The Student Room Group

Global economic collapse/ we are heading for the biggest market crash and wealth tran

Quick facts:

- like many other nations, America is sinking in dept, but America is also the world's reverse currency used to trade oil, gas ....etc.

- The USA's currency is weakening, in fact since the early 1910s the dollar has lost over 95% of its purchasing power.

So what on earth will it look like when the dollar collapses under its trillions of dept?, well it's going to be bad, that's not the main issue, my attention is on the chain of reactions that will occur of every Currency, Stock, Futures, Bonds and Derivatives market, you name it, it will all crash big time. while all of that wealth will be rushing to the commodities gold and silver which is safe ground.

On top of the gold & silver price going to the moon, I should also mention that the commodities market is full of gold and silver that doesn't really exist, traders at *cough*(JP Morgan) have flooded the market with gold certificates backed by gold which doesn't exist. I wonder what will happen when it comes time to pay up the physical gold.

"Hmm reminds me of the situation which occurred a few years back between Germany and the Federal reserve, when Germany tried to reclaim their gold but was told that they can only see some of it, they can't touch it, they can't check the gold's serial number and it will take around 7 years to deliver their own gold back to them.

So there is actually less gold and silver in the world, funny enough the Chinese are not only buying records amounts of physical gold, but they are also encouraging their citizens do the same and invest in the physical metals gold and silver, while also slowly dumping their dollar holdings.

It's funny how here in the west were selling our gold, we're encourage in adverts, high street.. Etc to pawn our gold jewelry no matter what the condition to send it for quick cash, but no one has ever asked why do they want my gold so badly. Well it's because they understand just how underrated gold is right now. But silver on the other hand in my personal opinion is more valuable than gold, but that's another story.

Why are we not doing the same as China and the rich to protect our wealth, by educating ourselves and buying physical gold and silver to store our wealth instead of having a savings account?
(edited 9 years ago)
The US debt is not, in any way, a problem. The only problem is the debt ceiling (and the absurd actions certain factions in the US government have been taking with regard to it). Getting rid of that would permanently fix the problem. Any government that is running a budget surplus right now is doing it wrong.
Gold and silver are just a form of asset whose price can go up and down, they are no different to other commodities.

Whilst there are a lot of risk factors in the global economy I find it hard to take seriously these prophets of doom that like to tell us everything is going to collapse and the only thing that will be worth anything is gold.
The armchair expert strikes again. OP obviously knows better than the world's finest economists.
Original post by BlueSam3
The US debt is not, in any way, a problem. The only problem is the debt ceiling (and the absurd actions certain factions in the US government have been taking with regard to it). Getting rid of that would permanently fix the problem. Any government that is running a budget surplus right now is doing it wrong.


Do you think debt is just some number on a piece of paper then?

Maybe debt to civilised countries wouldn't be so bad, but I want countries like China to have as little economic (and therefore political) leverage on the free world as possible.
Original post by t-swiper
Quick facts:

- like many other nations, America is sinking in dept, but America is also the world's reverse currency used to trade oil, gas ....etc.

- The USA's currency is weakening, in fact since the early 1910s the dollar has lost over 95% of its purchasing power.

So what on earth will it look like when the dollar collapses under its trillions of dept?, well it's going to be bad, that's not the main issue, my attention is on the chain of reactions that will occur of every Currency, Stock, Futures, Bonds and Derivatives market, you name it, it will all crash big time. while all of that wealth will be rushing to the commodities gold and silver which is safe ground.

On top of the gold & silver price going to the moon, I should also mention that the commodities market is full of gold and silver that doesn't really exist, traders at *cough*(JP Morgan) have flooded the market with gold certificates backed by gold which doesn't exist. I wonder what will happen when it comes time to pay up the physical gold.

"Hmm reminds me of the situation which occurred a few years back between Germany and the Federal reserve, when Germany tried to reclaim their gold but was told that they can only see some of it, they can't touch it, they can't check the gold's serial number and it will take around 7 years to deliver their own gold back to them.

So there is actually less gold and silver in the world, funny enough the Chinese are not only buying records amounts of physical gold, but they are also encouraging their citizens do the same and invest in the physical metals gold and silver, while also slowly dumping their dollar holdings.

It's funny how here in the west were selling our gold, we're encourage in adverts, high street.. Etc to pawn our gold jewelry no matter what the condition to send it for quick cash, but no one has ever asked why do they want my gold so badly. Well it's because they understand just how underrated gold is right now. But silver on the other hand in my personal opinion is more valuable than gold, but that's another story.

Why are we not doing the same as China and the rich to protect our wealth, by educating ourselves and buying physical gold and silver to store our wealth instead of having a savings account?

They want your gold so badly for the same reason they want your silver, copper, aluminum, even lead. Because it's a lot cheaper to acquire metal sitting behind a counter and paying 50-70% lower prices for it than it is to lease land, buy mining equipment, have ore assayed, put up with the E.P.A., fill out endless forms for the Army Corp Of Engineers, pay a crew, and hope the price doesn't drop before you get it refined and find a buyer.
Reply 6
The reason they go up in price is that paper currency doesn't hold real value. They can just double the quantity of it with a click of a button whereas commodities are real and so cannot be doubled (unless of course they do that thing you mentioned with gold certificates). So they are constantly printing more of this fake money causing the value to go down, whenever you borrow money from a bank for a mortgage or loan the currency in circulation increases because the money you are lent for that house doesn't have to exist due to the fractional reserve system. In effect this is why our government is encouraging massive borrowing yet inflation is at a low value of 1% range. If it wasn't for this we could very well be experiencing deflation which makes the government look really bad.
Original post by t-swiper
since the early 1910s the dollar has lost over 95% of its purchasing power.


Since the charter of the federal reserve in 1913 the value of the dollar has decreased by 95%. It's by design, a reverse sense of Marxism to fleece the lower classes to the pockets of the very wealthy. Inflation is a kind of stealth taxation.
The divide between rich and poor has been consistently increasing.

I believe when people have finally had enough, there will be a revolution. It may take another big event until it occurs, like the stock market crash of 2008 (which nearly brought the world financial system to systemic meltdown), or it may just be that Americans have just had enough of working extreme hours and still not being able to afford food without the aid of food stamps because the minimum wage is so low, who knows? But whatever the trigger, I believe the current banking/monetary system (and capitalism for that matter) is due to be overhauled, and for the population to enter a new age Karl Marx hypothesized, that as the productive forces and technology continued to advance, socialism would eventually give way to a communist stage of social development. Communism would be a classless, stateless, humane society erected on common ownership and the principle of "From each according to his ability, to each according to his needs".

Voting different presidents is not the solution though, they are all sponsored by big corporations that only have making the maximum amount of money from the taxpayer on their agenda. Similar story in the UK but the corruption is not as obvious.

When/if the system does collapse, materials such as metal will revert to an intrinsic value e.g. gold is an extremely good conductor and doesn't rust so it will still be worth more than iron. But with nanotechnology in the rise, the superconductor nanocarbon could cause the value of gold to fall rapidly. So don't go out and buy as much gold as you can thinking it will be worth loads when the system collapses! Technology in general is going to revolutionise human existence unrecogniseably and is an impossible task to predict the feats we are going to achieve in the next 50 years alone, it might naturally lead us to a new world order for many more reasons (but I will restrain myself from writing even more!).
Original post by felamaslen
Do you think debt is just some number on a piece of paper then?

Maybe debt to civilised countries wouldn't be so bad, but I want countries like China to have as little economic (and therefore political) leverage on the free world as possible.


If you are starving due to a trade embargo limiting the amount of food you can get hold of it is of now consequence whether it is due china or america.

But yes as a citizen of a rich western country allied with America (therefore inside the "free world") I would rather China didn't become the superpower for my own selfish reasons.
(edited 9 years ago)
Original post by ChaoticButterfly
If you are starving due to a trade embargo limiting the amount of food you can get hold of it is of now consequence whether it is due china or america.

But yes as a citizen of a rich western country allied with America (therefore inside the "free world") I would rather China didn't become the superpower for my own selfish reasons.


I think a dominant China would screw up life for many, many people, not just in the free world, and would slow or halt the spread of democracy.
OP is on to something. The vast US debt bubble can't just continue without either a massive US (and therefore global) inflation, or else a sustained global deflation and depression. At the moment, the world does seem to be deflating and many economies (for example, the Eurozone, Russia, Japan and possibly even China) are effectively 'stuck'.

The wealth redistribution thing is very much part of this picture. There's a wonderful book out by Pinketty and Goldhammer called 'Capital in the Twenty-First Century' that thoroughly lays out how wealthy is being redistributed globally to a tiny minority of uber-wealthy and the 2008-onwards 'crisis' has been very much a part of this game.
http://www.amazon.co.uk/Capital-Twenty-First-Century-Thomas-Piketty/dp/067443000X

The crisis is far from over. What we have at present is a minor debt-driven 'pickup' in the consumer economy, but the overall picture will remain bleak for the great majority until governments globally are seriously willing to address spiralling inequality.
Original post by felamaslen
Do you think debt is just some number on a piece of paper then?

Maybe debt to civilised countries wouldn't be so bad, but I want countries like China to have as little economic (and therefore political) leverage on the free world as possible.


China has precisely zero leverage from holding debt (not to mention, it doesn't hold much of it). The US national debt is primarily in the form of treasury bonds, which cannot be claimed before they expire. That, and one of the largest portions of the US government is that held by other branches of the US government. The debt of a country that controls a currency as strong as the US dollar is only a problem if the interest payments, by themselves, exceed revenue. They don't, not by a long shot.
Original post by BlueSam3
China has precisely zero leverage from holding debt (not to mention, it doesn't hold much of it). The US national debt is primarily in the form of treasury bonds, which cannot be claimed before they expire. That, and one of the largest portions of the US government is that held by other branches of the US government. The debt of a country that controls a currency as strong as the US dollar is only a problem if the interest payments, by themselves, exceed revenue. They don't, not by a long shot.


I wouldn't be so complacent. The US national debt as a percentage of GDP is higher now than it has been since the aftermath of WWII. See this graph:

1000px-FederalDebt1940to2012.svg.png

According to Wikipedia, the PRC and Japan are the largest holders of US public debt, with $1.1 trillion each.
Original post by t-swiper
Quick facts:

- like many other nations, America is sinking in dept, but America is also the world's reverse currency used to trade oil, gas ....etc.

- The USA's currency is weakening, in fact since the early 1910s the dollar has lost over 95% of its purchasing power.

So what on earth will it look like when the dollar collapses under its trillions of dept?, well it's going to be bad, that's not the main issue, my attention is on the chain of reactions that will occur of every Currency, Stock, Futures, Bonds and Derivatives market, you name it, it will all crash big time. while all of that wealth will be rushing to the commodities gold and silver which is safe ground.

On top of the gold & silver price going to the moon, I should also mention that the commodities market is full of gold and silver that doesn't really exist, traders at *cough*(JP Morgan) have flooded the market with gold certificates backed by gold which doesn't exist. I wonder what will happen when it comes time to pay up the physical gold.

"Hmm reminds me of the situation which occurred a few years back between Germany and the Federal reserve, when Germany tried to reclaim their gold but was told that they can only see some of it, they can't touch it, they can't check the gold's serial number and it will take around 7 years to deliver their own gold back to them.

So there is actually less gold and silver in the world, funny enough the Chinese are not only buying records amounts of physical gold, but they are also encouraging their citizens do the same and invest in the physical metals gold and silver, while also slowly dumping their dollar holdings.

It's funny how here in the west were selling our gold, we're encourage in adverts, high street.. Etc to pawn our gold jewelry no matter what the condition to send it for quick cash, but no one has ever asked why do they want my gold so badly. Well it's because they understand just how underrated gold is right now. But silver on the other hand in my personal opinion is more valuable than gold, but that's another story.

Why are we not doing the same as China and the rich to protect our wealth, by educating ourselves and buying physical gold and silver to store our wealth instead of having a savings account?


You're about 2 years too late for the gold/silver bug thing mate.

Reading those bullion blogs was always a favourite pastime of mine at work. The comedy value was unsurpassed.

Original post by Fullofsurprises
OP is on to something. The vast US debt bubble can't just continue without either a massive US (and therefore global) inflation, or else a sustained global deflation and depression. At the moment, the world does seem to be deflating and many economies (for example, the Eurozone, Russia, Japan and possibly even China) are effectively 'stuck'.

The wealth redistribution thing is very much part of this picture. There's a wonderful book out by Pinketty and Goldhammer called 'Capital in the Twenty-First Century' that thoroughly lays out how wealthy is being redistributed globally to a tiny minority of uber-wealthy and the 2008-onwards 'crisis' has been very much a part of this game.
http://www.amazon.co.uk/Capital-Twenty-First-Century-Thomas-Piketty/dp/067443000X

The crisis is far from over. What we have at present is a minor debt-driven 'pickup' in the consumer economy, but the overall picture will remain bleak for the great majority until governments globally are seriously willing to address spiralling inequality.


Yeah . . . there's no way China's growth is 'stuck' in any sense.
Original post by ClickItBack


Yeah . . . there's no way China's growth is 'stuck' in any sense.


Obviously they superficially appear to be continuing to grow at a high rate - if one believes their figures, which is always a little bit dubious. However, what I was referencing was the large asset bubble they are building, very large amounts of possibly quite dangerous dark and light economy debt and what remains a very strong reliance on the strength of the US and European consumer demands. Their growth is faltering and whilst most economists argue it will continue, albeit at a lower rate, there are voices suggesting a more doomy outcome. I don't think that the China model is viable in the medium term - their government is trying to maintain the corrupt oligarchy and lack of civil and political rights at the same time as promoting full capitalist competition and an open market and those are irreconcilable. There must be a major crash at some point, economic, political or both - the only real question is when. Certain indicators make one think it will be sooner rather than later.
Original post by felamaslen
I wouldn't be so complacent. The US national debt as a percentage of GDP is higher now than it has been since the aftermath of WWII. See this graph:

1000px-FederalDebt1940to2012.svg.png

According to Wikipedia, the PRC and Japan are the largest holders of US public debt, with $1.1 trillion each.


Although if the dollar devalues sharply to reprice those debts, as seems likely, their holdings will be so much toilet paper.

It's very difficult to see how the US can resolve the current situation without some very severe ructions. They are going to become much more apparent if the endless 'taps open' policy on Fed liquidity fully changes to a taps closed one. That's why every time they announce they are shutting them down, they go into a panic and open them up again!
Original post by Fullofsurprises
Obviously they superficially appear to be continuing to grow at a high rate - if one believes their figures, which is always a little bit dubious. However, what I was referencing was the large asset bubble they are building, very large amounts of possibly quite dangerous dark and light economy debt and what remains a very strong reliance on the strength of the US and European consumer demands. Their growth is faltering and whilst most economists argue it will continue, albeit at a lower rate, there are voices suggesting a more doomy outcome. I don't think that the China model is viable in the medium term - their government is trying to maintain the corrupt oligarchy and lack of civil and political rights at the same time as promoting full capitalist competition and an open market and those are irreconcilable. There must be a major crash at some point, economic, political or both - the only real question is when. Certain indicators make one think it will be sooner rather than later.


I've been slacking on following global macro of late, so I can't give as robust a response as I would like, but just to address the main points. It's debatable whether a dangerous 'asset bubble' exists. Certainly some parts of the construction/property market have suffered from overheating, but it's not at all obvious that this is going to lead to a dramatic crash rather than be subsumed in stride.

Also, there's a misconception that Chinese growth is still super-dependent on exports. Quoting from the Economist: "In the past six years alone, exports have fallen from 38% of GDP to about 25%. In four of the past five years, net exports have contributed less than nothing to China's 'export-led' growth". 25% is of course still a very big component of an economy, but the trend is firmly towards domestic consumption.

In short, I don't think an economic crash is inevitable. For other reasons entirely, I also very much doubt that China's political model will change dramatically for a long time to come.
All you saying is stupid **** without thinking, watching to much RT? USA has this most bs things ever, the federal government take loan from federal reserve and they pay them back with interest. Who knew right? The government can't print their own money. The last president who tried to change that got killed, John F Kennedy. Actually USD is strong right now.
Original post by felamaslen
I wouldn't be so complacent. The US national debt as a percentage of GDP is higher now than it has been since the aftermath of WWII. See this graph:

1000px-FederalDebt1940to2012.svg.png

According to Wikipedia, the PRC and Japan are the largest holders of US public debt, with $1.1 trillion each.


Still not, in any way, a problem. Show me a government that isn't currently running a deficit, and I'll show you a government that's mismanaging its economy.

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