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Old 03-11-2015, 09:02 AM   #21
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Old 03-11-2015, 09:42 AM   #22
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The subject of hard assets came from my understanding of where safety might lie, in the case of long term inflation. The "recent" mention about Alan Greenspan referenced his interview of Oct 14, 2014, available as a YouTube video or in transcript form. As usual his expanation was a cobweb of uncconnected financial gobbledegook, but a careful read poeinted up the uderlying factors of the FED, and the US Dept of the Treasury, and the original mandate that proposed the Fed existed to prevent deflation or inflation, both of which lead to depressions and recession.
It is agrrogant to think that any mere mortal could integrate the mechanisms and effects of monetary policy, but some simple observations:

The US Federal debtis skyrocketing.
Long term interest rates are being discounted.
Assets: Personal, Federal, and Banking are defined in leveraged dollars. Liquidity as a portion of these assets is so vague as to be unknown.

Long and short: a balloon. Some here on ER mentioned something to the effect that the success in creating paper money might be infinite, and to now, little to argue the point.

And so, the "hard assets" subject, and my thinking. As the value of paper dollars changes over time, and inflation rises, the Hard Assets is the counterpoint to Paper.

Imagine Venezuela... currently running inflation somewhere between 65-70%.
Which assets have basic value, to protect the individual. In a depressed economy, what items are likely to hold value and track inflation?

Two considerations:
1. To buy food shelter and the basics of life.
2. To own assets that have value in the world economy.

Most commonly accepted: Gold/Silver, precious metals.
Then items of value that support the necessities of life.
-Land
-Natural resources
-Food, Shelter

These makes sense,to a point. But not easy to segreate. As in OIL.. which has changed so rapidly in the past several months. The countries that rely on this natural resource to fund their governments are suffering.

Shelter: Yes, needed, but are the asets really "hard"? The ownership is vested in the same long term discounted debt in the illiquidity of the banks. (one more unmentioned risk factor here, the $1.3 Trillion on Student debt, just to point up the shady base.)

Esoteric items of value? Perhaps... an orginal Beatles Album?... a Van Gogh? Hmmm?

Now, as to the longer term... the recovery. Before looking at the past for historical validation, consider the current unfunded liabilities. Never (even excluding inflation) has this been so high. Little discussion about this, anywhere.

This morning one of the financial RV programs celebrated the current dip in the market as getting nearer to a base for the new Bull Market. Parhaps.
The natural question remains... What if we go to new highs and I miss it? How much will I leave on the table? On the other hand, what if it goes the other way? Then... how much will it cost to stay flexible, and day trade?

Am thinking (personally) that I'll stay with whatever is likely to track inflation, so will keep my I bonds, and trust that the government will find a way. I'll stay in my house and try to keep expenses low. Thankfully no debt.

Have you ever tried to put the whiole package together, to look for the future "what if's"? It's an awesome task, and can lead to a paranoia. On the other hand, what a fascinating subject. An intellectual exercise that can be interesting and exciting as long as its kept in perspective.
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Old 03-11-2015, 09:58 AM   #23
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Every year or so my DF brings up the "the world is going to hell in a handbasket" discussion and asks about moving his assets into gold or other hard assets.

The conversation usually end up with me saying something along the lines of
Assuming we (the US economy) muddle though as we have for a quite some time, he should stay invested in US markets. If everything falls apart he should be invested in guns and ammo, because the guy down the street will just help himself to DF's gold and food stockpile using his gun and ammo.
That usually ends the conversation.
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Old 03-11-2015, 10:20 AM   #24
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well it goes without saying that a small arsenal consists of hard assets
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Old 03-11-2015, 11:03 AM   #25
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Pleeeeease!!! Diamonds are good invest. Suuuuuuure!!


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Old 03-11-2015, 12:25 PM   #26
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Quote:
Originally Posted by imoldernu View Post
The subject of hard assets came from my understanding of where safety might lie, in the case of long term inflation. The "recent" mention about Alan Greenspan referenced his interview of Oct 14, 2014, available as a YouTube video or in transcript form. As usual his expanation was a cobweb of uncconnected financial gobbledegook, but a careful read poeinted up the uderlying factors of the FED, and the US Dept of the Treasury, and the original mandate that proposed the Fed existed to prevent deflation or inflation, both of which lead to depressions and recession.
It is agrrogant to think that any mere mortal could integrate the mechanisms and effects of monetary policy, but some simple observations:

The US Federal debtis skyrocketing.
Long term interest rates are being discounted.
Assets: Personal, Federal, and Banking are defined in leveraged dollars. Liquidity as a portion of these assets is so vague as to be unknown.

Long and short: a balloon. Some here on ER mentioned something to the effect that the success in creating paper money might be infinite, and to now, little to argue the point.

And so, the "hard assets" subject, and my thinking. As the value of paper dollars changes over time, and inflation rises, the Hard Assets is the counterpoint to Paper.

Imagine Venezuela... currently running inflation somewhere between 65-70%.
Which assets have basic value, to protect the individual. In a depressed economy, what items are likely to hold value and track inflation?

Two considerations:
1. To buy food shelter and the basics of life.
2. To own assets that have value in the world economy.

Most commonly accepted: Gold/Silver, precious metals.
Then items of value that support the necessities of life.
-Land
-Natural resources
-Food, Shelter

These makes sense,to a point. But not easy to segreate. As in OIL.. which has changed so rapidly in the past several months. The countries that rely on this natural resource to fund their governments are suffering.

Shelter: Yes, needed, but are the asets really "hard"? The ownership is vested in the same long term discounted debt in the illiquidity of the banks. (one more unmentioned risk factor here, the $1.3 Trillion on Student debt, just to point up the shady base.)

Esoteric items of value? Perhaps... an orginal Beatles Album?... a Van Gogh? Hmmm?

Now, as to the longer term... the recovery. Before looking at the past for historical validation, consider the current unfunded liabilities. Never (even excluding inflation) has this been so high. Little discussion about this, anywhere.

This morning one of the financial RV programs celebrated the current dip in the market as getting nearer to a base for the new Bull Market. Parhaps.
The natural question remains... What if we go to new highs and I miss it? How much will I leave on the table? On the other hand, what if it goes the other way? Then... how much will it cost to stay flexible, and day trade?

Am thinking (personally) that I'll stay with whatever is likely to track inflation, so will keep my I bonds, and trust that the government will find a way. I'll stay in my house and try to keep expenses low. Thankfully no debt.

Have you ever tried to put the whiole package together, to look for the future "what if's"? It's an awesome task, and can lead to a paranoia. On the other hand, what a fascinating subject. An intellectual exercise that can be interesting and exciting as long as its kept in perspective.
I find Greenspan being interviewed by pro gold interviewers, but not referencing October 14.2014. I also find "summaries of private conversations with A.G.," also by gold bugs. But I cannot be sure that these are what you are talking about. Since you seem to be referencing some particular conversation or speech can you provide a link? The forum allows this.

Ha
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Old 03-11-2015, 06:29 PM   #27
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Sorry...
Ooops got the 2014 date mixed up with the 14th... it was really on the 29th of October. A talk with the Council on Foreign Relations: Transcript here:

Transcript: Alan Greenspan on the U.S. Economy - Council on Foreign Relations

The YouTube bit was a little long, and too fast for me to absorb.

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Old 03-11-2015, 08:05 PM   #28
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Greenspan -- isn't he the dude that blew it about 10 years ago? Why should we listen to him now?
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Old 03-11-2015, 09:54 PM   #29
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Very interesting interview Imolder. The transcript is of an entire 1 hour, with some questions from the audience at the end, while the YouTube clip is a very short clip taken from the interview. Greenspan is smart, and I guess since he is no longer politically active, he allows himself to speak clearly.

Ha
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Old 03-12-2015, 09:57 AM   #30
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I do realize that this subject doesn't generate great interest, but believe that understanding inflation gives a leg up on coping with market changes that might come on quickly, whether tomorrow, of five years from now.

The link goes to an in depth analysis of measurable inflation with the investment in hard assets. While it eventually looks to commodity investments, the explanation of how inflation takes place gives a broader view of the effect on different parts of the economy... and along the way mentions the different kinds of Hard Assets.
Understanding Inflation

More of a scholarly analysis, but one that doesn't broad brush the subject. The one part that looks to be in error, is the discussion on oil, which does not seem to reacting to the expected path.

My thinking does not follow the commodities path, as we do not "invest" per se, but the section on TIPs made me feel a little more secure.
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Old 03-12-2015, 10:23 AM   #31
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Quote:
Originally Posted by imoldernu View Post

The link goes to an in depth analysis of measurable inflation with the investment in hard assets. While it eventually looks to commodity investments, the explanation of how inflation takes place gives a broader view of the effect on different parts of the economy... and along the way mentions the different kinds of Hard Assets.
Understanding Inflation
The sponsor and content provider of that link (Van Eck) sells ETFs that are designed to address their definition of inflation and hard assets. They sell their book...
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