Gyroscopic Investing

Flying under the radar of all the bickering about restroom rights and Russians, the big picture is not getting any better.

Break down that national and state and local debt by the number of US citizens, and we find that we each – every man, woman, and child – owe over $70,000. Worse yet, the total debt per taxpayer is over $190,000 and rising fast. If you include unfunded liabilities, the total debt per taxpayer rises to around $1.2 million, give or take.

http://ggc-mauldin-images.s3.amazonaws. ... 8_TFTF.pdf

Includes data on the intake of various taxes, and who pays them.

I can't see how the US Dollar can possibly survive with any purchasing power over the long haul.

If I owe my wife $1,000,000 and she owes me $1,500,000 does the grocery store owner care about our debts when we walk in to buy a loaf of bread?

Mountaineer wrote:If I owe my wife $1,000,000 and she owes me $1,500,000 does the grocery store owner care about our debts when we walk in to buy a loaf of bread?

If you try to pay with an IOU, yes.

ochotona wrote:I can't see how the US Dollar can possibly survive with any purchasing power over the long haul.

It can't. Which is why we have gold.

Libertarian666 wrote:

ochotona wrote:I can't see how the US Dollar can possibly survive with any purchasing power over the long haul.

It can't. Which is why we have gold.

I never get those commercials on Fox where William Devane shows what the U.S. debt is and says that now is the time to buy gold.

Just what is the relationship between U.S. debt and the price of gold any way? Is there any tangible evidence of a relationship? Best I can figure is that he's saying that with all that debt everything's going to come crashing down so you better have gold to be safe. He could be right and he could be wrong but how does anybody know what the outcome of a 19.5 trillion dollar for a country like the U.S.A. is going to be? What statistics do you have to go on? And how do you know gold will be safe in a catastrophic event like what he's predicting?

farjean2 wrote:

Libertarian666 wrote:

ochotona wrote:I can't see how the US Dollar can possibly survive with any purchasing power over the long haul.

It can't. Which is why we have gold.

I never get those commercials on Fox where William Devane shows what the U.S. debt is and says that now is the time to buy gold.

Just what is the relationship between U.S. debt and the price of gold any way? Is there any tangible evidence of a relationship? Best I can figure is that he's saying that with all that debt everything's going to come crashing down so you better have gold to be safe. He could be right and he could be wrong but how does anybody know what the outcome of a 19.5 trillion dollar for a country like the U.S.A. is going to be? What statistics do you have to go on? And how do you know gold will be safe in a catastrophic event like what he's predicting?

Please name a single case when a totally fiat currency has lasted more than a few decades.

I can't think of any offhand.

As for whether gold will be safe, please name a time when it has lost all its value.

I can't think of any cases like that either.

Libertarian666 wrote:

farjean2 wrote:

Libertarian666 wrote:
It can't. Which is why we have gold.

I never get those commercials on Fox where William Devane shows what the U.S. debt is and says that now is the time to buy gold.

Just what is the relationship between U.S. debt and the price of gold any way? Is there any tangible evidence of a relationship? Best I can figure is that he's saying that with all that debt everything's going to come crashing down so you better have gold to be safe. He could be right and he could be wrong but how does anybody know what the outcome of a 19.5 trillion dollar for a country like the U.S.A. is going to be? What statistics do you have to go on? And how do you know gold will be safe in a catastrophic event like what he's predicting?

Please name a single case when a totally fiat currency has lasted more than a few decades.

I can't think of any offhand.

As for whether gold will be safe, please name a time when it has lost all its value.

I can't think of any cases like that either.

Well, I'm a PP'er so obviously I believe in the value of gold and I'm not arguing against it in a balanced portfolio.

I honestly can't name a single case where a totally fiat currency has lasted more than a few decades but then I haven't spent much time thinking about it. If it's true that has never happened is there some universal law that says it can't and specifies a maximum time limit? Or that 19.5 trillion dollars in debt in a country of X number of people with GDP of X is the tipping point?

Also can't name a time when gold lost all its value. As a human I'm more concerned with whether all those gold coins will keep me and my family from starving to death if things get so bad you would need to use them to transact business. Maybe people will value something more than gold. Maybe bullets, or even food.

Just a matter of balance the way I see it.

ochotona wrote:I can't see how the US Dollar can possibly survive with any purchasing power over the long haul.

It can't. That is the beauty of fiat money from the government's standpoint. They want inflation; they need inflation. For them, it's the most perfect tax ever devised. Nothing else is even close.

Ironically, the lack of inflation is making the deficit problem more ominous. I don't see any way out except inflation, which would be a Pyrrhic victory.

farjean2 wrote:

Libertarian666 wrote:

farjean2 wrote:
I never get those commercials on Fox where William Devane shows what the U.S. debt is and says that now is the time to buy gold.

Just what is the relationship between U.S. debt and the price of gold any way? Is there any tangible evidence of a relationship? Best I can figure is that he's saying that with all that debt everything's going to come crashing down so you better have gold to be safe. He could be right and he could be wrong but how does anybody know what the outcome of a 19.5 trillion dollar for a country like the U.S.A. is going to be? What statistics do you have to go on? And how do you know gold will be safe in a catastrophic event like what he's predicting?

Please name a single case when a totally fiat currency has lasted more than a few decades.

I can't think of any offhand.

As for whether gold will be safe, please name a time when it has lost all its value.

I can't think of any cases like that either.

Well, I'm a PP'er so obviously I believe in the value of gold and I'm not arguing against it in a balanced portfolio.

I honestly can't name a single case where a totally fiat currency has lasted more than a few decades but then I haven't spent much time thinking about it. If it's true that has never happened is there some universal law that says it can't and specifies a maximum time limit? Or that 19.5 trillion dollars in debt in a country of X number of people with GDP of X is the tipping point?

Also can't name a time when gold lost all its value. As a human I'm more concerned with whether all those gold coins will keep me and my family from starving to death if things get so bad you would need to use them to transact business. Maybe people will value something more than gold. Maybe bullets, or even food.

Just a matter of balance the way I see it.

I don't know when the end of the dollar will come. Neither does anyone else, because it cannot be known in advance.

But that it will end one day is about as certain as anything other than the laws of physics.

BTW, there is only one circumstance in which a person of moderate means can multiply his wealth many-fold in a short period of time without taking undue risk: as a result of a currency reformation. This is quite likely to happen one of these days, but as mentioned above the timing is impossible to know. If it does happen, those with gold will be very happy about the change in their wealth, even if other circumstances may be difficult.

I want to be able to go on Bogleheads when that happens.

I Shrugged wrote:I want to be able to go on Bogleheads when that happens.

You aren't the only one.

Libertarian666 wrote: I don't know when the end of the dollar will come. Neither does anyone else, because it cannot be known in advance.

But that it will end one day is about as certain as anything other than the laws of physics.

BTW, there is only one circumstance in which a person of moderate means can multiply his wealth many-fold in a short period of time without taking undue risk: as a result of a currency reformation. This is quite likely to happen one of these days, but as mentioned above the timing is impossible to know. If it does happen, those with gold will be very happy about the change in their wealth, even if other circumstances may be difficult.

So, here's my question: when that day of currency reformation happens, is it only physical gold that helps, or will paper gold (i.e., ETFs like IAU) work properly to help someone like me?

stuper1 wrote:

Libertarian666 wrote: I don't know when the end of the dollar will come. Neither does anyone else, because it cannot be known in advance.

But that it will end one day is about as certain as anything other than the laws of physics.

BTW, there is only one circumstance in which a person of moderate means can multiply his wealth many-fold in a short period of time without taking undue risk: as a result of a currency reformation. This is quite likely to happen one of these days, but as mentioned above the timing is impossible to know. If it does happen, those with gold will be very happy about the change in their wealth, even if other circumstances may be difficult.

So, here's my question: when that day of currency reformation happens, is it only physical gold that helps, or will paper gold (i.e., ETFs like IAU) work properly to help someone like me?

I wouldn't rely on anything complicated like ETFs to survive a phase change like that.

Physical gold stored in a vault in a reliable country, like Switzerland, should be okay.

It may just end not with a bang, but with a whimper.