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The MoA Week In Review – OT 2025-275
Last week’s posts on Moon of Alabama:
> Trump does not have the legal power to close the airspace over another country, even as he appeared to be threatening an attack or seeking to push Venezuela’s leaders to think he was contemplating one. <
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Other issues:
West Asia:
EU:
EU and Ukraine:
UK:
Use as open (not related to the wars in Ukraine and Palestine) thread …
@c1ue:
“Why would a future revaluation/confiscation be any different?”
There are a few reasons, such as financial instruments reckoned in gold, physically held by others (gold ETF). That complicates confiscation a bit. The other part is the very large and liquid and easily accessible foreign markets in gold, which weren’t nearly so accessible to plebes in the 30s. I agree with your baseline premise, tho, e.g. “when gold gets to be problematic, we’ll eliminate the (access to) gold”.
The other point is about this notion of US can pay debts no matter what by inflating the dollar. Yes, of course they can, but the collateral damage to the economy would be proportional to the annual rate of inflation. Who is the creditor for all the US debt? Yes, foreign banks hold a lot, but the bulk is held by Americans. The econ damage would be pretty big, and the political fallout bigger.
I don’t think the USG, nor the “deep state” would be able to keep a lid on the political fallout if inflation got much above 20%. Much of the top-10% wealth is in 401K holdings, which would take a massive hit, not just because their USG bonds were worthless, but also because the corporate bond-holders’ customers’ incomes would not be able to keep up with rising prices. Prices tend to rise much faster than incomes. House prices (perceived wealth) goes down in proportion to interest rates, which would have to rise substantially as inflation takes off.
So a devaluation most certainly would be very disruptive. That much is obvious to all.
What I’m trying to work out right now is how to avoid the financial haircut that I see coming right at US Americans. It’ll be a miracle, by my lights, if the stock market doesn’t correct 30+ pct down, or more, and if inflation doesn’t rekindle, and as some posters here (like Exile) project a major squeeze on Gov’t spending in the next few years. We have massive asset price-inflation across the board, and stable foreign equities require pretty specialized knowledge that many of us (me included) don’t have.
The average US investor is on really shaky ground now, faced with a lot of bad alternatives.
Buy overvalued land or housing? Commercial buildings that may vacate? Hold US equities? Inflation accounts for most of stock price rise, and the rest is based on the (bubble?) performance of a few major companies.
OK, how about USG debt? Pretty stable, rock solid, holds value, right? No. Not looking real good at the moment. And when c1ue comes along saying things like “US will just inflate it away” (and he’s right, they will) … do ya want to hold USG bonds?
I also note the price resistance (wobbling around $4K / ounce following 25% price rise previous few months) evident in the gold charts over the last month or so; there is enormous force being applied to keep gold from rising fast, as it represents a bellwether on the state of the US dollar.
Canuk, I’d be very interested to hear your remarks on this subject. The point about the gold price, c1ue, is related to the ability of US to borrow, and pay low interest rates on those borrowings. Gold rising fast makes people edgy about the dollar.
That borrowing is a major factor keeping the US economy buoyant. If gold stays high or goes higher (says USD is becoming less valuable, very visibly) interest rates can’t come down (buy gold, make money; hold dollars lose money). US may need a lot of monetary stimulus (lower rates, get a flood of borrowing and spending) in the months and years to come. What if USG can’t borrow? Ask Exile what happens then.
Anything that impedes USG borrowing is bad for the US economy. Rapid inflation is bad for the US economy. Gold is a bellwether that tells both stories. This is not a great time to be Chairman of the Federal Reserve. No good moves, and take the blame for whatever happens. Yay.
I’d be interested to hear if and in what manner the Bar is maneuvering to address these major financial currents we are in now. Seems like those currents are going to intensify. Planning seems indicated.
Posted by: Tom Pfotzer | Nov 30 2025 20:37 utc | 50
@Tom Pfotzer #50
The other point is about this notion of US can pay debts no matter what by inflating the dollar. Yes, of course they can, but the collateral damage to the economy would be proportional to the annual rate of inflation. Who is the creditor for all the US debt? Yes, foreign banks hold a lot, but the bulk is held by Americans. The econ damage would be pretty big, and the political fallout bigger. I don’t think the USG, nor the “deep state” would be able to keep a lid on the political fallout if inflation got much above 20%.
All correct. The point which I thought was obvious – but apparently which is not – is that the above bad effects will happen when they become unavoidable, not because there is any 12D plan to get around it.
The traditional way to handle too much debt is inflation. Not war per se. It is another common error to say that wars are started to enable inflation…in fact, it is always – as a class – the wealthy people who don’t want inflation because it hurts them in the long term, even as the poorest of people who are worst hurt by inflation in the short term. But all things being equal: a war in which the poor of a nation are not roped into the dying; in which inflation is allowed to run rampant but also wages must rise as fast or faster is a situation which levels out inequality.
Much of the top-10% wealth is in 401K holdings
Incorrect. A significant amount of overall wealth of the top 10% to top 2.5% – ie the PMCs and enablers of the rentiers and monopolists is in 401Ks, but nobody cares about those people – neither the ones who employ them or the ones below them. And those people have neither the money, nor the power, nor the numbers in and of themselves to matter politically except as appendages of those above them. After all, the billionaire can always find someone else to be the tax collector…
So a devaluation most certainly would be very disruptive.
Devaluation of what? I don’t agree that all devaluations are disruptive in a negative way. Housing devaluation would be a positive for Americans and American society, as one of the bigger examples. Health care cost/spend devaluation would be another enormous example of an obvious net positive.
What I’m trying to work out right now is how to avoid the financial haircut that I see coming right at US Americans.
Figure out how the haircut comes, and do something which the haircut does not affect or even benefits.
OK, how about USG debt? Pretty stable, rock solid, holds value, right?
Looking at anything involving US dollars is pointless without considering how that thing performs as dollars decline in purchasing power. Or put more obviously: what has pricing power?
I also note the price resistance (wobbling around $4K / ounce following 25% price rise previous few months) evident in the gold charts over the last month or so; there is enormous force being applied to keep gold from rising fast, as it represents a bellwether on the state of the US dollar.
The rise in gold price is partly a function of dollar devaluation, but the US dollar has not halved in purchasing power in the past 18 months. Even in the worst case of say, 15% loss in purchasing power – gold should only have gone up 17.6%.
The rest of the gold price increase? pure speculation plus liquidity finding a new home.
The point about the gold price, c1ue, is related to the ability of US to borrow, and pay low interest rates on those borrowings. Gold rising fast makes people edgy about the dollar.
Nope. Disagree completely. There are a myriad of ways in which the US can force new buyers into the Treasury market. Yes, they represent scaling of the banana republic spectrum, but we’ve been scaling the banana republic spectrum for some time already.
Anything that impedes USG borrowing is bad for the US economy.
Nope. Disagree completely also. This is classic bankster bullshit.
First of all: the amount of economic growth per new debt has been continuously declining for multiple decades. Which leads to:
Second: lots of easy debt = zombie companies = shit economy.
Changing an economy from bankster/monopolist decline to growth isn’t rocket science.
But it does involve not listening to these fuckers.
Posted by: c1ue | Dec 1 2025 0:45 utc | 89
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