The USA has 10 700 billion ( 10 700 000 000 000 USD) debts.

I think Obama is better then Bush - BUT if he tries to pay off debts with even more debts - this is the beginning of the end of the USA.

The USA will never be able to pay off the debts...and taxes will go up and up so that the government will be able to pay off the interests on the debts...

It even reminds me of Ludwig XIV, who tried to pay off the debts of the government by printing more money...

In times like this, you notice that less and less people trust the dollar (or any other currency) as gold prices go up and up....the only "currency" you can trust, as gold is a limited resource.

Ok I am a bit thick when it comes to this kind of politics/economics etc.
Can someone explain in words of one syllable so my poor simple mind can explain......
Why can't the govt simply print more money and use it to pay off debts? That seems the obvious and simple answer to me!
If I had a (legal) money printing machine in my house I would be trotting off to the bank and paying off my debts pronto!
In fact, why cant African countries etc do that too?
Is there some world law that prevents this?

The more money exists, the less it becomes worth.

For a government it is good, because the debts can be paid of quicker...but for the rest of the country it is bad...imagine the price of milk increased to 100 pounds for example...and all your savings would hardly be worth anything anymore.

This also happened in Germany before the introduction of the DM....when the RM existed suddenly bread was a million.


Here is an example of a 50 million Reichsmark note:



and it all started with small notes:




So imagine the prices in the UK go up..and suddenly you have to pay more and more...until someone then decides to declare all money worthless and a new currency arrives.

This could happen again....in the UK, the USA...or in general in all Euro countries.

This would be interesting! I suppose most long distance trade would stop, which would mean exporting countries, such as China, would suffer too. The whole world's economy would slump. Ironically it may be less economically developed countries that can pull through more easily. It's hard to say how it will all pan out in the end, since each government will try to protect its own economy by various means. What is harder to know is how to prepare for such events. Obviously saving money will have little benefit.

Ive been reading that the only safe investment for the future is gold. so people, dont put your money in the bank, as it will most likely end up devalued. Buy some gold bullion and be a smart cookie

At the moment, USA is in a strong position. The US dollar is the standard world currency. All other currency value is measured against it. As long as the Dollar sets the standard, US have the power as they can print as much as they like. The problem for USA is that the Euro and the British Pound are closing that gap fast. Some even say that it has already passed the Dollar. It was predicted by some of the world's best economists in the early 1990's that the world economy would go into a slump as soon as the Dollar loses its global value. 15 years later, it seems that its all falling into place?

As far as investments go, your money will lose its value if you try bank it. The interest you make on your money won't keep up with the drop in the value of your money. Find something constant to invest in... like housing. If you are a tenant, renting your apartment or house, look into options of buying it. If you already own the place, look into buying another place and letting it out. Don't judge your money by hundreds or thousands... judge it by how many houses you can buy with it.

eg:
If you have $10,000.00 saved and u know it can buy you a small apartment. You have a choice in renting your place for another 5 years or purchasing it.
If in 5 years time, the Dollar has crashed and the value is about 1% of what it was, that same flat will cost you $1 mill. If you had banked that money and put it in the best investment options at the time, it might be worth $50,000 dollars in 5 years at most.

You see, by buying the apartment, you haven't suddenly become rich. It just means that your money hasn't depreciated as fast as banked money has (if at all).

No, the USD is not the world currency anymore...and in the long-term the USD will loose in importance. The USD becomes worthless - and this for the last 20 years....and now with the Euro, the debts of the USA etc, it is risky to invest in the USD...you will loose money...no matter what the interest rates are. The only reason why the dollar has not crashed yet completely is because many governments from other countries keep on pumping money into the USA to artificially keep the USD alive.


"if you are a tenant, renting your apartment or house, look into options of buying it."

No way - renting is often far better....no risk and no obligations...and lower monthly costs often.

If house prices drop by 50%, you loose 50% + the interests rates that might be higher then the rent.

Especially in the USA there is also the danger that whole communities become ghost towns and houses are not worth a dollar that used to be worth 300,000 USD.

"If you already own the place, look into buying another place and letting it out."

No way, house prices will fall further - especially in the UK they are still over-valued.

" Don't judge your money by hundreds or thousands... judge it by how many houses you can buy with it."

In some countries you can get houses for free - because nobody wants them.....whats the point of owning houses if they are empty or run-down or new lawys require to refurbish them to make them energy-efficient or otherwise you will have to pay fines? (might soon be).

If you own a house you need to invest money to avoid that it looses in value - even if it is a good location. Buying a house should only be an option if you know what you are doing...but most people are not property experts and even property experts are often wrong.

I guess the situation is different where you live?
In SA, houses are in demand. House prices have been on a steady increase for years. I bought a house for R120k in 1997 and sold it for R750k last year. Improvements? none.

Buying a house on mortgage is cheaper than renting over here. Monthly repayment on a R200k house is about R2,500 per month. Rent on that same house would cost you around R4k.

BTW, out if curiosity, how many people here have lived in a city that has emptied itself out and become a ghost town? Not a common thing as far as I know? Most ghost towns are former mining or logging towns who's resources have run dry. Just a quick glance at town forecasts can tell you if you are in danger there! Not too much to worry about wrt 'ghost towns' these days. If that's the biggest counter-argument to NOT investing in property, then I'd take my chances!

I'm going to side with chatt3r on this one. In the UK there is a lot of demand for houses as the population grows faster than we can build them. I can't see many ghost towns forming, however city centres may become derelict in places if our currency collapses. If you invest in a house and it halves in value, at least you have a house to live in. If you invest money and it halves in value, then it wont keep the rain off! Sure you will have wasted money on your house, but that's better than watching it vanish into thin air surely?

Other things on my investment list:
A few thousand litres of fuel
Tinned food
Bottled water
Encyclopaedia Britannica
9KW generator
A nuclear bunker
A shotgun to keep away looters
...I might be taking the P now

I would side on Toby, atleast from an American point of view.

The housing market is in a terrible state here.

So many people purchased houses that they couldn't afford and they have since been repossesed where then the bank auctions them off at a low price, which in turn lowers the value of everyone else's houses because now someone can get a $500,000.00 house for $250,000.00 or less.

If you plan on investing in a house with the hopes that the market will once again thrive, then I suppose you would be lucky in that aspect, but i wouldnt suggest planning your financial future on simply hope for a better tomorrow!