401k and the buble burst
- Thread starter minitman
- Start date
thinking4me
Member
- Joined
- May 31, 2007
- Messages
- 3
AceNZ
Member
- Joined
- Nov 5, 2007
- Messages
- 1,630
Phase 1: people pull cash out of their homes using equity lines of credit and spend it on non-productive assets like plasma TVs
Phase 2: housing bubble bursts, so people switch to using credit cards for more of the same
Phase 2.5: the government sends out tax rebate checks, which allow more spending, but only for a few weeks or months
Phase 3: credit card bubble bursts, and credit card limits are full or limits go down or cards get cancelled, so people pull out their retirement funds and live on those
Phase 4: savings and retirement funds are depleted, home equity is depleted, so spending stops, company earnings decline, the stock market declines -- then the Fed tries to inflate the money supply, which just makes things worse
Phase 5: a very long and deep recession (which has actually already started)
jonahtrainer
Member
- Joined
- Jul 11, 2007
- Messages
- 1,986
The stock crash will continue.
Gold is the risk-free rate.
Now whether other avenues for the allocation of capital are 'expensive' or 'cheap' is an investment decision one has to make.
Gold is just as effective for communicating value as it has ever been. It is not outdated or primitive. On the contrary, banks and central banks are the barbarous relics from a bygone age because now gold can be completely liquid and circulate as a currency in daily transactions.
The DOW crash has continued and the ratio is now at 13.37=12.207/913.30. I'd trade gold for the DOW when it takes 1-3 ounces.
Similar threads
