OK, a long post that has been brewing for a little while. It seems appropriate in that we are quickly coming to anxiously await the actual posting of GS's 10,000 post on his thread that he started. Since I posted on the first page of this thread those years ago, it seems that I could spend a couple of minutes and offer my views on some current topics. So, here ya go, IMHO.
Aww, come on guys. We've been talking about this new world order, socialism, manipulation of the masses for at least a year here. We can jaw all we want but everybody seems so suprised that it's actually happening. Well, maybe this is a good moment for reflecting on our first taste from the bottle of this "future" that we have just begun to sip. This ain't your fathers Oldsmobile.
Carbon credits...hummmm. So maybe Big Al is going to go talk to Hu and tell him to stop his country from burning coal? Remember the Olympics and about how no one could even breathe the air and they had to shut down all the factories and take all the cars off of the road for weeks just so the tv cameras could even see the birds nest stadium through all of the smog/pollution/carbon? So, take C off of the list of possible carbon traders 'cause Hu probably doen't want to even talk about it; they have their own problems, don't you know. How about India, hummm...maybe someone can talk the masses out of burning dung, wood, charcoal, cardboard, anything combustible just to keep the lights on...go ahead and sign them up for the carbon credits scheme, they ought to be all over that stuff. So, that takes care of the I. Brazil, hummmmmmm. Maybe they will stop burning thousands of acres of forest every week so they can plant export crops but hey, they could be selling that forest land for carbon credits...yeah, they are real intersted in carbon credits, sitting by the phone waiting patiently for the call. So scratch the B also. So, out of BRIC we have R left. I'm actually suprised that R is still going but since they had that big oil bonus from the $150/barrel they were thinking they might make it but they are on the quick path to becoming economic detritus, just a few steps behind Iceland. Now that we're on the topic, I've noticed Chavez has been really quiet with that $40 oil and all, him and his R buddies should be getting kind of jumpy right now because those people do know how to riot...remember Bolshevik and Che'. I'm sure all those countries are going to be real intereted in carbon credits right now...maybe they will send a jet for big Al to come on over talk about it with them. On the other hand, we have the middle east...oh wait, those are the guys selling the carbon, hummmm yeah, they sure do want to talk about trading carbon credits; actually, they have some carbon to sell. So, all that's left are the developed, sophisticated, european descedant countries that are holding huge conferences about carbon credits. Sure, whatever.
Social engineering...yepper, we've been waiting for it, we've been talking about it, and now we are getting our first peeps at what it might look like in reality. So, what are you gonna do about it? Better question, what can you do about it? Heck, do what everyone else is doing, ride the pony, get what you can from your government and try and get some before it runs out. But, you wanna know the problem with that strategy? Economies are much like resources in that as the resources become scarcer and scarcer they are depleated at a faster and faster rate until the resource is gone like the Carrier Pigeon. Economies, once stressed and predated upon, become weaker and weaker until at some point, they are nonfunctional. There have been plenty of theorists that take the stand that if you want to destroy a country don't fight their army, destroy their economy, then everything is still intact and you can just walk in and take it...the people are still there, the equipment and buildings are still there and everything is ready for the "Under new management" sign. If an ever decreasing number of people give the profits or their labor and endeavor to an ever increasing number of people that don't produce anything or contribute anything other than their souls and presence then how can that society prosper? Well, it can't but our current situation, there is little that can be done.
It's kind of like the problem with the terrorists...everyone wants to go and fight the terrorists till they are gone and then we can say we won and defeated terrorism and then, finally, there will be world peace. Nope, terrorism is an ideology and you can't kill ideology; you can kill a terrorist but you can't kill terrorism, you can't kill a thought...there will be terrorism be it ecoterrorism, economic terrorism, social terrorism, religious terrorism, the genie is well out of the bottle here and other than protect yourself, there is little that can be done here. So, live with it as there is no army that can defeat a thought.
So, the Europeans and Asians are running to gold all the sudden. Gold is good and I hate to say it but there is some chance that gold might be the only play in the world worth any credence. There have been a number of media ticklers about the "big bang" economic plan that is supposed to be revealed to us by our leaders next week. Is there a new currency in the works, maybe a little devaluation or some kind of boogie woogie that alters the value of our currency and replaces it with something else that is backed by the full faith of the government? There is something going on...something big is going on and I'm really suprised that no one has spilled the beans yet, not even Drudge...this is a very well kept plan. Looks like we are going to get another sip from that bottle of "future" we just opened.
And of course, there is gold. Everyone has an opinion and here's mine. Gold is good and other than the banks screwing with the gold contango like they are doing with the $40 oil sitting in the tankers of the worlds coasts waiting for the $52 September furtures contracts to mature, the gold shorts will be crushed. The naysayers are almost out of rope and it's gonna be ugly but hey, what can you do other than hang on to your religion and your guns...oh yes, and your gold.
Good luck to all and to the 10,000th post, it's been a great treat to have this thread and now to have our own forum...life is good. Live long and prosper.
Well its time for my 2 cents here too, although I am not as elequent or long winded as mhammerman is.
Yes socialism is coming , like it or not, get used to it. As much as I have loved to prosper in the capitalist society and fought hard to get Ron Paul to save us from this mess I have to finally give in. But I also have to say that when government turns on the producers and distibutes the borrowed and taxed prosperity to the masses those who benefited the most in the past will have no one to blame but themselves.
These "producers" have shown the true failure of corrupt capitalism. The ability to produce nothing except paper profits from manipulations, day trading, insider information, fraudulent loans and wholesale corruption. Then after pilfering trillions from the systems they deny the average working familiy sufficient income to live adequately.
How many times do I hear from those making six figures a year working the phones , trading here, scamming there, brokering deals and then whining while the ones who clean the floors, work out in the snow or long hours in the factories need to work weekend to feed the kids.
The system no longer works for the average worker but has been totally corrupted by the power elite and now the backlash is coming. Hopefully we will not go so far left that initiative and hard work will not provide sufficient incentive ala soviet style communism.
As far as those here who continue whine about the "welfare state" stop thinking you owe all your success to your greatness and be glad that God gave you the brains and ability you have. Had you been born to a different set of parents you too could be going to bed hungry every night hoping for the hot breakfast you get at school in the morning.
Coyn, I respect your thoughts on conceding to the socialist whim. I for one will fight this "climate change" tooth and nail. Your broad brushstrokes are exactly what BHO's government will use to justify their New Progressive ideas. Their goal in a nutshell is to destroy capitalism as we use to know it and replace it with Industrial Capitalism defined as Socialism by the ISS in 1905.
I for one make 6-figures and I came from parents that lived below the poverty line. We didn't know we were poor. I'm a Christian and my gifts DO come from God and anytime in my life I felt that I had it under control I had my arse handed to me. You may not understand that, that's OK. I'm not judging that aspect. I think to run head long into socialism is to give up your Life, Liberty and Property. And finally you will not be able to post what you want.
As far as distribution of wealth. I've done my own distribution and have a clear conscience of where my excesses goes. And, there are millions of people/families like me/us. We just don't advertise.
R/S Ren
Just saw Wall Street Journal with Maria B. from Davos. Didn't catch the name of the interviewee , sorry, but the high points were: 1. Don't look into the text books to figure out the recession, 2. Quarter 1 is down, quarter 2 is up slightly but then quarter 3 is down hard, 3. The recovery in 2010 will be disappointingly weak.
Cut to chase. Gold is the last "safe haven." It can not go bankrupt. That can't be said about anything else today. Not even cities, states, and countries.
I don't personally think that socialism or ANY ism except barbarism has much of a chance from here on.
The pendulum of the economy seems to swing between Socialism
and Capitalism. This Nation seems to do best with a correct mix of
both. However from time to time the pendulum swings to an excess
of one over the other.The free trade movement, supported by both parties,
has brought cheaper good into our Country and has kept inflation down. The
price for that has been the flow of manufacturing and service
jobs overseas.
The results have long been predicted, where free trade would lift the economic
standard of living of the rest of the world and lower our standard of living, until
the two meet at some distant time in the future. An additional cost has been the
expansion in the gap between the wealth owners and the working class in this
country. This gap will very shortly begin to cause a growing social unrest and
violence in our Country.
The way our working class has shown a decline in living standards is as follows:
l. The necessity for both the Father and the mother to hold jobs where once a single wage earner could support a family.
2. The lack of savings and liquid assets of the working families compared to 1945 -1975.
3. The enormous amount of debt of working families incurred as they tried to maintain living standards of the middle class.
4. The reward for good and effective work ethic has been destroyed. Executives are paid obscene bonuses when they mismanage companies. They then compensate by laying off major portions of the work force. Even when fired for incompetence, these same executives leave employment with tens of millions of dollars while the laid off workers are lucky to receive two weeks notice.
5. The average work day is again increasing beyond 8 hours as workers try to hold down two different jobs to make ends meet.
6. The current crises in home ownership as the desire to own a home is not balanced by the ability of working Americans to pay for such ownership. This is a decided breaking of a contract with the American Middle Class to enable the American dream to be met.
7. The increasing inability for working Americans, to have family health plans or defined benefit pensions.
It is too late to reverse free trade, without starting a trade war. All that can be done is to establish that a certain percentage of American made materials, must go into federal reconstruction. The Nation, as a part of our National Security must ensure that essential portions of our industrial might are operational in the event that they must be converted to defense production as well as provide a as of quality jobs for American Citizens. At some point in the recovery, the gap in living standards in this country must be addressed thru taxation. Further at some point, a realistic and prudent budget must be adhered to to at least balance the annual budget.
If this country is to survive and thrive, we must become energy independent. This must be achieved even if it requires a special tax on oil to make the alternatives feasible. At least then, the money Americans spend for energy will stay in the country and not go overseas to nations that would do us harm.
A sign of the times.... and the fear out there concerning the economy and the condition our country is in??
On Saturday, I made a trip to a pawn shop that does a lot of advertising that they deal in guns and gold and silver coins. I was hoping to find a little silver if I was lucky. The place was PACKED, with 9 out of ten customers at the gun counters. Ammunition was a huge seller; being sold by the case and none available any longer in some of the calibers. No gold or silver to be found. Tried to look at a few of the firearms available, but it was very difficult to even get to the counter.
Then decided to go to a national chain sporting goods store to take a look at what they had available in firearms. Nearly the same story there; the counters were elbow to elbow with individuals looking to purchase handguns. And the ammunition shelves were half empty, some calibers only available in the lower load levels. No hollow points at all. When I had looked at the selection around Christmas time, there was a large selection, but not that many buyers. Still have a pretty good selection, but looks like everything went up about $100 or so per handgun in price, and loads of people wanting to buy. Again, it was slow getting to any counter to even take a look. The rifle and shotgun sections were nearly deserted.
Out of curiosity, I checked a Wally world sporting goods section to see if they had any handgun ammo.... same story, nearly empty shelves.
So, what is going on? Are individuals getting ready for a siege?? A war?? Anyone else see this going on, or is this just a local Nebraska thing?
On Jan 5, I wrote..."The VIX will find support in the mid 30's over the next 2 weeks. Then bounce and retest the mid-30s. If it breaks and sustains under 25 then we will stabilize the markets for several weeks. If it bounces a 2nd time off the mid-30s, then its GAME ON!!!
Well, we got the bounce then the retest into the mid-30s, now it appears to be bouncing a second time and the momo indicators are in agreement. We may be in for quite a wild ride the next 6 weeks. Tighten your seatbelts!!!!
Does this quote sound like a USA story? Households, struggling with record debt, are losing confidence as unemployment rises and as falling stock and property prices reduce their wealth.
Will the $8.5 trillion government-taxpayer pledge lead to higher gold? *Bloomberg, by Pham-Duy Nguyen & Nicholas Larkin, January 30, 2009: "Gold Rally Fills Vaults on Banks’ Unprecedented Steps
The same unprecedented steps that central bankers are taking to rescue the banking system are driving investors to gold, the commodity investors buy when they lose confidence in financial assets.
David Einhorn, manager of the $5.1 billion Greenlight Capital Inc. hedge fund, bought gold for the first time. Steven Lehman, the Federated Investors Inc. fund manager who beat 99 percent of his peers last year, is betting on bullion with Toronto-based Yamana Gold Inc. and Goldcorp Inc.
The combination of central banks spending trillions of dollars to prop up the banking system in the worst financial crisis since the Great Depression will cause gold to appreciate at least 17 percent this year from $882.05 an ounce on Dec. 31, surpassing the record of $1,032.70 in London, according to 16 of 24 analysts surveyed by the London Bullion Market Association. The metal rose to a three-month high of $927.36 today.
'The government can print endless money, but they cannot increase the supply of gold,' said Michael Pento, chief economist at Delta Global Advisors Inc. in Huntington Beach, California, who is doubling holdings of the precious metal to 8 percent of his $1.5 billion in assets. 'Anything the government cannot replicate by decree, I want to own.'
Investors typically buy gold during times of financial turmoil as a store of value. The commodity has gained in five of the past six U.S. recessions.
Printing Money
To rescue the U.S. economy, the Federal Reserve reduced its target interest rate for overnight loans between banks to as low as zero percent, more than doubled its total assets during the past year and agreed to buy long-term Treasuries. The government pledged $8.5 trillion on behalf of American taxpayers and spent $350 billion so far under the Troubled Asset Relief Program to bail out banks.
The U.S. House passed an $819 billion economic stimulus package this week, Germany pledged 80.3 billion euros ($104 billion) over two years and China is spending 4 trillion yuan ($585 billion) on infrastructure projects.
George Soros, the billionaire hedge-fund owner, said the economy 'will deteriorate' and the International Monetary Fund said growth this year will slow close to zero. The U.S. economy shrank the most since 1982 in the fourth quarter, contracting at a 3.8 percent annual pace.
Only 20 percent of 1,124 chief executive officers surveyed by PricewaterhouseCoopers LLP expect revenue to increase this year, according to a report released as leaders met at the World Economic Forum in Davos, Switzerland, this week.
American Buffalo
The U.S. Mint suspended sales of American Buffalo 1-ounce gold coins in September after supplies ran out. The Perth Mint, producer of so-called Kangaroo and Nugget coins in Australia, said in October that it doubled output in six months. Muenze Oesterreich AG, the Austrian mint, almost quadrupled production of its Philharmonic coin in the first nine months of 2008."
I have a very strict gun control policy: if there's a gun around, I want to be in control of it - Clint Eastwood
<< <i>Does this quote sound like a USA story? Households, struggling with record debt, are losing confidence as unemployment rises and as falling stock and property prices reduce their wealth.
in many ways their wealth is very "new", will it be easier to shed?
USA gov wants it's people to spend more, sure with what? they will need to put fist-fulls of unencumbered $$$ into our pockets. hyper inflation here we come. devaluation? that will be a given...depends on how long is the wait.
Terry... i will defer the 10k post to you BTW it seems to take 4 new posts to turn the page, now at least.
A three prong economic policy plan to turn the economy around without increased government spending that has been proposed by some members of Congress:
Prong 1: Eliminate the capital gains tax (some suggest a 2 year sunset provision).
Prong 2: Cut corporate taxes
Prong 3: Cut personal income taxes at the highest brackets
The first prong will encourage investors who hold appreciated assets to sell them now so that they can avoid paying taxes on the gain. For example, long-term holders of the few stocks that have retained a significant amount of value, like Exxon Mobil or Gennentch for example, can sell now and drive the Dow and S&P down further for the rest of the investing public, thereby shifting loss and risk to the younger generation of investors who have plenty of time to recoup their losses down the road. The selling investors can then use the proceeds to buy productive assets like Treasuries or gold--no sense investing in risky assets like venture capital funds or small cap companies in a recession after all.
The second prong won’t affect companies that are incurring losses, like retailers, automakers, banks etc since they won’t be paying taxes anyway. Those companies will just go out of business and can be dropped from the tax rolls so that the IRS has less work to do processing corporate tax returns and can layoff some of its workers, thus reducing the Federal payroll and deficit. But companies like Exxon Mobil and Nike that have multibillion dollar stock buy-back plans will have more money for productive uses like buying-back even more of their stock. This will counterbalance the blow from the sellers who are avoiding capital gains taxes in prong one and will help maintain the equity value of stock options granted to CEOs.
The third prong will allow the bankers and investment bankers who just received billions of dollars of bonuses funded by TARP to keep more of the government’s bailout money. This will allow them to keep their undocumented household help employed.
Do you think this will get the economy running like a top again?
Do you think this will get the economy running like a top again
Nope.
1. You are still left with the entitlement problem. 2. The economy was running at 110% capacity. It will be nearly impossible to return to that level of spending. 3. The new mantra among Americans is now "save save save" vs "spend spend spend". Cutting taxes will only help people to save while increasing the deficeit for "programs". 4. The only cure for the problem......TIME and a larger (growing) population.
<< <i>4. The only cure for the problem......TIME and a larger (growing) population. >>
I agree. That is why the Govt is allowing the illegal immigrant problem to continue unabated. We have reached a plateau of real economic growth. An increase in population is needed to expand the size of the economy.
With Boomers dying off here in the next 10-20 years or so, there need to be people here to support the system.
Mark Piersall Random Collector www.marksmedals.com
<< <i>... prong 5. Enable a Constitutional Convention and let "We The People" throw all of these crooks out and start over with strong states rights...
Ren >>
Be careful thinking that we want a Constitutional Convention. While it may seem like the way to go, the way I understand it..... once it is convened, they can make whatever changes they want. In other words, the CC may be initiated for one issue, but then the crooks may change a lot of other things.... and we may regret it. We could end up losing many more freedoms if the wrong individuals are in the change process.
<< <i>4. The only cure for the problem......TIME and a larger (growing) population. >>
I agree. That is why the Govt is allowing the illegal immigrant problem to continue unabated. We have reached a plateau of real economic growth. An increase in population is needed to expand the size of the economy.
With Boomers dying off here in the next 10-20 years or so, there need to be people here to support the system. >>
i hope i can do 30-40 years, thank-you
as long as the immigrants help support the system, the difference between legal immigration and illegal (in this forum context) the new HS chief had a very controversial policy in Arizona for illegals. She is (IMHO) very proactive in this field. Time will tell.
No one in Govt pays taxes. Why should we? If we want to send a statement stop paying taxes. What are they gonna do? Take your house? Put you in jail? Good luck on that. If everyone did it, it would succeed.
<< <i>No one in Govt pays taxes. Why should we? If we want to send a statement stop paying taxes. What are they gonna do? Take your house? Put you in jail? Good luck on that. If everyone did it, it would succeed.
When does one think riots will start in California? It seems throughout the world people are getting fed up, riots here and there. I think Cali may be our nations first flash point.
<< <i>No one in Govt pays taxes. Why should we? If we want to send a statement stop paying taxes. What are they gonna do? Take your house? Put you in jail? Good luck on that. If everyone did it, it would succeed.
The currently empowered were elected by the urban centers. If you look at a red/blue county map of the US, you will see very little blue except at the urban centers regardless of geographical location. The blues, at the high level, were elected by urban voters, by concentrations of populations, not by a broad geographical representation. This election was won by urban concentrations of latte slurpers. The urbanites are typically wired with dsl and it is well documented that this election was won on the net with blogs, email addresses, and communications. It could be speculated that this urban blackberry/dsl/email phenomena is the main reason we are in our current situation. If you go to a small town, you don't see the zombies walking around fingering their devices for messages, you see people saying howdy and looking you in the eye in recognition, and then going about their business but in the urban centers, almost everyone has a headset/bluetooth on or at the least they have their devices at hand and you would be darned lucky to even get a nod much less a "how are you today" as you pass them...they love to have stuff happening on their equipment, keeps them engaged.
The other element that plays into this is that red didn't do this tech commo at anywhere the level that blue did; the same old boring reds, nothing happening, no blackberry commo, no bluetooth bleep when you have a new message, nothing going on...it is no wonder things happened the way they did. The reds were stuck in 1990 and the blues were living the new millennium. There was very little blue substance in postions and concrete plans but mostly the blue platform was couched in ideals and ambitions but actually very little substance...well documented. The reds had plenty of substance but no commo. None the less, it played well for blue because it created the images in the minds of the populace by continuously feeding to the devices. Another complaint was the way things were portrayed in the media, everything was very blue...blue, blue, blue. This was played by the blues because they were so wired, they could show real number polls to the media just by texting their contacts for a response and then they could send the info around to all the outlets, they could send real time feeds to the media, they could email/fax/video phone info to the media and their organization was based on innudating the media with blue stuff so what else could the media be fixated on and the media didn't have to do anything...they just suck up the blue feeds and it's ready to print and life is good for the media because they had plenty of action and didn't have to do anything to get it. It was just so easy.
Meanwhile, red did the same old thing...send a news release ahead of a major speech and then send the text to the media...borrrrrrrringggggg. the reds came off as old and common, regardless of their plans and positons. The blues captured the imagination of the masses with constant carpet bombing of the media outlets and the urban populace with commo and showing youth and newness...the message and the messenger were both very alluring and it worked and it was good but now we find ourselves where we are with lots of ideals and ambitions but little substance. All hat and no cattle but the hat do look good and hey, who needs cattle anyway when you have such a nice hat.
Amendments from Sens. Barbara Mikulski (D-Md.) and Tom Coburn (R-Okla.) were both adopted as the Senate began its debate over the economic stimulus bill (H.R. 1) Feb. 2, giving purchasers of new cars a tax break worth $11 billion.
Mikulski's amendment provides an above-the-line tax deduction for all interest and state sales and excise taxes paid for new cars purchased after Nov. 12, 2008, and before Jan. 1, 2010. The amendment was approved by unanimous consent after the Senate voted 71-26 to waive pay-as-you-go budget rules.
Amendments from Sens. Barbara Mikulski (D-Md.) and Tom Coburn (R-Okla.) were both adopted as the Senate began its debate over the economic stimulus bill (H.R. 1) Feb. 2, giving purchasers of new cars a tax break worth $11 billion.
Mikulski's amendment provides an above-the-line tax deduction for all interest and state sales and excise taxes paid for new cars purchased after Nov. 12, 2008, and before Jan. 1, 2010. The amendment was approved by unanimous consent after the Senate voted 71-26 to waive pay-as-you-go budget rules. >>
Any caveats on whether they have to be by the 3 US automakers? If there is, it does not do most any good.
<< <i>Convention? Blah. We have a great Constitution, problem is nobody cares to use it anymore. >>
I should've been more specific. The Sixteenth Amendment (1913) is what I was going after.
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
The current tax code is three Bibles thick and doesn't apply to politicians apparently. The "Fair Tax" has been in circulation for a while and getting traction in Congress. It seems to be a much better system than what is on the books now, jmho.
Mikulski's amendment provides an above-the-line tax deduction for all interest and state sales and excise taxes paid for new cars purchased after Nov. 12, 2008, and before Jan. 1, 2010.
While this would help the short term, I wonder how the medium term is hurt. I mean, if me and everyone else who *may* need a car... takes advantage and buys a new 2009 car... what does that do to the 2010, 2011, and 2012 vehicle market?
<< <i>Convention? Blah. We have a great Constitution, problem is nobody cares to use it anymore. >>
I should've been more specific. The Sixteenth Amendment (1913) is what I was going after.
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
The current tax code is three Bibles thick and doesn't apply to politicians apparently. The "Fair Tax" has been in circulation for a while and getting traction in Congress. It seems to be a much better system than what is on the books now, jmho.
Ren >>
Yeah, I am not a fan of #16 either. Good luck pushing your elected represenitive to go for a repeal. I am still amazed that language was ever remotely entertained, let alone passed by elected Federal and State governments. Then again, I am constantly amazed at what politicians are able to pull over the people.
Mark Piersall Random Collector www.marksmedals.com
-- Posted Tuesday, 3 February 2009 | Digg This Article | Source: GoldSeek.com
Paco Alhgrin, Seeking Alpha Here, I'll simplify it: your government, through Legal Tender laws, is forcing you to use dollars to navigate the economy in which you reside. It is then printing this currency with reckless abandon. Finally, the same government is issuing more debt than ever before in history, which it will loan to itself (or borrow from itself, depending on how you look at it) by employing the nearly innumerable dollars it has printed.
It used to be that a dishonest person had to rob Peter to pay Paul if he wanted to get ahead in life. But times have changed; the old way of doing things just isn't sophisticated enough to fool, say, an entire globe. No, these days, apparently Peter must first print a bunch of cash, then borrow it from himself, and finally dump it from a helicopter in Paul's front yard. Do you still think Treasuries are "risk-free?"
I'm done here. I'm going to go buy some gold.
John Bogle, Index Universe What we are increasingly seeing is the verification of "the financial instability hypothesis" put forth by the economist Hyman P. Minsky (1919–1996). In 1992, Minsky warned that "capitalist economies exhibit ... debt deflations which ... spin out of control ... [as] the economic system's reactions to a movement of the economy amplify the movement ... . Government interventions aimed to contain the deterioration [are often] inept in … historical crises."
Minsky concluded that over long periods of prosperity, the economy transits from financial structures that make for a stable system to ones that make for an unstable system—i.e., that "stability leads to instability," largely through what he described as hedging, speculation and Ponzi finance. In that sense, Minsky was a prophet of one of today's economic crises.
Another insight was also prophetic: "Institutional complexity [read: today's collateralized debt obligations and credit default swaps] may result in several layers of intermediation between the ultimate owners of the communities' wealth, and the [business and individual] units that control and operate the communities' wealth."
This separation between ownership and control has now come to pass. In a mere half-century, we have moved from an ownership society (92 percent of all stocks owned by individuals; 8 percent by institutions) to an agency society (24 percent and 76 percent, respectively), a change I've described as "a pathological mutation in capitalism." Does "experimental" economic policy make any sense?
Ted Butler, Investment Rarities Four traders hold two-thirds of all the true [silver] short positions on the COMEX. That such a concentration equals a control on price should be beyond question. If these four shorts were forced to cover their positions and had to be replaced by many sellers motivated by free market prices, the price would need to double or triple or quadruple. That’s the key question in any manipulation - what would the price of an item be, higher or lower, if the manipulators were removed from the market?
Richard Daughty, Mogambo Guru Regardless of your motives, gold is always popular at the beginnings of the busts that follow the booms that you get when somebody is stupid enough to use a fiat currency (like the U.S.A. and now all the other stupid countries of the world) that gets multiplied to excess so that inflations in the money supply causes inflation in other assets like stocks, bonds, houses and size of government and, unfortunately, food and energy.
And as the bust continues, gold always becomes MORE valuable as everything else turns to crap and the government starts destroying everything with fits of fiscal madness in its insatiable quest for more money, more money, more money! But we were not talking about how the socialist-communist/fascist morons running the place have doomed America, but "Why gold?" The reason is that there will be a lot of rich people selling the aforesaid stocks, bonds and houses, as that is how market tops are formed and why prices fall, and then the sellers will have a lot of money sitting there, meaning that now they have to find someplace to put it, and then they notice that everything else is turning to crap, and that is "Why gold"!
Dan Denning, Daily Reckoning Everyone and everyone's dog (and everyone's dog's feline foes) is calling for the popping of the bond bubble. Every fibre of our contrarian nature says to go against the crowd. After all, it seemed fairly obvious that the Nasdaq was in a bubble when tech stocks were selling at average price-to-earnings ratios of 100. And then the ratio doubled!
The point? A real bubble worthy of the name exceeds your expectations and just keeps going up. This prompts us to conduct a brief thought experiment. What could keep the Treasury bond bubble rising? Fed buying!
That's right. We know the Fed is trying to bridge the gap between government bond yields and mortgage rates. The Fed wants to make it easier for Americans to refinance into lower-rate mortgages, and thus heal the mortal weeping wound at the heart of the American economy. So it's been hacking away at the short-end of the yield curve, trying to bring mortgage rates down by proxy. It follows that if ten-year and thirty-year yields start creeping up in response to the increase in the monetary base, the Fed will kick into action and become a buyer of U.S. government securities. Now we know what you might be thinking. At least we know what that makes US think.
When the Treasury issues bonds, it's borrowing money from the world's savers. That crowds out private investment, but is not really money printing. True, it steals from future income and sends interest and principal payments to bondholders outside the U.S. But that is a kind of monetary time travel, rather than monetary alchemy.
If the Fed, on the other hand, moves to keep a lid on Treasury yields by buying them in the open market, it will likely do so with money in wishes into existence. There's no place like credit! And don't think this will go unnoticed by the precious metals gang loitering on the corner, and its leader, Gold. Here's a prediction for you: gold and its precious metals brothers in arms (silver, platinum, and palladium) will absolutely ambush the dollar this year if things keep playing out the way they are.
John Doody, Gold Stock Analyst One thing I think readers should bear in mind is that gold mining will be one of the few industries doing well in 2009. Their key cost is oil, which is about 25% of the cost of running a mine. Oil’s price, as we know, is down about 75% in the $147/barrel high last July. At the average $400 cash cost per ounce mine, that’s a cut of about $75/oz off their costs. That result alone is going to give them an uptick in future earnings versus what they showed for third quarter 2008.
Something else people may not recognize is that currencies are also falling; many are down 20% to 40% versus the U.S. dollar. All the commodity nation currencies—the Canadian dollar, the Australian dollar, the South African Rand, the Brazilian Real, the Mexican Peso—they’re all down 20% to 40%. When your mining costs in those countries are translated back into U.S. dollars, they’ll be 20% to 40% lower.
So, the miners are going to have falling cash costs and even if the gold price remains exactly where it is now profits are going to soar. This will be unique in 2009. I can’t think of any other industry in which people are going to be able to point to and say, “These guys are making a lot more money.” I think the increasing profits will get the gold mining industry recognition that it isn’t getting now. Of course I’m a bull on gold because of the macroeconomic picture. When you put falling costs of production together with a rising gold price, you’ve got a winning combination for the stocks in 2009.
Martin Hutchinson, Great Conservatives There are two reasons why the United States is likely to appear a much less safe haven by the end of 2010: monetary policy and fiscal policy. The current disasters may have come as a complete surprise to the Great Depression expert Ben Bernanke, but they would not have surprised a greatly superior monetary manager a century before the Great Depression, Robert Jenkinson, Lord Liverpool, Britain’s prime minister 1812-27. Liverpool took over a country with a national debt of 270% of GDP – and figured out how to get the debt down to a manageable level. “There is no surer source of commercial distress,” said Liverpool in April 1820, “than the creation and extension of fictitious capital; and of an appearance of prosperous trade without the reality, which is the inevitable consequence of a paper currency.”
No better description of the Bush/Bernanke bubble could have been written – “fictitious capital” sums up the whole mania. Now by reducing interest rates far below zero in real terms, by doubling the monetary base and by blowing up the Fed’s balance sheet to three times its normal size, Bernanke has rendered capital even more fictitious – and the United States will shortly reap the appropriate reward in an uncontrollable upsurge in inflation.
John Kemp, Guardian The United States and the United Kingdom stand on the brink of the largest debt crisis in history.
While both governments experiment with quantitative easing, bad banks to absorb non-performing loans, and state guarantees to restart bank lending, the only real way out is some combination of widespread corporate default, debt write-downs and inflation to reduce the burden of debt to more manageable levels. Everything else is window-dressing.
Rob Kirby, Kirby Analytics Some central banks (those of China, Russia, Iran and Venezuela) are actually buying physical gold to bolster their reserves. Perhaps you will take notice that countries that have a penchant for gold coincidentally are not viewed as America’s best friends. Ever wonder why?
Fondness for gold makes the dollar look bad. If you are America and are in the business of printing dollars to buy whatever you want, folks buying gold are raining on your parade, and if they do too much buying of gold, dollars can become worthless and not welcome in exchange for goods and services. (I would suggest that this is happening right now.)
JPMorgan Chase is the Federal Reserve in drag. It is Morgan Chase’s job to make sure that gold remains viewed as an unworthy means of wealth preservation, so that the biggest Ponzi scheme in the world stays viable — the U.S. government bond market.
But in the end, just as physical shortages of staple goods – in the face of limitless money creation - will push prices higher; it will be the same where gold is concerned. This process is now underway with the fraudulent futures [paper] price of gold already decoupled from the cost of buying physical ounces. Continued fraudulent interventions only ensure that this sordid perversion ends sooner rather than later.
Steve Saville, Speculative Investor Determining whether a nominal gain translates into a real gain is often not a straightforward matter due to the impossibility of measuring the economy-wide change in a currency's purchasing power. In fact, there is no ideal way of measuring the real performance of any investment; at least, none that we know of. We have found, however, that an investment's long-term performance in gold terms is a reasonable proxy for its real long-term performance. We therefore consider that for something to be in a long-term bull market it must be in a long-term upward trend relative to gold.
This prompts the question: which of the major markets are presently in long-term upward trends relative to gold? The answer is: none of them. Over the past decade there were multi-year periods during which various markets trended higher in gold terms, but the relative gains achieved by these markets rapidly evaporated last year.
To put it another way, a good case can be made that gold is the only long-term bull market 'on the go' at this time. Moreover, based on the information presently at hand we suspect that this will remain the case over the coming decade or until there's an upside blow-off in the gold price.
Peter Schiff, Euro Pacific Capital The grim reality is that when the real estate bubble burst the Government was able to “bail-out” private parties. However, when the bond market bubble bursts, it will be the U.S. Government itself that will be in need of the mother of all bailouts. If U.S. taxpayers or foreign creditors are unwilling or unable to pony up, and if the nightmare hyper-inflation scenario is to be avoided, default will be the only option. If misery really does love company, Bernie Madoff’s clients might finally find some comfort.
Eric Sprott, Sprott Asset Management The Gold Report: What’s your view of the U.S. dollar? What do you see in ’09 for the dollar?
Eric Sprott: The rally in the dollar, in my mind, was totally anomalous and totally had to do with repatriation. In fact, we can even see it in global offshore funds. These offshore hedge funds, which are owned by international financial institutions, have their own issues. So there have been redemption issues in hedge funds. I can tell you from experience, if we had X dollars of redemptions in November, we have one half of X in December, .1 of X in January, and none in February. In the business we’re in, the repatriation is done.
Anything we might have had to do—in other words, sell a Canadian resource stock, convert it to U.S. —it’s over. So the worst of that might be done. The dollar really, in my mind, shouldn’t have rallied; in fact, it should have done the reverse because the obligations that the U.S. government’s taken on here have been immense and I think beyond the scope of what they obviously can pay for, even though most people haven’t gone there yet. So I don’t hold out a lot of hope for further dollar strength.
TGR: But isn’t the dollar the best of the worst?
ES: You might have a point there. It might be the best of the worst and that’s a very challenging discussion. To know what is the best of the worst—and I don’t pretend to know exactly how strong the UK economy is or the EU or the Canadian (I guess the Canadian government I have some sense of)—but for me to analyze each one of those countries and decide who’s the worst? That’s a tough thing to do and it is sort of ironic that that would be the discussion. If that’s the discussion, just buy gold and forget it.
Eric deCarbonnel, Market Oracle Most commentators misunderstand the true moral hazard of bailouts. While bailouts might have an adverse effect on the future actions of individuals and businesses by encouraging risk taking, the real problem is their effects on future actions of the government. Specifically, each bailout makes it harder to say no to the next bailout. This pressure to fund future bailouts is made far worse if those receiving bailout money are truly undeserving. After all, if the government is going to give $45 billion to Citigroup (one of the banks responsible for our current mess) and insure $306 billion of its riskiest assets, then how can it say no to bailing out the state of California or South Carolina?
This "me too" phenomenon will get much worse after the Treasury market collapses, and the Fed starts monetizing the Treasuries that were sold to fund the current bailouts. If the Fed printed money to bail out the banks, why shouldn't it print more money to fund unemployment benefits? Politically speaking, you can't bail out the irresponsible and then let the responsible sink, which means congress isn't going to be saying no to a lot of the bailout requests this year. Unfortunately, these bailouts will become increasingly meaningless because, when you bail out everyone, you bail out no one as you destroy your currency.
Michael Pento, Delta Global Advisors But the most egregious aspect of our current economic condition is the buildup of potential inflation. Non-borrowed reserves sitting on the Federal Reserve’s balance sheet has jumped from under $2 billion in August of 2008 to over $774 billion as of December 27, 2008. Read that again.
All this high-powered money that’s piling up has the potential to be loaned out over 10 times its nominal amount, and presumably it will--eventually. To put that into perspective, the M2 money stock is now only $8 trillion. Gold prices are trading at nearly $900 per ounce. And even with oil trading down over $100 a barrel since this summer’s high, Consumer Price Inflation was still up 1.1% Y.O.Y. in November. Since another 72% drop in oil is unlikely, imagine how high C.P.I. inflation will go once banks start lending out their excess reserves.
All of the above sets the stage for a protracted period of inflation and economic turmoil unless the U.S. abandons its pursuit of a centralized command and control economy, and decides that savings and production will stem this tide, not more spending and debt. Against this backdrop, it is hard to conclude that the fundamentals for gold are anything but wildly bullish.
The only thing we should envy about any banana republic is its climate, not its economy. Until our politicians show signs of understanding this, keep your focus on hard assets.
Darryl Robert Schoon, www.survivethecrisis.com When wagon trains would come under attack, the wagon masters would “circle the wagons” for protection. Such is happening today as capitalism itself is now under attack.
What Americans are finding out, however, is that only the bankers are currently inside the circle—bankers are now the only ones being protected, the very ones responsible for the crisis in the first place. Observers and especially Americans might believe that something is wrong with this picture.
What they do not understand is that the picture is a perfect reflection of the power dynamic underlying capitalism. Bankers could not have accomplished their nefarious ends had they not first secured the full cooperation and protection of government.
This they did in England when they promised King William they would extend all the credit he wanted to wage his wars. This was replicated in the US when private bankers staged a midnight coup by passage of the Federal Reserve Act in 1913 which illegally transferred the right to issue money from government into the hands of private bankers.
This is the reason the US government has first protected the bankers, not the public, in this crisis. Bankers give government the unlimited credit that governments overspend, thereby indebting the nation and future generations into perpetuity. The US government bailout of bankers, TARP, is “owe-back” time.
James Turk, Freemarket Gold & Money Report It is foolhardy to think that the federal government’s resources and borrowing capacity are unlimited.
They are not, and more to the point, they have already been exceeded. It’s just that too few people today recognize this reality, which is what always happens in bubbles. People accept certain conventional wisdoms without question or even any cursory analysis. For example, consider the following.
Circa 2000 – It doesn’t matter that Internet stocks are trading at multiples of revenue because ‘these companies are going to change the way we do business’.
Circa 2005 – It doesn’t matter that people are borrowing 125% of the home purchase price because ‘the price of homes always goes up’.
Circa 2009 – US government ‘T-bills and T-bonds are risk free’, so the federal government can borrow unlimited amounts of money. This example of bubble-mentality thinking not only ignores the defaults by countless governments, it also ignores the history of US sovereign defaults (gold in 1933 and silver in 1967) as well as the continuing debasement of the sorry US dollar from inflation.
In short, the biggest bubble of them all – that the US dollar is ‘money’ – is about to pop. The US dollar is on the path to the fiat currency graveyard, and will soon get there.
James West, Midas Letter So let me see if I have this straight. The Fed prints money based on the sales of United States Treasury bills, which the U.S. Treasury sells to investors so it can write checks to the Fed so the Fed can print money. If the Fed is the buyer of T-bills, then isn’t that like kiting a check to yourself from your own account at a different bank? Is this how the debt/money supply thingy works?
If I did that, at some point I would get a visit from a gentleman wearing a uniform who would be determined to stop such behavior by depriving me of my liberty. I think it’s called “fraud”. The trigger for that would be when the bank cashing the check realized that the signature on the back of the check was the same as the one on the front. Bernie Madoff was recently deprived of his liberty for just such an offence, with minor variations.
Now I imagine if I was as highly organized a criminal organization as the United States government/banking cartel that I would employ a vast empire of minions, all of whom would be tasked with generating scads of complicated and contradictory data, so that the sharper tacks in the crowd wouldn’t be able to call “Bulls**t” on my little ponzi enterprise. And obviously, since this criminal organization also happens to be the government, this ruse would have the veil of respectability afforded by official sanction. I would call these data avalanches “statistics”. I would feed them to a perception management apparatus, and call that “media”. The statistics could then be rendered meaningful in “headlines”
Jim Willie, Golden Jackass The penalty suffered is a wrecked nation, and inevitable lost sovereignty. When foreigners own over half the national debt, and the USEconomy is in tatters, and the US banking system is both dysfunctional and in failure mode, foreigners have the right to take control. They will do so. The arrogant will be swept aside as thoroughly as the billionaires will be ruined. If you think such words are wild and silly, just wait and watch! Receivership committees are being formed in foreign lands, but they must contend with military threats. Numerous bilateral trade agreements are being hammered out, designed to circumvent the corrupt paper price systems in US & UK control. Times are changing, and the door is open for some degree of colonization. Wealth will flow in the direction of those prepared. Owners of actual gold & silver, as well as crude oil & natural gas, will lead the next era.
-- Posted Tuesday, 3 February 2009 | Digg This Article | Source: GoldSeek.com
Does anyone find the recent, sustained 25% increase in the price of silver to be at all remarkable?
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
Comments
OK, a long post that has been brewing for a little while. It seems appropriate in that we are quickly coming to anxiously await the actual posting of GS's 10,000 post on his thread that he started. Since I posted on the first page of this thread those years ago, it seems that I could spend a couple of minutes and offer my views on some current topics. So, here ya go, IMHO.
Aww, come on guys. We've been talking about this new world order, socialism, manipulation of the masses for at least a year here. We can jaw all we want but everybody seems so suprised that it's actually happening. Well, maybe this is a good moment for reflecting on our first taste from the bottle of this "future" that we have just begun to sip. This ain't your fathers Oldsmobile.
Carbon credits...hummmm. So maybe Big Al is going to go talk to Hu and tell him to stop his country from burning coal? Remember the Olympics and about how no one could even breathe the air and they had to shut down all the factories and take all the cars off of the road for weeks just so the tv cameras could even see the birds nest stadium through all of the smog/pollution/carbon? So, take C off of the list of possible carbon traders 'cause Hu probably doen't want to even talk about it; they have their own problems, don't you know. How about India, hummm...maybe someone can talk the masses out of burning dung, wood, charcoal, cardboard, anything combustible just to keep the lights on...go ahead and sign them up for the carbon credits scheme, they ought to be all over that stuff. So, that takes care of the I. Brazil, hummmmmmm. Maybe they will stop burning thousands of acres of forest every week so they can plant export crops but hey, they could be selling that forest land for carbon credits...yeah, they are real intersted in carbon credits, sitting by the phone waiting patiently for the call. So scratch the B also. So, out of BRIC we have R left. I'm actually suprised that R is still going but since they had that big oil bonus from the $150/barrel they were thinking they might make it but they are on the quick path to becoming economic detritus, just a few steps behind Iceland. Now that we're on the topic, I've noticed Chavez has been really quiet with that $40 oil and all, him and his R buddies should be getting kind of jumpy right now because those people do know how to riot...remember Bolshevik and Che'. I'm sure all those countries are going to be real intereted in carbon credits right now...maybe they will send a jet for big Al to come on over talk about it with them. On the other hand, we have the middle east...oh wait, those are the guys selling the carbon, hummmm yeah, they sure do want to talk about trading carbon credits; actually, they have some carbon to sell. So, all that's left are the developed, sophisticated, european descedant countries that are holding huge conferences about carbon credits. Sure, whatever.
Social engineering...yepper, we've been waiting for it, we've been talking about it, and now we are getting our first peeps at what it might look like in reality. So, what are you gonna do about it? Better question, what can you do about it? Heck, do what everyone else is doing, ride the pony, get what you can from your government and try and get some before it runs out. But, you wanna know the problem with that strategy? Economies are much like resources in that as the resources become scarcer and scarcer they are depleated at a faster and faster rate until the resource is gone like the Carrier Pigeon. Economies, once stressed and predated upon, become weaker and weaker until at some point, they are nonfunctional. There have been plenty of theorists that take the stand that if you want to destroy a country don't fight their army, destroy their economy, then everything is still intact and you can just walk in and take it...the people are still there, the equipment and buildings are still there and everything is ready for the "Under new management" sign. If an ever decreasing number of people give the profits or their labor and endeavor to an ever increasing number of people that don't produce anything or contribute anything other than their souls and presence then how can that society prosper? Well, it can't but our current situation, there is little that can be done.
It's kind of like the problem with the terrorists...everyone wants to go and fight the terrorists till they are gone and then we can say we won and defeated terrorism and then, finally, there will be world peace. Nope, terrorism is an ideology and you can't kill ideology; you can kill a terrorist but you can't kill terrorism, you can't kill a thought...there will be terrorism be it ecoterrorism, economic terrorism, social terrorism, religious terrorism, the genie is well out of the bottle here and other than protect yourself, there is little that can be done here. So, live with it as there is no army that can defeat a thought.
So, the Europeans and Asians are running to gold all the sudden. Gold is good and I hate to say it but there is some chance that gold might be the only play in the world worth any credence. There have been a number of media ticklers about the "big bang" economic plan that is supposed to be revealed to us by our leaders next week. Is there a new currency in the works, maybe a little devaluation or some kind of boogie woogie that alters the value of our currency and replaces it with something else that is backed by the full faith of the government? There is something going on...something big is going on and I'm really suprised that no one has spilled the beans yet, not even Drudge...this is a very well kept plan. Looks like we are going to get another sip from that bottle of "future" we just opened.
And of course, there is gold. Everyone has an opinion and here's mine. Gold is good and other than the banks screwing with the gold contango like they are doing with the $40 oil sitting in the tankers of the worlds coasts waiting for the $52 September furtures contracts to mature, the gold shorts will be crushed. The naysayers are almost out of rope and it's gonna be ugly but hey, what can you do other than hang on to your religion and your guns...oh yes, and your gold.
Good luck to all and to the 10,000th post, it's been a great treat to have this thread and now to have our own forum...life is good. Live long and prosper.
Yes socialism is coming , like it or not, get used to it. As much as I have loved to prosper in the capitalist society and fought hard to get Ron Paul to save us from this mess I have to finally give in. But I also have to say that when government turns on the producers and distibutes the borrowed and taxed prosperity to the masses those who benefited the most in the past will have no one to blame but themselves.
These "producers" have shown the true failure of corrupt capitalism. The ability to produce nothing except paper profits from manipulations, day trading, insider information, fraudulent loans and wholesale corruption. Then after pilfering trillions from the systems they deny the average working familiy sufficient income to live adequately.
How many times do I hear from those making six figures a year working the phones , trading here, scamming there, brokering deals and then whining while the ones who clean the floors, work out in the snow or long hours in the factories need to work weekend to feed the kids.
The system no longer works for the average worker but has been totally corrupted by the power elite and now the backlash is coming. Hopefully we will not go so far left that initiative and hard work will not provide sufficient incentive ala soviet style communism.
As far as those here who continue whine about the "welfare state" stop thinking you owe all your success to your greatness and be glad that God gave you the brains and ability you have. Had you been born to a different set of parents you too could be going to bed hungry every night hoping for the hot breakfast you get at school in the morning.
I for one make 6-figures and I came from parents that lived below the poverty line. We didn't know we were poor. I'm a Christian and my gifts DO come from God and anytime in my life I felt that I had it under control I had my arse handed to me. You may not understand that, that's OK. I'm not judging that aspect. I think to run head long into socialism is to give up your Life, Liberty and Property. And finally you will not be able to post what you want.
As far as distribution of wealth. I've done my own distribution and have a clear conscience of where my excesses goes. And, there are millions of people/families like me/us. We just don't advertise.
R/S
Ren
Just saw Wall Street Journal with Maria B. from Davos. Didn't catch the name of the interviewee , sorry, but the high points were:
1. Don't look into the text books to figure out the recession,
2. Quarter 1 is down, quarter 2 is up slightly but then quarter 3 is down hard,
3. The recovery in 2010 will be disappointingly weak.
Ren
ed4sp
Gold is the last "safe haven."
It can not go bankrupt.
That can't be said about anything else today. Not even cities, states, and countries.
I don't personally think that socialism or ANY ism except barbarism has much of a chance from here on.
roadrunner
and Capitalism. This Nation seems to do best with a correct mix of
both. However from time to time the pendulum swings to an excess
of one over the other.The free trade movement, supported by both parties,
has brought cheaper good into our Country and has kept inflation down. The
price for that has been the flow of manufacturing and service
jobs overseas.
The results have long been predicted, where free trade would lift the economic
standard of living of the rest of the world and lower our standard of living, until
the two meet at some distant time in the future. An additional cost has been the
expansion in the gap between the wealth owners and the working class in this
country. This gap will very shortly begin to cause a growing social unrest and
violence in our Country.
The way our working class has shown a decline in living standards is as follows:
l. The necessity for both the Father and the mother to hold jobs where once a single
wage earner could support a family.
2. The lack of savings and liquid assets of the working families compared to 1945 -1975.
3. The enormous amount of debt of working families incurred as they tried to maintain
living standards of the middle class.
4. The reward for good and effective work ethic has been destroyed. Executives are paid
obscene bonuses when they mismanage companies. They then compensate by laying off
major portions of the work force. Even when fired for incompetence, these same executives
leave employment with tens of millions of dollars while the laid off workers are lucky to receive
two weeks notice.
5. The average work day is again increasing beyond 8 hours as workers try to hold down
two different jobs to make ends meet.
6. The current crises in home ownership as the desire to own a home is not balanced by the ability
of working Americans to pay for such ownership. This is a decided breaking of a contract with the
American Middle Class to enable the American dream to be met.
7. The increasing inability for working Americans, to have family health plans or defined benefit pensions.
It is too late to reverse free trade, without starting a trade war. All that can be done is to establish that
a certain percentage of American made materials, must go into federal reconstruction. The Nation, as
a part of our National Security must ensure that essential portions of our industrial might are operational
in the event that they must be converted to defense production as well as provide a as of quality
jobs for American Citizens. At some point in the recovery, the gap in living standards in this country must
be addressed thru taxation. Further at some point, a realistic and prudent budget must be adhered to to
at least balance the annual budget.
If this country is to survive and thrive, we must become energy independent. This must be achieved even if
it requires a special tax on oil to make the alternatives feasible. At least then, the money Americans spend for
energy will stay in the country and not go overseas to nations that would do us harm.
Camelot
On Saturday, I made a trip to a pawn shop that does a lot of advertising that they deal in guns and gold and silver coins. I was hoping to find a little silver if I was lucky. The place was PACKED, with 9 out of ten customers at the gun counters. Ammunition was a huge seller; being sold by the case and none available any longer in some of the calibers. No gold or silver to be found. Tried to look at a few of the firearms available, but it was very difficult to even get to the counter.
Then decided to go to a national chain sporting goods store to take a look at what they had available in firearms. Nearly the same story there; the counters were elbow to elbow with individuals looking to purchase handguns. And the ammunition shelves were half empty, some calibers only available in the lower load levels. No hollow points at all. When I had looked at the selection around Christmas time, there was a large selection, but not that many buyers. Still have a pretty good selection, but looks like everything went up about $100 or so per handgun in price, and loads of people wanting to buy. Again, it was slow getting to any counter to even take a look. The rifle and shotgun sections were nearly deserted.
Out of curiosity, I checked a Wally world sporting goods section to see if they had any handgun ammo.... same story, nearly empty shelves.
So, what is going on? Are individuals getting ready for a siege?? A war?? Anyone else see this going on, or is this just a local Nebraska thing?
and ammunition a long time ago. Security and defense
goes hand in hand with economic security.
Camelot
Well, we got the bounce then the retest into the mid-30s, now it appears to be bouncing a second time and the momo indicators are in agreement. We may be in for quite a wild ride the next 6 weeks. Tighten your seatbelts!!!!
Knowledge is the enemy of fear
Text
Knowledge is the enemy of fear
*Bloomberg, by Pham-Duy Nguyen & Nicholas Larkin, January 30, 2009:
"Gold Rally Fills Vaults on Banks’ Unprecedented Steps
The same unprecedented steps that central bankers are taking to rescue the banking system are driving investors to gold, the commodity investors buy when they lose confidence in financial assets.
David Einhorn, manager of the $5.1 billion Greenlight Capital Inc. hedge fund, bought gold for the first time. Steven Lehman, the Federated Investors Inc. fund manager who beat 99 percent of his peers last year, is betting on bullion with Toronto-based Yamana Gold Inc. and Goldcorp Inc.
The combination of central banks spending trillions of dollars to prop up the banking system in the worst financial crisis since the Great Depression will cause gold to appreciate at least 17 percent this year from $882.05 an ounce on Dec. 31, surpassing the record of $1,032.70 in London, according to 16 of 24 analysts surveyed by the London Bullion Market Association. The metal rose to a three-month high of $927.36 today.
'The government can print endless money, but they cannot increase the supply of gold,' said Michael Pento, chief economist at Delta Global Advisors Inc. in Huntington Beach, California, who is doubling holdings of the precious metal to 8 percent of his $1.5 billion in assets. 'Anything the government cannot replicate by decree, I want to own.'
Investors typically buy gold during times of financial turmoil as a store of value. The commodity has gained in five of the past six U.S. recessions.
Printing Money
To rescue the U.S. economy, the Federal Reserve reduced its target interest rate for overnight loans between banks to as low as zero percent, more than doubled its total assets during the past year and agreed to buy long-term Treasuries. The government pledged $8.5 trillion on behalf of American taxpayers and spent $350 billion so far under the Troubled Asset Relief Program to bail out banks.
The U.S. House passed an $819 billion economic stimulus package this week, Germany pledged 80.3 billion euros ($104 billion) over two years and China is spending 4 trillion yuan ($585 billion) on infrastructure projects.
George Soros, the billionaire hedge-fund owner, said the economy 'will deteriorate' and the International Monetary Fund said growth this year will slow close to zero. The U.S. economy shrank the most since 1982 in the fourth quarter, contracting at a 3.8 percent annual pace.
Only 20 percent of 1,124 chief executive officers surveyed by PricewaterhouseCoopers LLP expect revenue to increase this year, according to a report released as leaders met at the World Economic Forum in Davos, Switzerland, this week.
American Buffalo
The U.S. Mint suspended sales of American Buffalo 1-ounce gold coins in September after supplies ran out. The Perth Mint, producer of so-called Kangaroo and Nugget coins in Australia, said in October that it doubled output in six months. Muenze Oesterreich AG, the Austrian mint, almost quadrupled production of its Philharmonic coin in the first nine months of 2008."
I have a very strict gun control policy: if there's a gun around, I want to be in control of it - Clint Eastwood
<< <i>Does this quote sound like a USA story? Households, struggling with record debt, are losing confidence as unemployment rises and as falling stock and property prices reduce their wealth.
Text >>
yup
in many ways their wealth is very "new", will it be easier to shed?
USA gov wants it's people to spend more, sure with what? they will need to put fist-fulls of unencumbered $$$ into our pockets. hyper inflation here we come.
devaluation? that will be a given...depends on how long is the wait.
Terry... i will defer the 10k post to you BTW it seems to take 4 new posts to turn the page, now at least.
Prong 1: Eliminate the capital gains tax (some suggest a 2 year sunset provision).
Prong 2: Cut corporate taxes
Prong 3: Cut personal income taxes at the highest brackets
The first prong will encourage investors who hold appreciated assets to sell them now so that they can avoid paying taxes on the gain. For example, long-term holders of the few stocks that have retained a significant amount of value, like Exxon Mobil or Gennentch for example, can sell now and drive the Dow and S&P down further for the rest of the investing public, thereby shifting loss and risk to the younger generation of investors who have plenty of time to recoup their losses down the road. The selling investors can then use the proceeds to buy productive assets like Treasuries or gold--no sense investing in risky assets like venture capital funds or small cap companies in a recession after all.
The second prong won’t affect companies that are incurring losses, like retailers, automakers, banks etc since they won’t be paying taxes anyway. Those companies will just go out of business and can be dropped from the tax rolls so that the IRS has less work to do processing corporate tax returns and can layoff some of its workers, thus reducing the Federal payroll and deficit. But companies like Exxon Mobil and Nike that have multibillion dollar stock buy-back plans will have more money for productive uses like buying-back even more of their stock. This will counterbalance the blow from the sellers who are avoiding capital gains taxes in prong one and will help maintain the equity value of stock options granted to CEOs.
The third prong will allow the bankers and investment bankers who just received billions of dollars of bonuses funded by TARP to keep more of the government’s bailout money. This will allow them to keep their undocumented household help employed.
Do you think this will get the economy running like a top again?
CG
Nope.
1. You are still left with the entitlement problem.
2. The economy was running at 110% capacity. It will be nearly impossible to return to that level of spending.
3. The new mantra among Americans is now "save save save" vs "spend spend spend". Cutting taxes will only help people to save while increasing the deficeit for "programs".
4. The only cure for the problem......TIME and a larger (growing) population.
Knowledge is the enemy of fear
<< <i>4. The only cure for the problem......TIME and a larger (growing) population. >>
I agree. That is why the Govt is allowing the illegal immigrant problem to continue unabated. We have reached a plateau of real economic growth. An increase in population is needed to expand the size of the economy.
With Boomers dying off here in the next 10-20 years or so, there need to be people here to support the system.
Random Collector
www.marksmedals.com
prong 5. Enable a Constitutional Convention and let "We The People" throw all of these crooks out and start over with strong states rights...
Ren
<< <i> start over with strong states rights... >>
Many states are asking the Federal government for bailout assistance!
<< <i>...
prong 5. Enable a Constitutional Convention and let "We The People" throw all of these crooks out and start over with strong states rights...
Ren
Be careful thinking that we want a Constitutional Convention. While it may seem like the way to go, the way I understand it..... once it is convened, they can make whatever changes they want. In other words, the CC may be initiated for one issue, but then the crooks may change a lot of other things.... and we may regret it. We could end up losing many more freedoms if the wrong individuals are in the change process.
Random Collector
www.marksmedals.com
<< <i>
<< <i>4. The only cure for the problem......TIME and a larger (growing) population. >>
I agree. That is why the Govt is allowing the illegal immigrant problem to continue unabated. We have reached a plateau of real economic growth. An increase in population is needed to expand the size of the economy.
With Boomers dying off here in the next 10-20 years or so, there need to be people here to support the system. >>
i hope i can do 30-40 years, thank-you
as long as the immigrants help support the system, the difference between legal immigration and illegal (in this forum context)
the new HS chief had a very controversial policy in Arizona for illegals. She is (IMHO) very proactive in this field. Time will tell.
<< <i>Nice posts, Cnitas. >>
I read every post in this thread. I don't post much, but I try to make them good
Random Collector
www.marksmedals.com
Nancy Killefer, nominated by President Barack Obama to be the federal government's first chief performance officer, is withdrawing from the post........Ms. Killefer, 55 years old, failed to pay employment taxes .........Ms. Killefer is the third Obama nominee to confront tax problems
Knowledge is the enemy of fear
<< <i>Concern as money moves out of China >>
So they are buying up US assets..... they have more confidence that we seem to have in our economy!
They're not buying at anything close to the bottom, IMO.
Here's a warning parable for coin collectors...
<< <i>No one in Govt pays taxes. Why should we? If we want to send a statement stop paying taxes. What are they gonna do? Take your house? Put you in jail? Good luck on that. If everyone did it, it would succeed.
Nancy Killefer, nominated by President Barack Obama to be the federal government's first chief performance officer, is withdrawing from the post........Ms. Killefer, 55 years old, failed to pay employment taxes .........Ms. Killefer is the third Obama nominee to confront tax problems >>
I now know why wealthy democrats are for a tax increase.
<< <i>
<< <i>No one in Govt pays taxes. Why should we? If we want to send a statement stop paying taxes. What are they gonna do? Take your house? Put you in jail? Good luck on that. If everyone did it, it would succeed.
Nancy Killefer, nominated by President Barack Obama to be the federal government's first chief performance officer, is withdrawing from the post........Ms. Killefer, 55 years old, failed to pay employment taxes .........Ms. Killefer is the third Obama nominee to confront tax problems >>
I now know why wealthy democrats are for a tax increase.
Because they don't pay them?
Seriously, we've put a party into power that is dogmatically opposed to the very things that would spur the economy.
We've got a big problem on our hands. I just wish the other 53% of the people would join us in a meaningful solution.
The currently empowered were elected by the urban centers. If you look at a red/blue county map of the US, you will see very little blue except at the urban centers regardless of geographical location. The blues, at the high level, were elected by urban voters, by concentrations of populations, not by a broad geographical representation. This election was won by urban concentrations of latte slurpers. The urbanites are typically wired with dsl and it is well documented that this election was won on the net with blogs, email addresses, and communications. It could be speculated that this urban blackberry/dsl/email phenomena is the main reason we are in our current situation. If you go to a small town, you don't see the zombies walking around fingering their devices for messages, you see people saying howdy and looking you in the eye in recognition, and then going about their business but in the urban centers, almost everyone has a headset/bluetooth on or at the least they have their devices at hand and you would be darned lucky to even get a nod much less a "how are you today" as you pass them...they love to have stuff happening on their equipment, keeps them engaged.
The other element that plays into this is that red didn't do this tech commo at anywhere the level that blue did; the same old boring reds, nothing happening, no blackberry commo, no bluetooth bleep when you have a new message, nothing going on...it is no wonder things happened the way they did. The reds were stuck in 1990 and the blues were living the new millennium. There was very little blue substance in postions and concrete plans but mostly the blue platform was couched in ideals and ambitions but actually very little substance...well documented. The reds had plenty of substance but no commo. None the less, it played well for blue because it created the images in the minds of the populace by continuously feeding to the devices. Another complaint was the way things were portrayed in the media, everything was very blue...blue, blue, blue. This was played by the blues because they were so wired, they could show real number polls to the media just by texting their contacts for a response and then they could send the info around to all the outlets, they could send real time feeds to the media, they could email/fax/video phone info to the media and their organization was based on innudating the media with blue stuff so what else could the media be fixated on and the media didn't have to do anything...they just suck up the blue feeds and it's ready to print and life is good for the media because they had plenty of action and didn't have to do anything to get it. It was just so easy.
Meanwhile, red did the same old thing...send a news release ahead of a major speech and then send the text to the media...borrrrrrrringggggg. the reds came off as old and common, regardless of their plans and positons. The blues captured the imagination of the masses with constant carpet bombing of the media outlets and the urban populace with commo and showing youth and newness...the message and the messenger were both very alluring and it worked and it was good but now we find ourselves where we are with lots of ideals and ambitions but little substance. All hat and no cattle but the hat do look good and hey, who needs cattle anyway when you have such a nice hat.
Edited to add: I found this while looking around...You saw the movie...now read the book.
10K
Amendments from Sens. Barbara Mikulski (D-Md.) and Tom Coburn (R-Okla.) were both adopted as the Senate began its debate over the economic stimulus bill (H.R. 1) Feb. 2, giving purchasers of new cars a tax break worth $11 billion.
Mikulski's amendment provides an above-the-line tax deduction for all interest and state sales and excise taxes paid for new cars purchased after Nov. 12, 2008, and before Jan. 1, 2010. The amendment was approved by unanimous consent after the Senate voted 71-26 to waive pay-as-you-go budget rules.
Knowledge is the enemy of fear
<< <i>Time to buy a new car........
Amendments from Sens. Barbara Mikulski (D-Md.) and Tom Coburn (R-Okla.) were both adopted as the Senate began its debate over the economic stimulus bill (H.R. 1) Feb. 2, giving purchasers of new cars a tax break worth $11 billion.
Mikulski's amendment provides an above-the-line tax deduction for all interest and state sales and excise taxes paid for new cars purchased after Nov. 12, 2008, and before Jan. 1, 2010. The amendment was approved by unanimous consent after the Senate voted 71-26 to waive pay-as-you-go budget rules. >>
Any caveats on whether they have to be by the 3 US automakers? If there is, it does not do most any good.
<< <i>Convention? Blah. We have a great Constitution, problem is nobody cares to use it anymore. >>
I should've been more specific. The Sixteenth Amendment (1913) is what I was going after.
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
The current tax code is three Bibles thick and doesn't apply to politicians apparently.
The "Fair Tax" has been in circulation for a while and getting traction in Congress. It seems to be a much better system than what is on the books now, jmho.
Ren
Pretty amazing that this has survived so long. "It" even survived a venue change albeit scary for a few days hiding in the ether.
Ren( 10k
So, Will the Long Beach Curse be upon us soon ?
LM-ANA3242-CSNS308-MSNS226-ICTA
While this would help the short term, I wonder how the medium term is hurt. I mean, if me and everyone else who *may* need a car... takes advantage and buys a new 2009 car... what does that do to the 2010, 2011, and 2012 vehicle market?
<< <i>
<< <i>Convention? Blah. We have a great Constitution, problem is nobody cares to use it anymore. >>
I should've been more specific. The Sixteenth Amendment (1913) is what I was going after.
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
The current tax code is three Bibles thick and doesn't apply to politicians apparently.
The "Fair Tax" has been in circulation for a while and getting traction in Congress. It seems to be a much better system than what is on the books now, jmho.
Ren >>
Yeah, I am not a fan of #16 either. Good luck pushing your elected represenitive to go for a repeal. I am still amazed that language was ever remotely entertained, let alone passed by elected Federal and State governments. Then again, I am constantly amazed at what politicians are able to pull over the people.
Random Collector
www.marksmedals.com
hmmmm 1 TRILLION coming up next.....
Gold to new highs???
I have a very strict gun control policy: if there's a gun around, I want to be in control of it - Clint Eastwood
for now i'd rather see a flat tax.
yeah the tax code is 70,000 pages and 9 million words...
video flat vs fair tax
Linky
Best Quotes of January 2009
By: John Rubino
-- Posted Tuesday, 3 February 2009 | Digg This Article | Source: GoldSeek.com
Paco Alhgrin, Seeking Alpha
Here, I'll simplify it: your government, through Legal Tender laws, is forcing you to use dollars to navigate the economy in which you reside. It is then printing this currency with reckless abandon. Finally, the same government is issuing more debt than ever before in history, which it will loan to itself (or borrow from itself, depending on how you look at it) by employing the nearly innumerable dollars it has printed.
It used to be that a dishonest person had to rob Peter to pay Paul if he wanted to get ahead in life. But times have changed; the old way of doing things just isn't sophisticated enough to fool, say, an entire globe. No, these days, apparently Peter must first print a bunch of cash, then borrow it from himself, and finally dump it from a helicopter in Paul's front yard. Do you still think Treasuries are "risk-free?"
I'm done here. I'm going to go buy some gold.
John Bogle, Index Universe
What we are increasingly seeing is the verification of "the financial instability hypothesis" put forth by the economist Hyman P. Minsky (1919–1996). In 1992, Minsky warned that "capitalist economies exhibit ... debt deflations which ... spin out of control ... [as] the economic system's reactions to a movement of the economy amplify the movement ... . Government interventions aimed to contain the deterioration [are often] inept in … historical crises."
Minsky concluded that over long periods of prosperity, the economy transits from financial structures that make for a stable system to ones that make for an unstable system—i.e., that "stability leads to instability," largely through what he described as hedging, speculation and Ponzi finance. In that sense, Minsky was a prophet of one of today's economic crises.
Another insight was also prophetic: "Institutional complexity [read: today's collateralized debt obligations and credit default swaps] may result in several layers of intermediation between the ultimate owners of the communities' wealth, and the [business and individual] units that control and operate the communities' wealth."
This separation between ownership and control has now come to pass. In a mere half-century, we have moved from an ownership society (92 percent of all stocks owned by individuals; 8 percent by institutions) to an agency society (24 percent and 76 percent, respectively), a change I've described as "a pathological mutation in capitalism." Does "experimental" economic policy make any sense?
Ted Butler, Investment Rarities
Four traders hold two-thirds of all the true [silver] short positions on the COMEX. That such a concentration equals a control on price should be beyond question. If these four shorts were forced to cover their positions and had to be replaced by many sellers motivated by free market prices, the price would need to double or triple or quadruple. That’s the key question in any manipulation - what would the price of an item be, higher or lower, if the manipulators were removed from the market?
Richard Daughty, Mogambo Guru
Regardless of your motives, gold is always popular at the beginnings of the busts that follow the booms that you get when somebody is stupid enough to use a fiat currency (like the U.S.A. and now all the other stupid countries of the world) that gets multiplied to excess so that inflations in the money supply causes inflation in other assets like stocks, bonds, houses and size of government and, unfortunately, food and energy.
And as the bust continues, gold always becomes MORE valuable as everything else turns to crap and the government starts destroying everything with fits of fiscal madness in its insatiable quest for more money, more money, more money!
But we were not talking about how the socialist-communist/fascist morons running the place have doomed America, but "Why gold?" The reason is that there will be a lot of rich people selling the aforesaid stocks, bonds and houses, as that is how market tops are formed and why prices fall, and then the sellers will have a lot of money sitting there, meaning that now they have to find someplace to put it, and then they notice that everything else is turning to crap, and that is "Why gold"!
Dan Denning, Daily Reckoning
Everyone and everyone's dog (and everyone's dog's feline foes) is calling for the popping of the bond bubble. Every fibre of our contrarian nature says to go against the crowd. After all, it seemed fairly obvious that the Nasdaq was in a bubble when tech stocks were selling at average price-to-earnings ratios of 100. And then the ratio doubled!
The point? A real bubble worthy of the name exceeds your expectations and just keeps going up. This prompts us to conduct a brief thought experiment. What could keep the Treasury bond bubble rising? Fed buying!
That's right. We know the Fed is trying to bridge the gap between government bond yields and mortgage rates. The Fed wants to make it easier for Americans to refinance into lower-rate mortgages, and thus heal the mortal weeping wound at the heart of the American economy. So it's been hacking away at the short-end of the yield curve, trying to bring mortgage rates down by proxy.
It follows that if ten-year and thirty-year yields start creeping up in response to the increase in the monetary base, the Fed will kick into action and become a buyer of U.S. government securities. Now we know what you might be thinking. At least we know what that makes US think.
When the Treasury issues bonds, it's borrowing money from the world's savers. That crowds out private investment, but is not really money printing. True, it steals from future income and sends interest and principal payments to bondholders outside the U.S. But that is a kind of monetary time travel, rather than monetary alchemy.
If the Fed, on the other hand, moves to keep a lid on Treasury yields by buying them in the open market, it will likely do so with money in wishes into existence. There's no place like credit! And don't think this will go unnoticed by the precious metals gang loitering on the corner, and its leader, Gold. Here's a prediction for you: gold and its precious metals brothers in arms (silver, platinum, and palladium) will absolutely ambush the dollar this year if things keep playing out the way they are.
John Doody, Gold Stock Analyst
One thing I think readers should bear in mind is that gold mining will be one of the few industries doing well in 2009. Their key cost is oil, which is about 25% of the cost of running a mine. Oil’s price, as we know, is down about 75% in the $147/barrel high last July. At the average $400 cash cost per ounce mine, that’s a cut of about $75/oz off their costs. That result alone is going to give them an uptick in future earnings versus what they showed for third quarter 2008.
Something else people may not recognize is that currencies are also falling; many are down 20% to 40% versus the U.S. dollar. All the commodity nation currencies—the Canadian dollar, the Australian dollar, the South African Rand, the Brazilian Real, the Mexican Peso—they’re all down 20% to 40%. When your mining costs in those countries are translated back into U.S. dollars, they’ll be 20% to 40% lower.
So, the miners are going to have falling cash costs and even if the gold price remains exactly where it is now profits are going to soar. This will be unique in 2009. I can’t think of any other industry in which people are going to be able to point to and say, “These guys are making a lot more money.” I think the increasing profits will get the gold mining industry recognition that it isn’t getting now. Of course I’m a bull on gold because of the macroeconomic picture. When you put falling costs of production together with a rising gold price, you’ve got a winning combination for the stocks in 2009.
Martin Hutchinson, Great Conservatives
There are two reasons why the United States is likely to appear a much less safe haven by the end of 2010: monetary policy and fiscal policy. The current disasters may have come as a complete surprise to the Great Depression expert Ben Bernanke, but they would not have surprised a greatly superior monetary manager a century before the Great Depression, Robert Jenkinson, Lord Liverpool, Britain’s prime minister 1812-27. Liverpool took over a country with a national debt of 270% of GDP – and figured out how to get the debt down to a manageable level. “There is no surer source of commercial distress,” said Liverpool in April 1820, “than the creation and extension of fictitious capital; and of an appearance of prosperous trade without the reality, which is the inevitable consequence of a paper currency.”
No better description of the Bush/Bernanke bubble could have been written – “fictitious capital” sums up the whole mania. Now by reducing interest rates far below zero in real terms, by doubling the monetary base and by blowing up the Fed’s balance sheet to three times its normal size, Bernanke has rendered capital even more fictitious – and the United States will shortly reap the appropriate reward in an uncontrollable upsurge in inflation.
John Kemp, Guardian
The United States and the United Kingdom stand on the brink of the largest debt crisis in history.
While both governments experiment with quantitative easing, bad banks to absorb non-performing loans, and state guarantees to restart bank lending, the only real way out is some combination of widespread corporate default, debt write-downs and inflation to reduce the burden of debt to more manageable levels. Everything else is window-dressing.
Rob Kirby, Kirby Analytics
Some central banks (those of China, Russia, Iran and Venezuela) are actually buying physical gold to bolster their reserves. Perhaps you will take notice that countries that have a penchant for gold coincidentally are not viewed as America’s best friends. Ever wonder why?
Fondness for gold makes the dollar look bad. If you are America and are in the business of printing dollars to buy whatever you want, folks buying gold are raining on your parade, and if they do too much buying of gold, dollars can become worthless and not welcome in exchange for goods and services. (I would suggest that this is happening right now.)
JPMorgan Chase is the Federal Reserve in drag. It is Morgan Chase’s job to make sure that gold remains viewed as an unworthy means of wealth preservation, so that the biggest Ponzi scheme in the world stays viable — the U.S. government bond market.
But in the end, just as physical shortages of staple goods – in the face of limitless money creation - will push prices higher; it will be the same where gold is concerned. This process is now underway with the fraudulent futures [paper] price of gold already decoupled from the cost of buying physical ounces. Continued fraudulent interventions only ensure that this sordid perversion ends sooner rather than later.
Steve Saville, Speculative Investor
Determining whether a nominal gain translates into a real gain is often not a straightforward matter due to the impossibility of measuring the economy-wide change in a currency's purchasing power. In fact, there is no ideal way of measuring the real performance of any investment; at least, none that we know of. We have found, however, that an investment's long-term performance in gold terms is a reasonable proxy for its real long-term performance. We therefore consider that for something to be in a long-term bull market it must be in a long-term upward trend relative to gold.
This prompts the question: which of the major markets are presently in long-term upward trends relative to gold? The answer is: none of them. Over the past decade there were multi-year periods during which various markets trended higher in gold terms, but the relative gains achieved by these markets rapidly evaporated last year.
To put it another way, a good case can be made that gold is the only long-term bull market 'on the go' at this time. Moreover, based on the information presently at hand we suspect that this will remain the case over the coming decade or until there's an upside blow-off in the gold price.
Peter Schiff, Euro Pacific Capital
The grim reality is that when the real estate bubble burst the Government was able to “bail-out” private parties. However, when the bond market bubble bursts, it will be the U.S. Government itself that will be in need of the mother of all bailouts. If U.S. taxpayers or foreign creditors are unwilling or unable to pony up, and if the nightmare hyper-inflation scenario is to be avoided, default will be the only option. If misery really does love company, Bernie Madoff’s clients might finally find some comfort.
Eric Sprott, Sprott Asset Management
The Gold Report: What’s your view of the U.S. dollar? What do you see in ’09 for the dollar?
Eric Sprott: The rally in the dollar, in my mind, was totally anomalous and totally had to do with repatriation. In fact, we can even see it in global offshore funds. These offshore hedge funds, which are owned by international financial institutions, have their own issues. So there have been redemption issues in hedge funds. I can tell you from experience, if we had X dollars of redemptions in November, we have one half of X in December, .1 of X in January, and none in February. In the business we’re in, the repatriation is done.
Anything we might have had to do—in other words, sell a Canadian resource stock, convert it to U.S. —it’s over. So the worst of that might be done. The dollar really, in my mind, shouldn’t have rallied; in fact, it should have done the reverse because the obligations that the U.S. government’s taken on here have been immense and I think beyond the scope of what they obviously can pay for, even though most people haven’t gone there yet. So I don’t hold out a lot of hope for further dollar strength.
TGR: But isn’t the dollar the best of the worst?
ES: You might have a point there. It might be the best of the worst and that’s a very challenging discussion. To know what is the best of the worst—and I don’t pretend to know exactly how strong the UK economy is or the EU or the Canadian (I guess the Canadian government I have some sense of)—but for me to analyze each one of those countries and decide who’s the worst? That’s a tough thing to do and it is sort of ironic that that would be the discussion. If that’s the discussion, just buy gold and forget it.
Eric deCarbonnel, Market Oracle
Most commentators misunderstand the true moral hazard of bailouts. While bailouts might have an adverse effect on the future actions of individuals and businesses by encouraging risk taking, the real problem is their effects on future actions of the government. Specifically, each bailout makes it harder to say no to the next bailout. This pressure to fund future bailouts is made far worse if those receiving bailout money are truly undeserving. After all, if the government is going to give $45 billion to Citigroup (one of the banks responsible for our current mess) and insure $306 billion of its riskiest assets, then how can it say no to bailing out the state of California or South Carolina?
This "me too" phenomenon will get much worse after the Treasury market collapses, and the Fed starts monetizing the Treasuries that were sold to fund the current bailouts. If the Fed printed money to bail out the banks, why shouldn't it print more money to fund unemployment benefits? Politically speaking, you can't bail out the irresponsible and then let the responsible sink, which means congress isn't going to be saying no to a lot of the bailout requests this year. Unfortunately, these bailouts will become increasingly meaningless because, when you bail out everyone, you bail out no one as you destroy your currency.
Michael Pento, Delta Global Advisors
But the most egregious aspect of our current economic condition is the buildup of potential inflation. Non-borrowed reserves sitting on the Federal Reserve’s balance sheet has jumped from under $2 billion in August of 2008 to over $774 billion as of December 27, 2008. Read that again.
All this high-powered money that’s piling up has the potential to be loaned out over 10 times its nominal amount, and presumably it will--eventually. To put that into perspective, the M2 money stock is now only $8 trillion. Gold prices are trading at nearly $900 per ounce. And even with oil trading down over $100 a barrel since this summer’s high, Consumer Price Inflation was still up 1.1% Y.O.Y. in November. Since another 72% drop in oil is unlikely, imagine how high C.P.I. inflation will go once banks start lending out their excess reserves.
All of the above sets the stage for a protracted period of inflation and economic turmoil unless the U.S. abandons its pursuit of a centralized command and control economy, and decides that savings and production will stem this tide, not more spending and debt. Against this backdrop, it is hard to conclude that the fundamentals for gold are anything but wildly bullish.
The only thing we should envy about any banana republic is its climate, not its economy. Until our politicians show signs of understanding this, keep your focus on hard assets.
Darryl Robert Schoon, www.survivethecrisis.com
When wagon trains would come under attack, the wagon masters would “circle the wagons” for protection. Such is happening today as capitalism itself is now under attack.
What Americans are finding out, however, is that only the bankers are currently inside the circle—bankers are now the only ones being protected, the very ones responsible for the crisis in the first place. Observers and especially Americans might believe that something is wrong with this picture.
What they do not understand is that the picture is a perfect reflection of the power dynamic underlying capitalism. Bankers could not have accomplished their nefarious ends had they not first secured the full cooperation and protection of government.
This they did in England when they promised King William they would extend all the credit he wanted to wage his wars. This was replicated in the US when private bankers staged a midnight coup by passage of the Federal Reserve Act in 1913 which illegally transferred the right to issue money from government into the hands of private bankers.
This is the reason the US government has first protected the bankers, not the public, in this crisis. Bankers give government the unlimited credit that governments overspend, thereby indebting the nation and future generations into perpetuity. The US government bailout of bankers, TARP, is “owe-back” time.
James Turk, Freemarket Gold & Money Report
It is foolhardy to think that the federal government’s resources and borrowing capacity are unlimited.
They are not, and more to the point, they have already been exceeded. It’s just that too few people today recognize this reality, which is what always happens in bubbles. People accept certain conventional wisdoms without question or even any cursory analysis. For example, consider the following.
Circa 2000 – It doesn’t matter that Internet stocks are trading at multiples of revenue because ‘these companies are going to change the way we do business’.
Circa 2005 – It doesn’t matter that people are borrowing 125% of the home purchase price because ‘the price of homes always goes up’.
Circa 2009 – US government ‘T-bills and T-bonds are risk free’, so the federal government can borrow unlimited amounts of money. This example of bubble-mentality thinking not only ignores the defaults by countless governments, it also ignores the history of US sovereign defaults (gold in 1933 and silver in 1967) as well as the continuing debasement of the sorry US dollar from inflation.
In short, the biggest bubble of them all – that the US dollar is ‘money’ – is about to pop. The US dollar is on the path to the fiat currency graveyard, and will soon get there.
James West, Midas Letter
So let me see if I have this straight. The Fed prints money based on the sales of United States Treasury bills, which the U.S. Treasury sells to investors so it can write checks to the Fed so the Fed can print money. If the Fed is the buyer of T-bills, then isn’t that like kiting a check to yourself from your own account at a different bank? Is this how the debt/money supply thingy works?
If I did that, at some point I would get a visit from a gentleman wearing a uniform who would be determined to stop such behavior by depriving me of my liberty. I think it’s called “fraud”. The trigger for that would be when the bank cashing the check realized that the signature on the back of the check was the same as the one on the front. Bernie Madoff was recently deprived of his liberty for just such an offence, with minor variations.
Now I imagine if I was as highly organized a criminal organization as the United States government/banking cartel that I would employ a vast empire of minions, all of whom would be tasked with generating scads of complicated and contradictory data, so that the sharper tacks in the crowd wouldn’t be able to call “Bulls**t” on my little ponzi enterprise. And obviously, since this criminal organization also happens to be the government, this ruse would have the veil of respectability afforded by official sanction. I would call these data avalanches “statistics”. I would feed them to a perception management apparatus, and call that “media”. The statistics could then be rendered meaningful in “headlines”
Jim Willie, Golden Jackass
The penalty suffered is a wrecked nation, and inevitable lost sovereignty. When foreigners own over half the national debt, and the USEconomy is in tatters, and the US banking system is both dysfunctional and in failure mode, foreigners have the right to take control. They will do so. The arrogant will be swept aside as thoroughly as the billionaires will be ruined. If you think such words are wild and silly, just wait and watch! Receivership committees are being formed in foreign lands, but they must contend with military threats. Numerous bilateral trade agreements are being hammered out, designed to circumvent the corrupt paper price systems in US & UK control. Times are changing, and the door is open for some degree of colonization. Wealth will flow in the direction of those prepared. Owners of actual gold & silver, as well as crude oil & natural gas, will lead the next era.
-- Posted Tuesday, 3 February 2009 | Digg This Article | Source: GoldSeek.com
Anyone think this could be another 1980 - and gold will have topped because the big bang stimulus will work?
<< <i>Just to play devil's advocate (and get the post count to 10K)...
Anyone think this could be another 1980 - and gold will have topped because the big bang stimulus will work? >>
It's not a "stimulus". It's a ginormous government spending binge and little else.
Time and again, government spending has been shown to have very little velocity compared to the private sector.
Incentives to business and individuals would get the economy going kwikly.
<< <i>Does anyone find the recent, sustained 25% increase in the price of silver to be at all remarkable? >>
It was about time.