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Gold is to China as paper currency is to US

January 25, 2011 Comments off

Bill Bonner

We’d still like to see a deep decline in the gold price. Too many people are getting onto gold. Most of them have no idea of what they are doing. Like readers of MONEY magazine, they’re buying the yellow metal as a speculation. Most likely they’re going to lose money. Almost everyone who speculates on gold loses money. Don’t ask us why. It’s just one of those Iron Laws of investing.

Gold goes up for 10 years straight. Speculators notice. They jump on board. And then the train runs off the tracks.

That’s just the way it works.

Besides, remember that this Great Correction is not over yet…not by a long shot. It has barely begun to correct the excesses of the Bubble Era. A quarter of all homeowners are said to be underwater on their mortgages – that still needs to be sorted out. And the whole financial industry – with the collusion of the Fed – is sitting on trillions of dollars’ worth of mortgage backed securities, pretending that they are good credits.

There are still major bankruptcies ahead…and deflation of assets prices. And in all the sturm and drang of it, the price of gold could go down too.

But if you’re acquiring gold, you have some powerful competition. As nations become rich and powerful, they accumulate gold. Those that are getting weak and poor give it up. Here’s The Financial Times with the latest news: Read more…

What kinds of societies create wealth? What kinds destroy it?

January 25, 2011 Comments off

There are some activities that are positive sum activities. That is, they are productive. They increase the total of real wealth in a society.

Bill Bonner

There are other activities that are zero sum activities…or even negative sum activities. War, for example. Excess legal wrangling. Paperwork. Too much time spent in schools. Too much support for the unemployed, the malingerers and the loafers. These things decrease the total of real wealth in a society.

Sometimes people are bright, honest and hardworking. Sometimes they are lazy, shiftless and cunning. They always prefer to get wealth and status by the easiest means possible. In some societies, the best way is by working hard. In others, it is by being clever…becoming a lawyer…a banker…or a government hack.

A new society…or a fresh economy (such as one that has just been flattened by war or hyperinflation)…or a new model for an economy…is generally a wealth-creating society.

A free society is also generally a wealth creating society. People do what they want. If they want wealth, they are free to create it.

But as societies (or economies) age, they become Read more…

5 Kilo TNT Shrapnel Suicide Bomb Used In Domodedovo Airport Attack.

January 25, 2011 1 comment