"As with Schiff, Rogers and pretty much everyone else these days, Tice is concerned about the “debasing” of the U.S. dollar and our reliance on foreigners to fund the deficit.
Unlike others of the Austrian School of economics, however, he does believe the government was right to spend money last year because “we were going through a meltdown…”"
Huh? How does someone claim to be from the Austrian school of economics and claim that the government should spend money? It is garbage like this that give the Austrian school a bad name.
Supply and demand. With a second crisis coming, the demand for dollars will increase, as stocks are sold and banks go bankrupt. The increase in the price of dollars will necessarily drive down the prices of all commodities, including gold. The fall in the price of gold will feed on itself when short-term investors begin to drop the commodity.
Good explination. Too bad it screws with my current (albiet simple) view. Right now, some are calling for a collapse in the American dollar and a collapse in the bond market. But that isn’t happening yet because the banking sector is afloat in cheap credit right now. But it’s afloat on cheap credit because of the introduction of new cash… which would weaken the dollar, but a lot of that money isn’t quite getting out into the economy, while a lot of credit destruction is occuring. But while the credit destruction is occuring, there is deficit spending that brings new cash into the economy.
…
???
Anyways, I think you and some others see a credit crisis coming, while others see a currency crisis coming. Is it possible that both happen at or around the same time, driving commodity prices up? I think commodity prices would go up, seeing as the banks are loaning out a lot less money (even though the interest rate is very low) meaning there would be less investment in higher-order production, such as primary resource gathering.
I don’t know what’s going to happen or when it’s going to happen, but I’m pretty sure it’ll be bad.
The Great Depression ended with the end of WW2. Draftees returned to the US labor pool and capital was freed up by repeal of FDR’s socialist policies. The US also enjoyed a superior economic position relative to the rest of the world because it was spared the large-scale destruction of the war.
I think the current fiasco grinds on for some time. Like KK said, people will start sitting on cash. When interest on the debt sends us completely underwater, that’s probably when people start dumping their dollars. No idea what happens then. However, I don’t think the central government will be able to paper it over as in the past because the US nation no longer has much cohesion.
Could you please explain that last sentence. My qs are:
What is the “it” that the govt won’t be able to paper over? People dumping dollars?
What does “paper it over mean”? Print a lot of money? How will conceal the fact that people are dumping dollars?
What do you mean the US nation no longer has cohesion?
Do you mean perhaps that people will dump their dollars, the govt will try to newspaper it over, meaning flood the media with reassuring messages that all is OK. But it won’t work cause people don’t trust them anymore?
Adding liquidity and passing legislation. In the 1930’s, people just gave up their gold b/c they considered themselves good Americans working for the good of America. It doesn’t always seem that way, but people really are a lot more cynical about government now. Also, like all empires eventually do, the US is beginning to fracture along its ethnic and cultural lines.
