Current Observations Home Current Observations Home Current Observations Home

The Value of Gold

Thursday, December 08, 2005

Here's a simple question: How can our economy be considered "in good shape" while at the same time the value of gold rises? On one hand: you have government officials and economic analysts declaring how great our economy is. On the other: gold, oil, and other essential commodities continue to rise in value.
This situation doesn't pass the "smell" test. If the value of gold goes up, the value of the dollar goes down. It's as simple as that. I'm no economist, but simple logic says that if the money you use doesn't purchase as much of a certain valuable commodity as it once did, then your economy is down.
In closing, The Washington Times carried an interesting editorial on Nov. 29th, How's the dollar holding up? It takes a broad look at what the dollar has been doing since 1995. What I found interesting was the last paragraph:
Absent a major policy reversal in Washington (such as finally exerting control over a fiscal situation that has become seriously unhinged over the short, medium and long terms) and absent a simultaneous return of household thrift (which has completely disappeared as the personal saving rate has turned negative), normally sober-minded economists are warning about severe financial consequences for both the United States and the global economy if the structurally unbalanced U.S. economy continues to rely on foreigners to lend it nearly three-quarters of a trillion dollars per year. (Emphasis added)
We have to understand that this swimming pool of credit that we've tapped into will eventually run dry. Wealth is finite. We will be cut off at some point. That day is coming closer than many of us realize.


Post a Comment

<< Home

Powered by Blogger |



Who Links