Pretty much. Financial armageddon.

Making prediction is difficult, but if I had been consistently wrong on gold for the last 10 years, I'd feel guilty about my followers' financial loss, apologize, or at least keep my mouth shut. 

Apparently it's not the case for the president of the Elliott Wave International:
 
http://www.reuters.com/article/2010/06/07/us-investment-summit-prechter-gold-idUSTRE65652L20100607

http://truthingold.blogspot.com/2011/04/robert-prechter-aka-mr-elliot-wave-is.html

yeah thats true.  he's been really wrong on gold.  i'm glad i didn't listen to him until i sold at the silver top in May and gold starting a month ago.  and i'm glad i'm not a financial advisor either with clients.  but he did get the 2008 deflation call right and called the bottom in 3/09.  has been wrong again since 10/09 when he thought stocks would roll once again.  but his overall deflation theory makes sense to me altho i freely admit this could go the other way and could regret the gold selling.

I didn't predict it would happen. At most I'd expect some form of fiat which is used in many countries but obviously not all. An extension to the Euro idea under one central bank.

More likely to see return to gold standards.

You mean we could do without war but people wont choose it?

I don't predict a single world fiat currency either. I never meant that with whatever I said.

Er, hang on.

You list two examples of UST defaults, both of which happened by changing the value of gold in relation to the dollar.  So, a bond holder got back the right number of dollars, but not the right mass of gold.  This type of default has been ongoing for like 40 years now, with no sign of ever stopping.

The other kind of default is the kind where the Treasury just declares some bonds to be worthless, or at least worth less than their face value.  In this type of default, bond holders don't even get back the right number of dollars.

The second type of default hasn't ever happened, and probably never will happen.  This kind of default would be apocalyptic, and would probably instantly create hyperinflation.  UST and USD are widely considered to be different instances of the same thing, so a loss of faith in one is the same as a loss of faith in the other.

I really can't imagine any possible way for the treasury to default in a way that actually increases the value of the dollar.

this is not true.  UST bond holders do not invest in them for the yield.  they invest for bond appreciation.  this has been the best trade since 1980 of ALL except for perhaps gold the last 11 yrs.  Remember, everytime the Fed jacks down interest by half the value of the bonds double.  he's been halving the interest rate for decades and its theoretically infinite.  there's also whats known as sliding down the yield curve as a bond ages.  can't exactly remember the term for it.  but it essentially the same concept; as the bond decreases in age from say a 10 yr down to a 5 yr, the interest rate drops and the value  of the bond rises.  this has been a fascinating trade of which i've never taken part but which expert UST investors have taken advantage of since 1980.  this is why muni bond issuers have gotten killed by Wall St selling them interest rate hedges.  it seems so obvious that interest rates would rise with all the debasement of the USD but in fact what is going on as explained best by Antal Fekete is that the more the Fed pushes interest rates down the more the UST bond speculators buy UST's to front run their buying schedule creating a virtuous circle of increasing bond prices and further decrease in rates.  this took me a long time to understand but Fekete explains it beautifully.  this is why i've explained the UST market as a vortex black hole sucking most available capital into it at the expense of the real economy.  muni bond issuers have paid a dear price for their hedges which went against them.

if we go into a Depression, UST bond values are likely to increase even more in value which is why so many investors paradoxically dive into them during troubled times.

US treasury yields surely aren't going to go lower or much lower? 'Til now it's been the federal reserve that has been sustaining them ultimately. Now they are expensive and give almost no yield, so I think US treasuries are now the way to kill wealth if you wanted to.

You would agree with this as you think everything is going into deflation. I am fine with the idea that treasuries have maxed out.

But wait!


Oh dear. Your words are either very contradictory or it is true that markets are completely illogical which isn't true. There is a reason why gold has been going up and it will continue!

Head and shoulder reversal?

this is exactly what ppl are doing.  again, its not a bad investment when you think of it in terms of bond value not yield.  this is TLT the 20 yr UST