Breaking the last bubble

Commodities, real estate, and interest rate products:
The last bubble left to burst could be debt instruments… and perhaps in times of potential turmoil investors are holding onto US dollars or acquiring more, but it goes beyond the belief of a stable political system, the US military is still perceived as a dominant force, and if you have to think about where to stash your money there doesn’t seem to be an accepted viable second choice. When that happens that nation will experience prosperity, but until that time some regions of the world may experience substantial currency declines like Iceland and South Korea. So, fundamentally it could be said that after a long period of time investors flee the US dollar but since July 2008 the US dollar index appears to have sustained upward momentum.

Month  Dollar Index  
Dec 00 104.65
Dec 01 109.51
Dec 02 101.48
Dec 03 86.21
Dec 04 80.10
Dec 05 85.65
Dec 06  80.89
Dec 07  73.69
Dec 08 80.69
   
Jul 08 70.91
Aug 08 74.09
Sep 08 75.51
Oct 08 80.39
Nov 08 82.74
Dec 08 80.69
Jan 09 81.01
Feb 09 83.11

As interest rates increase it could trigger a debt bubble collapse. Whether it’s corporations, municipal or national government debt some players in the game may find themselves overextended and unable to pay.So while there are people that always scream buy gold or silver whether the economy is on the cusp of a crisis or not (these are the folks that make their money by selling silver and gold coins) if there is a severe long-term crisis large quantities of gold and silver coins aren’t practical. There’s no formally established and tested medium of retail/consumer exchange. I’d rather have access to clean water. Your bartering skills will be what matters – and your time can be exchanged for goods, for example in the Community Oriented Mutual Economy which makes sense to have on offer in a community regardless of times of prosperity or gloom. Last October a family member spoke of the gold coins he purchased. He had to buy a safe and then had to have it installed. Considering the overhead it’s tough to come out ahead financially. Fortunately the price of gold rose significantly since he made his purchase but he’s not planning to sell the coins, he wants to pass it on to his children. I commented that his children would sell them – his wife smiled, she wasn’t a supporter of buying the coins.But why worry about the economy entering despair? There is a built-in safety net… rich people still want to protect their wealth so the system won’t evaporate, it’ll trudge along so the rich people can maintain their relative affluence.

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