The Death of the Dollar

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sumamura

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Wednesday, May 04, 2005 - 03:14 am:

colin, tony, spider, and all other friends,

many of you may have already read this article. if not please check the article under following link -

http://www.gold-eagle.com/editorials_05/hommel031805.html

the prospects are frightening.

i will appreciate your views about how such an eventuality can be avoided by the american financial system.

hilarius

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Wednesday, May 04, 2005 - 06:51 am:

Sumamura

The article is a typical gold ramper panic story

Gold is no more a store of value than my big toe

It does glint at people in times of panic but its ramped value at such times is no more a safe haven than my great great grandfather's big toe or mine

The world went off the the gold standard before WW2 and is not likely to return to it, either legally or even in a de facto relationship

The sky is not about to fall in ... and the loss of value by individual companies happens over time ... not usually in a sudden cataclysm [Gympie Gold was an exception when its coal mine blew up]

The fact that markets are slow to respond to fundamentals and then panic when charts head down (rightly so from the perspective of short term traders) does not alter the fact that economies thrive and benefit from the present paper based financial system when they don't abuse it

Multi decade value collapses are possible when artificial imbalances are forced to remain in place as happened in Japan

A market economy such as the USA should prosper once the obsession with war, debt, luxuries and non-productive services is handled as it must be for the dollar to strengthen

America may or may not be the modern equivalent of the decaying Roman Empire ... but if it is there are plenty of growing economies to take its place and the astute will follow the real growth

With Best Wishes

Hilarius

Only $12 (USD) per month

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

goldbug

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Wednesday, May 04, 2005 - 08:19 am:

Hilarius,

I'm going to have to disagree with you on the store of value statement....but agree on all the rest.

Gold is the ULTIMATE store of value. (its got to be worth more than your big toe...)

The US dollar is perceived to be a store of value because people trust the US to come up with the goods ie growth / or some sort of return for your investing in their currency.
The US has recently been through an explosion in credit on all fronts.....the easy credit is slowly but surely being taken away...the end result will be mountains of debt, higher interest rates, higher inflation and the prospect of....well there is no prospect for the US (long term).....The shift in economic powers will move to the Asian countries with the lead being taken by China as the growth engine....sure the US still has a roll to play but it won't be as it is now....hence the undoing of the dollar as a store of value.

The barbarous relic has been around, its seen all this before, all paper currencies end up down the gurgler....who would have thought 50 years ago that the Euro would have been possible...in the process it has sent local currencies in Europe into history.
http://news.bbc.co.uk/1/hi/world/europe/1480242.stm
http://news.bbc.co.uk/1/hi/business/1840475.stm

The chase to paper will continue but GOLD will be the ultimate store of value.

Regards

GB

hilarius

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Wednesday, May 04, 2005 - 09:30 am:

Hi GB

Gotta love someone with so much faith ... would you like a job at the Monastery?

I think you have a point (which I also hinted at) that gold can be a great counter cyclical store of value ... but ...

Taking the long view as I do it tends, does it not, to be in the nature of a spike ... here today and gone tomorrow?

If one can ride the gold spike up while everything else is collapsing around ... it can as I said give us the glitter of hope and real gain ... if we can stay on board the spike and exit when it begins to collapse

The problem there as always is knowing when a spike has reached exhaustion or is just taking a breather

Such things are always much clearer in hindsight and only the most nimble and astute will emerge unscathed

If only I could recruit you in the cause of the scriptures with the same energy and devotion you have for gold!

Blessings and Peace

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

goldbug

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Wednesday, May 04, 2005 - 09:48 am:

Hilarius,

Its a tough life...but someones gotta do it...

I'm patiently waiting for the 'spike'

Regards
(in monastic heaven)

GB

archer

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Wednesday, May 04, 2005 - 10:24 am:

Sumamura
Jason Hommel is at best a young sensationalist
I really would not read too much into his writing
All the best
---Archer---

goldbug

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Wednesday, May 04, 2005 - 01:09 pm:

Archer,

Your right, he maybe a sensationalist.....but he has a point...that is the $US is about to go down.

How convenient it was for the fed to leave an important sentence out last night "Longer-term inflation expectations remain well-contained," .... i mean how the fxxx can a sentence like that be left out of an official statement only to be included after the US market closed...

Today in Asia the $US IS being hit....the presumption being deduced from the late inclusion of 'THE' sentence that rate increases in the US have limited upside...probably more downside if truth be known....but the fed will continue on its merry way towards chasing a ghost inflation, meanwhile bringing down a fragile US economy that has been fuelled by easy money....either way, IMHO the fed and the $US are up shit creek...

Regards

GB

PS Hilarius...
your big toes do have value...try living without them...

archer

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Wednesday, May 04, 2005 - 02:10 pm:

No maybe's about it gold bug
Read some of his other articles and you'll find he really cant be taken seriously
--
Re the dollar
All currencies eventually fail and this U.S dollar will also
By the way this is already their third form of paper dollar
so thay have already had 2 failures in their short history
But its going to take years
The way Hommel writes you would think its going to fail
tommorow
That simply will not be allowed to happen nor would you want
to live in a world where that happened
The outcome would be catastrophic for the entire world
population
It will be a managed decline with little panics here and there

goldbug

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Wednesday, May 04, 2005 - 02:13 pm:

totally agree Archer...

Regards

GB

hilarius

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Wednesday, May 04, 2005 - 02:27 pm:

Good afternoon

It's difficult for a currency to die that works like a traveller's cheque in most parts of the world

Financial discipline, if and when re-asserted, will strengthen the dollar

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

goldbug

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Wednesday, May 04, 2005 - 02:45 pm:

Hilarius,

You've hit the nail on the head....

IF and WHEN financial discipline re-asserts itself the dollar will strengthen... so far discipline has been of short supply...

When i travel i use my GOLD amex ...can't stand travellers cheques...

Regards and happy travels

GB

archer

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Wednesday, May 04, 2005 - 03:03 pm:

Hilarius
You of all people should realize how ill fated paper money is
Its always difficult for currencies to die,but die they do
There is only one money that has stood the test of time
while hundreds and thousands of forms of currency have
failed over the last 5000 years
The future will be no different from the past

archer

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Wednesday, May 04, 2005 - 03:15 pm:

"does not alter the fact that economies thrive and benefit from the present paper based financial system when they don't abuse it "
--------
Therein lies the problem Hilarius
Its not the paper or the gold or the lack of gold that cause the constant failure but the human control of it
I'm betting that man does not change his spots this time
either
Id be crazy to bet for something that has a 100% failure
rate

captain_chaza

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Wednesday, May 04, 2005 - 03:55 pm:

Ahoy there

Surely this debate should be more about which Paper Money is best to travel the high seas of the Global Exchange
Why do have an FX then?

IE
The BIG Buck verses the REST of the World Currencies and diversify our rig for safety with a couple of precious metals GOLD SILVER just for luck

How else could we set sail under a fair number(not full) spread of sail presented to the wind in these horrible seas without getting stopped out all the time

Salute
Captain Chaza
capn

PS Fr Hilarius
Never bet your thumbs on a "sure thing"
You can live without the odd Toe at sea

(Message edited by Captain_Chaza on May 04, 2005)

"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.

"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893

"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897

hilarius

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Wednesday, May 04, 2005 - 03:57 pm:

GB

I find travellers cheques quite handy especially if you buy a rising currency and convert them back at a profit

My point was people use US dollars widely, often in remote corners of the world where nothing else works apart from the local currency ... everywhere

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

hilarius

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Wednesday, May 04, 2005 - 04:08 pm:

Archer

Not sure where you get your 100% failure rate from ... I understand the point that inflation erodes value ... but that is true whatever your store of value happens to be unless you own a productive facility and can adjust your prices upwards with inflation

The Benedictines had the right idea with their liqueur ... store it and sell it as its value rises

100 year old port does quite well too

The good old pound sterling hasn't been a bad performer ... and the Euro will probably kick along nicely if it helps to achieve the aim of ending European wars

As for the Chinese currency ... watch this space

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

hilarius

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Wednesday, May 04, 2005 - 04:09 pm:

PS

Any offers for one of my toes?

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

sumamura

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Wednesday, May 04, 2005 - 05:27 pm:

i am watching this thread as it developes.

unfortunately, everyone is looking at the website at which the report is posted and then the whole discussion has shifted to gold v/s dollar rather than the possible impact on the world economy.

nobody is denying that the picture that hommel has painted is worst case scenario - probably beyond the realms of reality - but we shud be more interested to get learned views about what will happen to all these multi billion dollar borrowers when the interest rate will be 4 times from 1 % a year ago.

will it have any significant impact on american economy and correspondingly on the world economy.

i am too small to contribute on such matters hence i am just watching the debate.

captain_chaza

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Wednesday, May 04, 2005 - 06:27 pm:

PS
Captain Chaza makes no recommendations as to the merits of any financial product referred to in this website, e-mails or its related websites and the information contained

Does not take into account your personal objectives, financial situation and needs.

Therefore you should consider whether these ideas are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with such ideas

As always
It's always best to make a strong stance with tightly held stops

Salute and Bottoms Up

capn

I just heard the Poms /Teabags sold their Gold reserves ages ago
Bloody typical!
Now they are caught in a catch 22
They must now be seen to do something!

(Message edited by Captain_Chaza on May 04, 2005)

(Message edited by Captain_Chaza on May 04, 2005)

goldbug

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Wednesday, May 04, 2005 - 07:20 pm:

Hilarius....

How does 50 bucks sound for both...($US of course!!) any excuse to get rid of some more of the little green suckers!!

Not too sure what i'm going to do with another set of big toes maybe i could hang them on the wall as a trophy or something...

Cheques in the mail...
Send your toes c/o Goldbug in New Zealand.

Regards

GB

captain_chaza

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Wednesday, May 04, 2005 - 07:27 pm:

Ahoy there Fr Hilarius

Would it not be wonderful FR Hilarious if Israel got the GO ahead from the US of A and take the contract to eliminate the IRAN Weapons of Mass Destruction Project?

As you know, Big Boys can't be seen to do little things!
I think even God himself would have sent in a messenger in these difficult times!

Maybe it's time again for the Little Aussie Digger' to go in again and show those blood thirsty Koreans what life is all about!!!

Salute and Gods'speed Fr
Captain Chaza

capn

redrover

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Wednesday, May 04, 2005 - 09:34 pm:

sumamura said.............
"colin, tony, spider, and all other friends, many of you may have already read this article. if not please check the article under following link -

http://www.gold-eagle.com/editorials_05/hommel031805.html

the prospects are frightening. i will appreciate your views about how such an eventuality can be avoided by the american financial system."

I could be wrong, but it seems to me that Jason Hommel has not interpreted the General Motors balance sheet correctly.

sumamura

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Thursday, May 05, 2005 - 02:58 am:

yes, it apparently looks like that. 300 billion borrowing is of GM and GMAC together. 30 billion is GM and remaining GMAC.

pl see another article which is of late 2004 but showing similar concerns.

http://slate.msn.com/id/2111294/

sumamura

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Thursday, May 05, 2005 - 03:05 am:

this article also may be interesting. -

http://www.forbes.com/services/2005/05/04/cz_jm_0504kerkorian.html?partner=yahoo tix&referrer=

colin_twiggs

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Thursday, May 05, 2005 - 07:25 am:

Redrover,

I suspect that GM acts like a bank, financing its own vehicle sales. If that's the case there should be a huge Receivables balance that offsets the debt figure.

However, they do seem to be in trouble with their pension/healthcare funding: http://www.washingtonpost.com/wp-dyn/articles/A64599-2005Apr18.html

hilarius

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Thursday, May 05, 2005 - 07:44 am:

Hi Colin

The thought that Receivables could offset Liabilities to a major extent at GM seems highly reasonable

A question arising from that would be the age of and collection prospects for the receivables

Would those receivables represent unsold dealer stocks?

If so is dealer viability an issue and are provisions for doubtful debts adequate?

The quality of the receivables would be a key issue, but the principle you put forward seems potentially very sound

I guess in an economic downturn the factory discounts might need to be quite deep

Plenty of optimism overnight in the USA ... but for how long?

Just chewing it over while peeling a potato or two for lunch at the Friary

With Best Wishes

Hilarius

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

colin_twiggs

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Thursday, May 05, 2005 - 12:47 pm:

Hilarius

Here is the balance sheet: http://www.gm.com/company/investor_information/docs/fin_data/gm04ar/content/fina ncials/stmt/stmt_01.html

It doesn't look too hot. Liabilities exceed Cash plus Receivables. [I amended from "Current Liabilities" as some notes issued will have longer redemption dates; as will some Receivables].

Regards
Colin

(Message edited by colin_twiggs on May 05, 2005)

hilarius

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Thursday, May 05, 2005 - 04:59 pm:

Colin

Thanks for the link ... much appreciated

With a $5 jump in the GM share price it seems the bidder has something in mind that we don't know while still claiming to be just an investor :-

http://business.timesonline.co.uk/article/0,,8209-1598542,00.html

The massive first quarter loss gives little comfort ... but perhaps the bidder is "buying in gloom"

Hilarius

(Message edited by Hilarius on May 05, 2005)

I come in peace to share my thoughts and to shine my candle light on possible long term opportunities

coyotte

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Thursday, May 05, 2005 - 11:33 pm:

thought we where supposed to be in the early stages of a new War Cycle 2000 - 2020
with the ensuring increase in " money supply " and hence inflation to write off govt debt the future all commodities would have to look bright but mainly Crude, Gold, Diamonds (in Iraq apparently diamonds where used to get wealth out of the country) and Silver (for bullets)
but would it not depend on what form of payment the producing nations demanded (if the $usd was devaluing ) or would the USA simply invade none complying nations ?

but with the changing of the guard at the end of the cycle would we end up with China / India / Japan as the new economic engines with a bankrupt USA ?

cannot see any western goverment ever having responsible money managment when they have to be elected every 3/4 years --- thats the stuff of dictatorships

Coyotte

sumamura

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Friday, May 06, 2005 - 03:50 am:

have you seen s&p downgrade of GM ?

yesterday i wrote at 5 pm that this matter may have serious implications. does not look as a trivial item.

dow is down by 70 points and i expect serious ramifications in the american / world market as many pension / mutual funds can not hold junk class assets.and volume is huuuuuuge - 300 billion dollars.

pl comment.

Only $12 (USD) per month