At a time when our economy is fighting for its life, it seems almost surreal that an IPO is about to turn a handful of people into multi-billionaires. Facebook has definitely turned into an Internet phenomenon with some 850 million users worldwide. Now it begs the question - will an investment of $50 billion $80 billion and perhaps as high as $100 billion, produce a return on investment for those willing to bet another Google-Like phenom is being born.
These billions of dollars are about to be invested against a backdrop of a failing stock market and fresh warnings from the most powerful banker in the world. Looking back to just days prior to the Lehman launch of the 2008 credit crisis, we see stocks have done nothing. Even the great Google has fought just to recover to 2008 pre-crisis levels.
Now as if to say, don't blame me when it hits the fan, Ben Bernanke, today, issued a warning, Rising federal budget deficits are posing a significant threat to the U.S. economy and are likely to cause a crisis if not brought under control. This is especially alarming in the wake of having just raised the debt ceiling by $1.2 trillion dollars. Does that sound like control to you? Does this sound like an environment conducive to rising stocks is being created?
This warning is spoken like a true believer in printing money to escape economic disaster. As though debasement of our currency is preferred over creating debt that is increasingly more difficult, if not already impossible, to repay. This comment by the Fed Chairman suggests the Fed believes we have created too much debt and not enough printed money. That's my take. Either way, debt is not under control and may never be. The economy is not recovered and is still in peril. So what will be next. More debt or more printed money?
In the last 3 years or so, we have gotten a combination of both printed money and rising debt. More than $8 trillion worth. So in my humble opinion, whichever we are about to get more of puts gold in a win-win situation. Numbers don't lie. Stocks have gone nowhere and the gold price has more than doubled. Against that backdrop which investment makes more sense to you today. Facebook or Gold? I mean...I'm just sayin'. The choice is always yours.