The Money Bubble

Today’s fiat currencies emphatically meet the above bubble criteria. The prices of government bonds denominated in euro, yen and dollars have risen to extraordinary levels (which is the same as saying interest rates have been forced to extraordinarily-low levels). And befitting its size and scope, this bubble is rationalized with two popular mantra

The national mints generally sell to wholesalers who sell to dealers who sell to individuals, which can result in a fairly high mark-up at the retail level. So while there are advantages to owning well-recognized forms of bullion like gold eagles or maple leafs (for example, they often are easier to sell), our advice is to get the most metal for yo

As for tried-and-true business practices being supplanted by “innovations,” consider the fact that no major country balances its budget any more, while all engage in historically-unprecedented deficit spending and money printing.

But because so many of the uses to which these borrowed funds were put turned out to be unwise or unprofitable, debt ended up growing faster than productive assets. This “malinvestment” left the country poorer than it would have been had the money never been borrowed.

Ludwig von Mises, a pioneer in the Austrian School of economics, called this sudden loss of faith in a fiat currency a “crack-up boom,” and historically it has spelled the end of the currency in question.

The world’s governments thus find themselves in an ever-shrinking box. And all it will take to trigger the crisis is a return to historically-normal levels of interest rates. As recently as 2000, 30-year Treasury bonds yielded over 6 percent and 30-year mortgages cost 7.5 percent. Let rates return to those levels and the global financial system imp

A good resource for finding a dealer that is both reputable and reasonable is GoldPrice.org, http://www.goldprice.org, which compares prices across numerous dealers.

As Figure 19.1 illustrates, when it takes about 20 or more ounces (622 grams) of gold to buy the Dow Jones Industrial Average, financial assets have become overvalued and are topping out, and it’s time to shift into real assets. Conversely, when less than two ounces (62 grams) of gold can buy the Dow Jones Industrials, then financial assets are che

Artificially-High Stock Prices Until very recently share prices, by general consensus, were set purely by market forces (though they were influenced somewhat by the Fed’s control of short term-interest rates and government tax and spending laws). Whether the market went up or down was not generally seen as a pressing policy matter for the federal g