has the us lost control?, page-6

I disagree with the hyperinflation/gold bubble scenario put forward by that article and unfortunately he doesn't put much of an argument forward other than a mostly emotional pitch for an armageddon scenario. While it is true that the world has created a massive debt bubble and that gold is just as good as currency as it was two thousand years ago, that doesn't mean that the value of gold will go ballistic... If the US economy does go hyperinflationary then yes the price of gold will rocket upwards but that does not mean that it's value has changed, merely that the currency used to buy it has been debased by the Federal Reserve.

Fwiw for the US Federal Reserve to debase the currency by that degree means that somebody is borrowing money from it... BIG money. But when interest rates begin to rise who will the borrower be? Not the Chinese, they will probably be the first to crack the irrits because they know that it's just devaluing their existing bond purchases... Not Joe Bloggs down the main street, he'll see property values falling and his job disappear so he won't be interested. That only leaves the US Government who've been reasonably happy with their relationship with the Fed up until now... but even that has limits so with an ever increasing interest burden either the pollies will wake up or the electorate will vote someone else in and when that happens the merry go round will come to a complete stop... On that point I also agree with the article, but that doesn't mean hyperinflation... it means that people start repaying their debts and tightening their belts... so with no (or reduced) additional borrowing and debts being paid down the money supply will contract... perhaps it will crash, perhaps it will ease, but it will contract and as that takes place the value of each dollar that remains in circulation will increase until the cycle bottoms and the process starts all over again.

If a gold bubble does happen then I wouldn't mind being on board but I won't be looking at a gold:usd chart... I'll be comparing gold to other commodities (oil, copper etc) and looking for a vertical trend in relative values.