Imagine, if you will, a country in which banking regulations were stripped down so far that worthless paper again becomes a hot commodity. Now consider that this had (as it inevitably must) blown up and caused a crash in the lending market and equities market and thus the economy in general. Further note that a necessary result would be a rapid rise in the price of precious metals, notably gold.
After a couple of years, that gold bubble would be ripe. People who had assets remaining when the junk bonds or sub-prime mortgages or whatever collapsed could have conservatively moved their money into gold, further depressing the equities market and inflating the price of gold.
But, wait. Because of government investing, the market was recovering too fast! So fast that the wealthy were unable to swap their inflated gold for depressed stocks at the optimum time. What to do?
Congress to the rescue! The wholly owned carriers of the banners of freedom and independence could be employed to create a palpably unnecessary crisis with a distinct deadline. Yes! This would quickly depress the markets and allow those holding too much bubble-gold to buy depressed stocks.
Meanwhile, those elected to carry the load of screwing the middle class could also jump on the wagon and buy up stocks just before the deadline hits. Then the price of stocks returns to normal levels, and the gold bubble can be allowed to pop.
I, for one, would like to see the trading histories of all those involved in the current crisis, and their friends and kin.
Pay no attention to the man behind the curtain. The middle class has been soaking us rich people for too long, and it’s time to get even.
And all the unemployment you pay us! You got a taste of the Bitch pudding!
Hmmm. Maybe I’m right, given the early evidence: Gold Price Drops on Debt Ceiling Deal
Dan: Gold changed only negligibly today. My read is that it will keep rising in dollars as long as the U.S. is borrowing 30-40% of federal expenditures, leading to felt need to print cheaper and cheaper dollars. http://www.factcheck.org/2011/07/fiscal-factcheck/
Recent investments in gold by the burgeoning Chinese middle class and wealthier Chinese will continue to drive up the price of gold. There is apparentlty less confidence abroad in US Treasuries and the US dollar. Imagine that? I’ll bet it’s a Tea Party and Republican conspiracy. Why else drive the country and world to the brink of economic disaster?
I was just remembering what the Hunt brothers did in the 1970’s, just as I was studying silversmithing. Those two guys ran gold up from about $100 in 1977 to about $800 in 1980 by manipulating silver futures. (Chart of 36 year gold price history)
It can be done, and although economics are chaotic (in the mathematical sense) there are certain predictable related trends in the medium term. But you need large capital and long term planning to take advantage of those.