There are currently 2 avenues our federal government can take at this pivotal point in the economic meltdown. One is to bailout the failing banks at the tune of 700 billion dollars reassuring all investors including foreign ones that our economy and our dollar is wholly backed by the US government, or as some people are saying let all financial institutions fail and let the chips fall where they may. It is after all a capitalistic society right? The stronger better companies will prosper leaving only the well run companies to succeed.
The saying"your darned if you do and your darned if you don't" pretty much sums it up. We are currently in real trouble. There is talk of a "recession" notice how they avoid the word "depression" like the plague, and no matter which course is taken there is no silver lining.
If we flood the market with 700 billion dollars that we didn't have a month ago (that's right, run the printing presses) we will devalue our dollar even further than it is now and inflation will continue to grow.
If we don't do anything and let the financial companies fail then this could be perceived by foreign investors and our financial monies are not backed by our government which would lead to a exodus of foreign money being invested into the US financial institutions digging us ever deeper into a murkey depression of job loss and inflation and savings being turned to worthless dollars.
Golds value price will definately benefit in both scenarios since it will appreciate due to dollars value being lowered through more of them being produced, and the dollars value being viewed as worthless and not backed by our government leading foreign investors to shy away from our dollar.
1 comment:
My thoughts on gold. As an asset for the long term you would do better in the stock market where you get dividends and appreciation.
Gold does not psy dividends, only appreciation. This happens only in troubled times and for the short term. This means you have to be very good at timing the market, which is a tough thing to do.But as you have alluded to these "are" uncertian times.
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