Pushing on a string

We have seen unprecedented pouring of cash into the economy to no avail. We have reached the point of pushing the string. For the last 50 or so years the economy reacted to the fed stimulus. It apears this is no longer working. Defaltion is the headlines. Problem with headlines is that are usually after the fact.

I dont recall many in the press shouting of the disasters we are in until they appeared. So take what the press is squaking with a grain of salt.

As traders we always need to understand what is coming not what is. So looking down the road....History is on our side here.

What will likely happen is a massive devqaluation of all major currencies. Roosevelt did this in 1932 and forbad anyone from hold gold. We witnessed this on an almost daily basis in South America in the '80's. About the only way to get out of all the debt we have now is to devalue. The inflation gig did not work. Defation is everywhere.

Who gets hurt in a situation like this. Creditors. Debtors (like the U.S.) come out great. Creditors take less than face amount on the loans. Much like the inflation of the '80's. there is talk already of placing the dollar on a world bank standard. It will be interesting to see waht happens. Gold shouls shoot for the moon much like it did in the 1930's after the equities collapsed.

I am not recommending running out and buying all you can of gold, but in the very near future this will in all probability play out.

Just be ready.