Thursday, March 19, 2009

Where is all the money going?

I read recently that both in the US and the UK, a significant part of the "quantitative easing" is repurchasing sovereign debt from foreign holders. In other words, money is being created to buy back government bonds from overseas investors.

This says two things to me: (a) the new money thus created is not going to help kick-start our economies, and (b) foreigners are losing confidence in us and want out, before inflation and defaults shrivel the value of their investment in us. As to the latter point, I said last August that I thought the Chinese wouldn't let themselves be swindled.

So I suspect we are still headed for slump, currency devaluation and, eventually, high interest rates.

Maybe a new currency, to whitewash the mess and make further progress towards some New World Order political grouping - Oceania, Eurasia etc. Any news on the Amero?


Anonymous said...

Any thoughts on which currency(ies) might escape the pain? Or is that the trillion-dollar question?

Anonymous said...

Not sure about the Amero but I believe Kruger-rands are still on sale.

Probably Broon will ban people from owning them at some point, so get yours now and hide them somewhere.

Today they are £721 each.

Sackerson said...

Anon1: wish I knew. Thinking about inflation-linked gvt bonds at present.

Anon2: Also thinking about gold, and silver, too.

Sobers said...

If the printed cash is going to foreign bond holders, surely the first thing they will do is sell those pounds (or dollars) and get some other currency (or asset) with it. Result: lower pound and dollar on the exchanges. Just as we have seen since the policy started........

If I was a multimillionaire with cash in the bank, what would I want to do right now? I'd be very loath to have my money in any fiat currency, especially as everyone has started to print money. I'd want real assets that are touchable, that produce stuff that people need. I'd have my money in commodities, food, maybe some gold for insurance. Oil stocks perhaps. The neccessities of life. God I sound like Jim Rogers!