Brian
in most recessions the USA economy has been strong and we were able to come out of it after a short painful recession. The reason? We had great factories and we produced more products cheaply than most other nations, so we were strong exporters.
This time though our folly with the Bush administration may be a different ending. We are into debt over NINE TRILLION dollars!
This time around our growth was not so much production from our factories.
Our economic growth was spurred solely by real estate. That real estate boom was artifically created by a government that wanted to create a QUICK booming economy. So when Bush wanted war, he also wanted a strong economy to fund it.
To accomplish that they cranked up the money machine, the printing presses. Create massive amounts of debt thru borrowed money and get it into the banking system. Then make the money available to almost anyone they could give it to. That happended on a massive scale and was done quickly.
After months of huge realestate borrowing, that spurred the economy.
So much money was poured into our economy thru banking loans that real estate profits started soaring. Many homes doubled in price in only months. In the past the real estate boom growth was much slower, ( your parents homes only doubled after they lived in them their whole lives).
Second mortgages were taken out against the huge home equity profits and that money was also fueling the economic growth.
Loans were given to almost anyone who wanted into the boom, even those who had poor credit. The first houses that went up in value were in places like Southern California and other more expensive palces to live. Many of those people sold their homes at a huge profit and moved to smaller communities, thus spurring the housing markets there too.
In a short period of time Americans were blinded into thinking America was booming and all was right in the homeland. Irag war was now a lower priority as a booming economy was creating oppourtunites everywhere. People were so happy with the new prosperity, why worry about the massive debt piling up, we were getting rich here in the USA, all you had to do was buy a house, or build a house or 'FLIP" a house.
Then the result we are seeing today, so much fiat money floating around that its value started declining. Now the dollar is not just going down, it is dropping like an albatross. It will get worse as those who are lemming investors get the painful picture that the good ol USA dollar is good only for wiping .... ... !
Dump, dump, dump the dollar will be the song of the day.
Gold will be the only way to save your assets then.
The trouble is when you have miles high of paper money and that paper money tries to convert to gold the panic will set in. When "big" money bails on the currency and tries to get into the safe haven only gold or silver provides to those investors, then gold will seek its true value.
To the extent the fiat money has been diluted that will transfer to golds high ending price. You decide, an ounce of gold or a truckload of useless American dollars. During times of monetary crisis, new laws will happen and we may see an adoption of the Amero of some other forced new monetary action.
The USA economy was not built by strong factory growth, or investments in fixing up our industries. We were an economy based on defense contractors and home sales.
Now dependant on oil, we have made very little investments in oil self suffiency. We will find ourselves more and more at the heals of offshore oil.
The only hope for a stronger USA economy is oil at a low barrel price below $40.00. That will spurr our economy.
That is also a pipedream.
Everyone in the USA thought this boom would go on forever and did not realise it was not a real economic strong growth period, but one that was pretty much based on real estate. Based on a purpose, spurring the economy with fiat money.
Now the shit is hitting the fan and our economy is tanking.
Our dollar is in a free fall. If our economy was based on a long period of factory production and growth of our national product and international growth we would be ok and we would more than likely come out of it.
The situation is worse than we are being told and the real estate market will continue to slow the USA economy down. It will do more than that, it will also slow down all world economies. You will realise how much it will slow the world economies down when other modern countries bail on our dollar.
We are in the beginning stages of a US dollar dumping. Will it be strong enough to keep us afloat? Or will it freefall?
Your trust in the USA government and its fiscal history of late will make your decision for you. The trust of the USA government by other countries that hold massive amounts of our greenbacks is a different matter and you have no control over how they will react.
This time around the reaction will be swift and hard. It will be dump those dollars, plummenting the world into a recession or depression worse than ever experienced.
Have a happy day!
