A reader in New Hampshire wrote to ask for my near-term economic predictions. Here they are, in a nutshell: Major turmoil in global credit markets will continue. Greece will require a huge, painful bailout.The credit pool is presently near collapse, and desperate attempts will be made to re-liquify the system. This means Trillions of new dollars, again created out of thin air, by Ben Bernanke’s legerdemain. The job and real estate markets will continue to deteriorate. Taxes and “fees” will be squeezed out of us turnips, by clever new artifices. Currency inflation will become an all to obvious (and popular) alternative form of taxation, in all of the developed countries. The cost of living will become painful. There will be some spectacular defaults, including some municipal bonds. Several large hedge funds are likely to go under, as derivative counter-party risk skyrockets. There will be some brokerage house problems as well, possibly requiring yet another expensive bailout. Precious metals will continue in bull market trends, but will become even more volatile, with $300 daily swings in gold becoming commonplace. There will be some huge scares in the metals markets, when margin requirements are raised to absurd levels on futures contracts. But the lights will stay on and the supermarkets shelves will still stay stocked. Probably.
Michael Z. Williamson (SurvivalBlog’s Editor at Large) sent the link to a fascinating web site: Priced In Gold. Mike quotes an e-mail from a friend about the site: “Good charts, and pretty interesting. For example, when the Federal minimum wage was introduced in 1938, at $0.25/hr, it was 222mgAu/hr. Now, despite being $7.25/hr, the minimum wage is only 127mgAu/hr. Or, in terms of what the Feds think is a minimum wage, they’re admitting that they’ve inflated the currency by a factor of more than 50, relative to gold.” And Mike pointedly provides another way of looking at this: “They’ve depreciated our buying power by almost 50%.”
K.A.F. sent this alarming news of potential chaos from Greece: Country in a state of emergency.
Marc Faber Says Gold Is “Dirt Cheap” & The Price Could Reach $10,000 Per Ounce
Items from The Economatrix:
Consumer Borrowing Up for 10th Straight Month
WikiLeaks Discloses the Reason(s) Behind China’s Shadow Gold-Buying Spree