Gold, The Government and Insolvency
2009 February 3
Why spot gold looks like a good investment. In recent decades the U.S. has paid interest on Treasuries through increased borrowing, and by printing ever more money. But how will that work in an environment in which the currency is deteriorating at such a perilous rate? One could make the argument that inflation is actually helpful to the U.S. debt position; as the dollar becomes less valuable, so too does the debt it represents. But that doesn't eliminate the obligation to service debt, and since the government will almost certainly not be able to borrow its way out of insolvency — nor to print more money without completely destroying the economy.[tags]gold, gold investing, spot gold, spot gold price, economy, insolvency[/tags]
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The US debt in the hands of foreign governments is 25% of the total, virtually double the 1988 figure of 13%. Despite the declining willingness of foreign investors to continue investing in US-dollar–denominated instruments as the US Dollar has fallen in 2007, the U.S. Treasury statistics indicate that, at the end of 2006, foreigners held 44% of federal debt held by the public. About 66% of that 44% was held by the central banks of other countries, in particular the central banks of Japan and China. In total, lenders from Japan and China held 47% of the foreign-owned debt.
Orange County Attorney
Paper currencies are not totally worthless, there is the worth of the paper itself to consider.
SD Lasik Surgery Specialist
The reality is we are seeing currency and credit DEFLATION.
The central banks can ‘print’ as much money as they want, but when no one will borrow/take it and loan it into circulation it doesn’t matter… You can’t get fiat money into circulation any other way.
Money and credit are being destroyed at a faster pace then the central banks can push new money back into the system.
LA Bondsmen
Nice posting. My sentiments exactly.
Shirley