Friday, June 12, 2015

It's not "IF", it's "WHEN"

As usual, I was reading ZeroHedge and I stumbled across this article about Gold.

It reminded me of a recent conversation that I had going on with my friend.

He asked me all sort of good questions.

What is debt? 
Borrowing from your own future.

Why is there so much debt? 
People tend to value the present more than the future

How is it possible that so much debt is created?
People with excess money don't mind to lend it to earn interest

How can debt be paid back?
People dial back on their current consumption or increase their incomes

What happens when people can't pay it back?
They default and become bankrupt

Are countries the same as people when it comes to debt?
Yes, except that they could also print money, ie. force out inflation

Why don't countries just print more money then?
That's exactly what they are doing

Wouldn't that solve all the problems?
Have you heard of Zimbabwe?

I also found this interesting infographic to help visualize and put in perspective to people about how much gold there is in the entire world. 


I'm not saying that gold is a great investment. Gold is a commodity, it is a precious metal. It is a non-productive asset. It just is, and will always just be as is.

But, that's the appealing thing about it. It is there, and it will always be there.

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