(6 December 2012, 22:51)Cloud Wrote: Well from what im reading about stuff in the US atm, the dollar is pretty much dead, and its just a matter of time till it hits home over there, and has a chain effect bringing down the rest of europe russia etc.
The price of stuff is going to keep going up quite simply.
The dollar died back in 1971. It's just that nobody noticed.
The dollar came off the gold standard, same as the GBP did much earlier on, I think back in the 1920's or 1930's. Which allowed for the money to be unbacked, and thus able to print more money, without the need for gold to facilitate the increased national wealth. The money supply could increase independently of a nation's wealth. If you have a ratio of £1 to 1oz gold, then you have a pound values to one ounce of gold (this is hypothetical, so let's not be knobs about how expensive gold is). If you then start printing money, so that you now have £1.00 and £1.00, but still have only 1oz of Gold. Has the gold increased in value, or has the pound halved in value? (once again this is only an example, there are much more complex economic models involved, but this is a basic lesson)
The truth is, the gold is still the same. The variable in the equation is the pound coins. Their buying power has halved. However, their buying power has only halved, if everything else doubles in price. If everything stays the same value, e.g. A bar of Chocolate starts at £1.00, when the other pound is created, the chocolate still costs £1.00, then the gold has doubled in value, relative to the other items....providing that the gold is valued at £2.00. So, as you can see, increasing the money supply has a lot of issues. Leaving the gold-standard can play a HUGE problem with currencies.
What America later did, after coming out of the gold backed monetary system, was create the OPEC agreement. This meant that if oil was to ever be traded, that it needed to be traded in dollars......regardless of where on earth the transaction was taking place. Which basically means that America was once again, backed by gold. It just so happened to be black gold. Dollars had value because they were used for oil. No dollars, no oil transaction. Clever hu? NO!!!
This backing system is, at best......retarded!
If there is an unknown amount of oil in circulation, in storage, is useable, tapeable, accessible, and unknown quantities on earth, then how can you use that as backing for a currency? I don't know, but America didn't care. They didn't have gold, but they had oil, and their currency was never going to crash, as long as the world used oil.....which it does.
The fun begins when people stop trading oil, or they stop trading oil with dollars. That's when America will crash!!! That crash then means that a world superpower, could well end up going the way of the Mayans. Or it might go the way of Spain, who were once a dominant world power, now a damaged flailing has-been-country. An also-ran, in the global model. Or it may come back and become a superpower again, like how Germany WOULD be if they weren't stifled by the EU and EuroZone bollocks!
Oh, forgot to mention the babyboomer generation that will be retiring between 2012 and 2016, who will be cashing in their pensions, selling the shares into the market, making an influx of shares....supply/demand.......which will crash the prices of the shares, reducing the value of everyone else's shares, that isn't retiring, and could then lead to another stockmarket crash, bigger than that seen over 2007-2008.
What will happen then? Well, history says that people transition from shared to precious metals. Which, to me, sounds like a great time to sell what I have.
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