[andrewinardeer]

This 100%.

The monstrous debt storm just over the horizon that most people can't see (or refuse to acknowledge) will hit and will hit hard. The Fed won't be able to restrain or lessen it with policies and blunt instruments at their disposal.

Over the last 4 months I've moved most of my investments to gold, trading cards, BTC, wine, land and rare earth.

[IAmGraydon]

>Over the last 4 months I've moved most of my investments to gold, trading cards, BTC, wine, land and rare earth.

And you believe that in an economic crisis, people are going to want to buy these things?

[Hilift]

> And you believe that in an economic crisis, people are going to want to buy these things?

Gold is obviously more common in some cultures, and could be used for trade if paper money swings wildly. For example, a kilo of gold (32.15 troy ounces/$86k) is not an uncommon incentive gift from real estate developers in China when purchasing properties, to offset variations in costs and pricing. However, in the US, my observations have been the gold buyers are looking for an easy buck.

China is very different. People in China are buying "beans" of gold for $87. Chinese consumers have fewer investment options that are secure, and real estate investments are less favorable now.

"...there is a growing sentiment that the gold market is governed no longer by economic factors but by the whims of Chinese buyers and investors. “China is unquestionably driving the price of gold,” said Ross Norman, chief executive of MetalsDaily.com, a precious-metals information platform based in London. “The flow of gold to China has gone from solid to an absolute torrent.”"

Another interesting quote:

"When China increased its gold holdings in the past, it bought domestically using renminbi, said Guan Tao, global chief economist at BOC International in Beijing. But this time, he said, the bank is using foreign currencies to buy gold — effectively reducing its exposure to the U.S. dollar and other currencies."

China is one of the largest foreign holders of US treasuries. It may be trying to gradually dump them while preserving the value of the bonds.

https://archive.is/hvKoa

[HDThoreaun]

China's lack of highly liquid equity markets makes it an extremely potent breeding ground for bubbles. Combined with their cultural propensity to save instead of consuming and its easy to see how their real estate bubble happened. Chinese government is going to have to pay very close attention to any speculation possibilities if they dont start selling equity in state owned companies or at least make it much easier and safer to invest in foreign equities.

[Hilift]

In the US, you could take 75% of your money allocated for savings and invest in an index fund and it would be a safe investment and probably make money. I don't think the average China consumer has access to that type of safe investment, or they don't trust financial institutions.

I don't really see a valid reason to invest in gold in the US vs index funds. It seemed more of a paranoia thing up until now. Now it is attracting BTC level of throw money in the hole. $84,500/kilo, which is about the size of a large phone.

Creating markets like this fueled the conflict in Sudan. At least one plane per day fly gold from Sudan to the UAE. The RSF leader made his fortune selling gold. Despite being a humanitarian basket case, Sudan produces over one ton of gold per week. https://archive.is/3ZT6v

[HDThoreaun]

Right thats what Im saying. Most chinese companies are state owned and can not be invested in. Foreign equities have the risk of running into a government crack down. Without good investment opportunities chinese investors are forced to turn to bad investments which become bubbles.

[bigstrat2003]

I have a family member who holds onto gold and silver currency because he believes the USD is going to collapse someday. I've raised the argument you made with him, and he admits that such currency won't be useful in the midst of the crisis. He believes it'll be useful in the rebuilding period afterwards, though. I guess time will tell.

[johnchristopher]

That scenario could be made of very long stretch of times. Gold is a shelter value (or so was I told). Hard to use as a currency (you need to buy small parts that can be divided easily - coins or ingots) and hard to hide/protect.

[rapsey]

Gold is completely valid form of preserving wealth. Massive USD devaluation results is skyrocketing prices of gold. Why people think this leads to a mad max world I don't know. If USD is worthless, it just means people will start using some other currency.

[rapsey]

You believe an economic crisis means a mad max world? Argentina is still here and has been going through an economic crisis for decades.

[Lionga]

I like how trading cards and BTC are same category of "investment"

[stackghost]

I'm not American but would like to read more about this "debt storm", since your politics move world markets.

Can you provide some jumping-off points for the financially-literate?

[ptero]

"Broken Money" by Lyn Alden is a good engineering background. Then, for example, read one of many macro articles on fiscal dominance.

You do not have to read Lyn first, but without reading it on modern financial systems I personally would not understand most technical points in the current macro discussions.

[shadowerm]

Even then though, there is a giant global debit maturity wall from covid that needs refinancing at much higher interest rates that starts coming due in 2026 and 2027.

That is much sooner than fiscal dominance in the US. I suspect we can go to 100 trillion in debt at least without fiscal dominance. I suspect everyone will understand what fiscal dominance is in the 2030s though.

This liquidity problem from debt refinancing is much nearer.

[ptero]

To nitpick a bit. I see the fiscal dominance not as "even then" but as a "because of" the unsustainable debt levels.

With the US budget deficit over 35% there are fewer and fewer external parties willing to lend to the US at low rates. The government could reduce the spending (yeah), collect more taxes (raising taxes 50% across the board -- sure) or use fiscal dominance to lower the rates. Fiscal dominance could be done in a variety of ways, either directly (e.g., printing money and using it to buy own bonds) or indirectly (e.g., by printing money and requiring pension funds to hold some treasuries), but whatever way it is done, the increase in M2 that goes with it will devalue assets for an average person. This is not the future; this is already happening via various quantitative easing programs. That was a US-centric view; Western Europe is in a broadly similar state.

The beauty of fiscal dominance for politicians and MMT-subscribing economists is that it removes the liquidity problem from debt refinancing. The problem (and the quiet part that some forget about and say out loud) is that it requires capital controls.

Capital flow controls was something the US had naturally in the 1940s, when a major US fiscal dominance effort was last run. But this is not the state today. In the modern world where one can buy gold, bitcoin or any of 100+ currencies with a few keystrokes capital controls will be harder to enforce.

Next decade will likely be very interesting, at least from the financials viewpoint... My 2c.

[dools]

Read The Deficit Myth by Stephanie Kelton and watch the film Finding the Money to find out how this "debt storm" is neither debt, nor a storm.

[akg_67]

/r/AskEconomics is a good subreddit for such topics, mostly due to top level replies being highly referenced and vetted. Check it out for informed discussions.

IMO, US is a unique case as the biggest consumer, importer, military and financial power. All these economic concerns about debt, trade deficit, inflation etc is just election year rhetoric that will die down once new admin is sworn in (may be this is my prediction for 2025).