[quote=antelope_sniper]TF, Gold backed is a subset of asset back currencies. I just used the broader term. As for their relevance today, the only currency still partially backed by an assets is the Swiss Franc, with is 40% gold backed.
As for the severity of the calamity, I'm asking about your vision of the severity less in terms of financial numbers (you commented on a possible $240 a barrel oil), but in terms of suffering. 10% unemployment? maybe 25%? Will inflation devalue the welfare checks to the point the underclass riots?
How does Republican control of both the House and Senate affect your timeline?
Are you assuming QE will not be reversed, an if it is, like I predict, how will that affect your model regarding the timing and severity of the calamity? [/quote
AS,
OK, here are some thoughts:
1. - I do not "know" and my thoughts amount to only views and are certainly subject to change as parameters change. All thoughts will change if we see a �shooting war� of significant magnitude.
2. - I would not be surprised to see the DOW head up to 21,000 - 25,000 as the dollar appreciates, being the best currency amongst a host of other weaker currencies. This may happen in the next 18-24 months. Money begins to leave US bonds/t-bills. The world continues to see a gradual reduction in business activity as the QE, in its various forms, around the world does not yield economic growth. Yes, QE continues. Money begins to flow from other countries to the US. This movement of money takes place as folks become more and more concerned about the lack of growth in anything but debt. A gradual crisis of confidence builds and the smart money moves first. We will see "inflation" in asset prices as "money" loses confidence in financial instruments. This is why the stock market goes up. Money searches for any type of hard asset that is not someone else's "promise to pay." Gold moves up with the DOW and the dollar. Other commodities languish.
3. - A Republican Congress means little as far as �solutions.� Congress and the Federal govt� continue in a state of deadlock with recriminations and blame abounding.
4. - The situation with Russia and the ME seems to improve and politicians declare victory and vow to work on world economic growth. However, ME oil production is plagued by continuing political issues within the ME. They continue to fight amongst themselves.
4. - Unemployment continues to rise and the middle class is further pressed. US gov�t increases all types of benefits so as to reduce pressure on the populace. Taxes are increased in attempts to cut deficits. Much political unrest ensues. Divisive issues such as race relations get much worse. Weak government begins more class demonization. I would not be surprised to see riots of significant magnitude. Police responses are insufficient. Vigilante action is not uncommon in many areas. Some areas are peaceful and some are not. As always, avoid the big cities and the coasts.
4, - The chickens come home to roost on the immigration issue. Illegal aliens are on the voting rosters and their impact is huge. He who robs Peter to pay Paul can always count on the vote of Paul.
5A. - The economic situation does not improve and then money begins to move in ways that are sudden and disturbing. Oil and gold fluctuate madly. Currencies wobble and there is great media coverage of a worldwide financial calamity. World leaders get together and proclaim a new economic order must begin. We find that large corporation and countries have been settling business debts/payments using SDRs and this has been going on for a couple of years. World leaders pledge to support the �new currency� and most people are glad and believe in it because they are weary of the impoverishment, crime and trouble. Countries yield sovereignty to this �new economic order.� The USD remains in some form but may only be used in North America�and only by the peasantry.... the euro will be used in Europe and Africa and the �yuan� used in Asia. The SDR currency is valued by a basket of ever changing commodities and by the $, Euro and Yuan. This seems to work well for a while. Precious metals do well as they are large components of the SDR basket. The new economic order does not work well in many areas of the world and barter economies emerge. Some bartering will be on a very large scale. This happens in 5-15 years.
5B - The economic situation does not improve and then money begins to move in ways that are sudden and disturbing. Oil and gold fluctuate madly. Currencies wobble and there is great media coverage of a worldwide financial calamity. Somebody..? Russia perhaps does not make debt payments to their European banks. Banks begin to fail. Confidence is lost VERY quickly. Other nations and banks repudiate their debt and confiscate assets of depositors. Capital controls have been implemented. Gold� and other hard assets rise dramatically in price and nervous money searches for safe harbor. Commerce begins to break down as nobody can figure out how to get paid. Food deliveries stop ...etc� police are overwhelmed and have walked off the job in some areas. Martial law was declared at some point. We get a Mussolini type in power and the American populace are initially happy as some promise of order has come. We get a �new dollar.� Indonesia and Peru are two great examples of currency devaluation and replacement with some new monetary instrument. This happens in 5-10 years.
Better not ask me what I think ever again.
TF
