. Prior to great depression, money supply is regulated because it is gold standard, but it did not avert the great depression. I can understand everyone wanting to go back to gold standard, but when we were on gold standard, the same problem exists too. So I am not sure if inflation is the devil here. I am more convinced that positive loop during hot economy and bad financial education for the mass is the reason boom bust cycles continue to happen. If I disagree with you, can you use nicer words in your argument? I have not discounted even one of your argument and have answered nicely. Healthy arguments are constructive, attempting to dismiss my existence entirely by calling names and completely pooping on my arguments does not help me at all. Can we continue this while keeping it civil please? I would like to hear what you have to say and I think I have been respectful enough with my wordings.
you're gonna give me a complex here mate - i'm being as nice as i possibly can! it's not easy... :lol: from my understanding of things, the Great Depression was exasperated by government meddling. The US economy seemed to do just fine on a gold standard during the 19th and early 20th centuries where there was virtually no inflation.
Thanks for being civil, it makes it easier to communicate. Anyway: You are correct, although indirectly. The government expansion of money supply of 1920 caused the first significant case of inflation and over investment, then significant deflation follows in 1930. Prolonged even further by more intervention etc. However, austrian economics made an error in predicting spending behavior during deflation. The great depression was a great time to observe and gather data for deflationary behavior, Japan also the same. In theory, small inflation (0.1-1%) is ok because it is almost negligible and encourages stability, even 0 inflation is ok, some deflation in the small range also won't destabilise economy. Inflation and deflation starts to wreak havoc when it starts getting too high. What is too high depends on a lot of factors like global trade, population, cash supply, resource availability, etc. Basically very complex and hard to put a blanketing statement on economy. In the period of 1770-1900 there was inflation but so small it is negligible and there were cases of deflation too (through quality increase in goods and services). There is never a one answer fit all in everything, economics also subject to that rule. Austrian economics is interested in stability and therefore its models does not accomodate high inflation and high deflation. Don't start flaming and saying I defend keynes etc, I don't. I personally believe eventually we will evolve to unified/new economic theory that incorporates keynes, austrian, classical, neoclassical etc. There is no point defending one theory because the answer lies in evolution which incorporates multi-theory. It is more constructive if we contribute to discussion and develop new economical models that took into account past theories. Past theories = cumulative success and failure, so if you discount them completely, you run the risk of reinventing the wheel.
