Ever expanding CADs are, I guess, bubbles just like any other. Normally when a CAD bubble goes pop the fiat currency will go with it. However, with "quantitative easing" happening in all the major economies the AUD won't necessarily go pop in this way - even if Australia's CAD escalates.

A key side point is that the government expenditure increases do no more than (partially) counter decreases in private sector expenditure. I don't know if anyone can really say where future CADs are likely to go.

I sometimes read what Steve Keene has to say – his blog would be a good place to put some of these issues into (an Australian) context.

PS: I liked the way you separate the real agenda from the propaganda surrounding the first home ownership scheme. On a much bigger scale its a similar situation in the US.

I understand that the US Government can't allow house prices to collapse further (as some classical economic theorists would like). To do so would put just about every American mortgage underwater and this (it is argued) would trigger a 1930’s style banking system collapse. All the US can do is print money to keep nominal house prices relatively stable. Money printing won’t however get rid of the “real” losses incurred by the banks. Cheers!

This possible scenario does not imply a commodity price recovery (in real terms). Being a pseudo index of (relative) commodity prices, I expect the AUD to rise in value - relative to over currencies. In a global race to a currency bottom, a relatively high AUD won’t bode well for the economy?

This could mean anything for gold I guess.

Although there is room to play at short term gains riding local fluctuations, intrinsics always win in the bigger picture.

As for USD/AUD variations, the AUD has been taking its medicine but the USD has just been putting off the inevitable. AUD will bottom out first (hasn't happened yet) while the USD is just at the start of a long and scary ride down. China don't want the USD to crash too bad because they don't enjoy the instability but all China can do is slow down the inevitable. Rather than a rapid nasty USD crash, we will see a drawn out downward spiral, probably going on for years.

You can end up buying gold which is likely to keep going up - but in USD - and still actually "lose". That can happen if AUD stages even a slight recovery against USD, which is completely possible.

For example, the one year performance of gold (from now) in USD is only about 6% up. In AUD terms its like 50%.

What is missing here is the chart of price of gold in AUD and USD.

USD is going to crash