6,000,000 U.S. jobs to be lost in 2009

It will be interesting to see How does Obama come into picture in overcoming the situation. I have heard a lot about him and undoubtly everytime one listen to his speech there is some divine power in his personality. He has already made fans all over the world. But his greatness will be test when he takes up the biggest responsibility on Tuesday and the kind of expectations everyone has from him is tremendous.

 

Here's where we disagree.

Inflation and deflation undermine price stability. Without price stability, it disrupts free markets. People can't accurately determine true worth (or relative worth) because a third party is artifically manipulating prices through the availability of money.

In the world today, every government has given this power to the Central Banks (e.g. Bank of England, the Fed, Bank of Japan, etc.).

Since these money producers only print (paper/cloth) and not mint (gold or silver), they can inflate/deflate, expand/depress any economy at their whim.

This is not sustainable and every time in history paper money has been tried without being backed by gold/silver, it has failed spectacularly.

Some say inflation/deflation are immoral and a sign of a tyrannical government.

The dollar will collapse (along with the yen, pound, ruble, yuan, etc.). It's just a matter of when.

 

Money collapses all the time. The mexican peso collapsed after the NAFTA treaty.

Obama is bigger than the Beatles

 

Gold and silver (real money) does not collapse.

Paper/cloth (i.e. money substitute) collapses all the time.

 

On the deflation front, Gold is still sky high at $829 a troy oz. Even housing prices are severely inflated compared to 2001 prices. In the North East, homes are still selling for 300% of their prices in 2001.



The job loses are going to be tough over the next few months. For example, Circuit City is closing 567 stores and laying off 30,000 people.

In 2007-2008, 25% of the corn produced in the U.S. was used in ethanol production. There's going to be a lot of corn on the market and 2009 is going to be tough for farmers.

It's going to feel like deflation but you are going to wake up with the mother of all hang-overs. This fiscal year the US will have a $2 trillion deficit.

 

What gold tells us about housing



Although nominal prices have risen over time, real prices - as defined in ounces of gold - declined rather sharply beginning in 1971 and rose very slowly subsequently to the dollar devaluation of the 1970s.

Keeping the recent housing boom in perspective, housing values in real terms peaked in 2001, albeit slightly lower than where they were in the 1960s. The trend in increasing real values as measured in gold from 1980 onward had simply reversed what the inflation of the 1970s did to real values that peaked in the late 1960s. So the perception that housing keeps pace with inflation is misleading. Instead, nominal prices serve to minimize losses in real terms at best.

While aggressive underwriting fueling unprecedented home buying generally gets the blame for the fall in existing home prices, blame truly lies at the feet of the government’s inflationary monetary policy. The current decline in nominal prices is the market’s way of bringing nominal prices in line with housing’s real value in gold. Home prices are adjusting to the Fed and Treasury’s wanton neglect of the dollar.

 

That's why it's hard to beleive that there is deflation. Just as fast as the prices came down, they can go up again.

 

Sure.

The way things are happening, it looks like prices are getting ready to shoot higher for food and fuel.

But... I just don't see how housing prices can increase.

This country built the wrong kinds of houses and built way too many of them.

 

Home prices need to correct. In the last ten years home prices have increased 300% in the bubble markets.