be afraid - be very afraid

the competitive fiscal measures of governements to blow huge holes in their budgets with scant regard to demand pull inflation just shows that this may be the end of capitalism as we know it. or rather capitalism never had a chance once the politicians got into the act.


matters arent helped with china upping the ante to embaress the US with its side remark about the credit worthiness of the US treasury notes that its holds. as supply of the paper increases china does not see itself spending what it holds fast enough before the treasury notes becomes worthless pieces of paper. that brings us to the next question?


is the world economy ready to shift back to the gold standard from the current dollar standard?


what are the implications?


first and foremost - the price of gold will got through the roof to adjust for the increased supply of notes since governements went off the standard. for eg if the US had 1 trillion $'s in supply in 1950 and it now has say 20 trillion $'s then the price of gold has to be 20 times plus a minor adjustment for demand supply economics as it is also a commodity used in various medical equipments/ computers and most recently in nano technology.


this upward revision in the price of gold will suddently make every indian/ chinese etc who have traditionaly bought gold as a hedge against inflation to benefit as their gold would now come to its true value as against the paper monsters that they currently carry which has no real value backing it other than the "perceived" currency value in relation to other countries and also the "perceived" governenance value in relation to other countries.