I feel the earth shake, raise my voice
I have my sould, I have a choice
I feel it burning, I want more
So what am I waiting for?
--Miley and Billy Ray Cyrus
Ron Paul stands firm on no debt ceiling increase whatsoever. Unfortunately, he believes he'll be in the very small minority.
As such, he believes that default is inevitable. But his definition of default is the broader one--one that includes defaulting thru debasing the currency. His thesis is based on the reality that we've borrowed beyond our capacity to repay. As a consequence, we either stop payments to creditors or pay them back in devalued dollars.
His idea is to start positioning for the inevitable default.
Meanwhile, we may be foregoing a final opportunity to change course under our own volition.
position in USD
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3 comments:
The advocates of public control cannot do without inflation. They need it in order to finance their policy of reckless spending and of lavishly subsidizing and bribing the voters.
~Ludwig von Mises
So how does an individual start positioning for the inevitable default? There has to be more options than just buying gold and silver.
If default follows the 'print money' path as RP suggests, then cash will be the worst thing to hold. Tangible assets will be valuable. Stocks may work, but history suggests that during big inflations stock prices usually do not keep pace.
If default follows the 'quit paying the bond coupons' path, then this is deflationary by definition (i.e., debt is being destroyed). In this case, cash will feel good as prices of risky assets will be prone to decline.
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