An American Bubble Bath
The comments below are an edited and abridged synopsis of an article by G.E. Christenson
GameStop, AMC, and Tesla are just a few of many bubbles. Bubbles are dangerous and destructive, and they always implode, but some persist for a long time. Price and value are not the same; price is not value, and paper wealth can disappear.
Nevertheless, investors and speculators indulge in bubblicious behaviours again and again.
The US could improve itself if: It used honest money—gold coins and gold-backed digital and paper dollars (all countries should do this); it required balanced federal and state budgets; the US followed the Constitution, returned to the rule of law, and enforced it; Congress dissolved the Fed; if it used honest voting; and if it audited Fort Knox gold.
Consequences of the above: Stable purchasing power of the dollar (back it with gold and most consumer price inflation disappears); reduced federal spending and a balanced budget; increased trust in government; no quantitative easing; and Federal Reserve dollar devaluation minimized or terminated.
Russia and China are accumulating gold. Why is the US accumulating debt instead of gold? American billionaires added over $1 trillion to their wealth last year. How much of that trickled down to the average American? Is the economy strong if nearly one million Americans file for unemployment every week? Food prices are rising, the national debt increased by over $4 trillion last year, and tens of millions of Americans are unemployed. Do we expect QE and fake money creation to stop? Why buy over-valued bonds or stocks when you can buy under-valued gold and silver?
The real issues: America’s financial and debt-based economic system creates bubbles. Bubbles crash, prices collapse, and businesses fail. Deficits, debt, and devaluation: Do we expect more of the same, or material improvement? If we expect more deficits, debt, QE, unemployment, and business failures, then the dollar will devalue. Consumer prices will rise. If the dollar continues its 100-year journey toward zero, hedge with gold and silver instead of 10-year notes, Tesla, GameStop, and other over-valued stocks.
Conclusions: Too many bubbles, too little financial and economic sanity; beware of over-valued markets.
Buy gold. Buy silver. Wait for a return to sanity.