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Monday, March 30, 2009

US Dollar Backing

The only thing backing the US dollar is the "full faith and credit" of the US government. How much faith, and later, credit is there when the US is allowing phony book keeping?


New Mark-to-Market Rules Coming
...
"The House Financial Services Committee, led by Rep. Paul Kanjorski (D-PA), yesterday successfully browbeat the Financial Accounting Standards Board (FASB) into coming up with modifications of the mark-to-market rules for valuing bank assets."
...
"Thus the idea is to let the banks make up the valuation for these assets. Oh sure -- they will have some fancy black box model showing how much they are 'really worth.' But anyone with three hours of experience with Excel can make up a spreadsheet that gets the answers they want if they manipulate the numbers and the assumptions that go into the spreadsheet.

There is a term for knowingly publishing financial statements with incorrect values in them, and that term is 'securities fraud.' The very foundation of capitalism is that the 'real value' for something is that which a willing buyer and a willing seller can mutually agree upon. That, folks, is the market price. That is the price at which these securities should be valued."
...

New Rule Would Allow Banks To Choose Values Of Their Assets
"The Financial Accounting Standards Board quietly buckled to banking-industry pressure last week and proposed new accounting practices that would allow banks to value assets at a higher price than they could currently be sold for."
...



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EU presidency: US stimulus is ‘the road to hell’
By AOIFE WHITE, AP Business Writer – Wed Mar 25, 3:38 pm ET

BRUSSELS – The head of the European Union slammedPresident Barack Obama’s plan to spend nearly $2 trillion to push the U.S. economy out of recession as "the road to hell" that EU governments must avoid.
...
Road to hell article


Chris Rea: The Road To Hell

Well I'm standing by a river
But the water doesn't flow
It boils with every poison you can think of
And I'm underneath the streetlight
But the light of joy I know
Scared beyond belief way down in the shadows
And the perverted fear of violence
Chokes the smile on every face
And common sense is ringing out the bell
This ain't no technological breakdown
Oh no, this is the road to hell

And all the roads jam up with credit
And there's nothing you can do
It's all just bits of paper flying away from you
Oh look out world, take a good look
What comes down here
You must learn this lesson fast and learn it well
This ain't no upwardly mobile freeway
Oh no, this is the road
Said this is the road
This is the road to hell




The current "Road to Rescue" is a road to debt.



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G Edward Griffin - Creature From Jekyll Island, A Second Look at the Federal Reserve





From The Jakarta Post:
What Asia and the world need from America now
"What the American governing and legal establishment must do, before too much time goes by, is to come completely clean not only with the American people but with Asia, especially, which has poured so much of its wealth into the US. China and Japan are its biggest financial investors.
...
What's at stake is not so much an eventual honest return on investments (which, in many instances, may be impossible, as many funds have vaporized down the rat-holes of criminal enterprises), but the credibility of the United States of America. And this is something that, when healthy, is priceless, and when destroyed, is worthless.
... "




The US dollar has completed a 5 wave uptrend. With the US turning into a cross between communism and fascism, and a world of make believe, the "full faith and credit", the backing of the US dollar is getting shakey.

Saturday, March 28, 2009

Gold and Silver Miscellaneous

Some miscellaneous bits of information on gold and silver. There should be more and more of these as the gold price and the silver price get higher and higher, as more and more of the trend followers jump on the trend, as more and more people look for protection of their purchasing power, of their stored value, as economic and financial rock n roll gets stronger and stronger.

An unusually interesting gold story by Bloomberg reports that there has been a surge in gold accumulation accounts amongst the Japanese public, especially young adults

Some in Zimbabwe have given up altogether on government fiat tokens:
"MDC activist Sam Chakaipa returns to his village in Zimbabwe to find his friends and neighbours starving. As the Zimbabwean dollar becomes ever weaker, gold has become the currency of choice."
The video is no longer embeddable, so, here is the link to it: Gold For Bread - Zimbabwe

R.I.P. Zimbabwe Dollar
"As I wrote on 25 June 2008, “Zimbabwe is in the late stages of a classic hyperinflation. … Inflation is galloping ahead as the supply of Zimbabwe dollars surges and the demand for them shrinks. Eventually, the currency will totally collapse as people simply refuse to accept it.” In recent months, facts on the ground have validated this prognostication. The Zimbabwe dollar is dead."

Zimbabwe Closes in on Record
...
"Readers will be aware that hyperinflation has long been alive, well and thriving in Zimbabwe. Back in February 2007 the country became the first to hyperinflate in the 21st century when the monthly inflation rate achieved 50 percent. This is taken as the minimum rate to allow a country to qualify as a fully paid-up member of the hyperinflation club. It equates to 12,875 percent per year.

Promotion through the ranks has been rapid for Zimbabwe. Last October it achieved second place in the all-time hyperinflators' stakes when it nudged aside Yugoslavia's January 1994 monthly rate of a miserly 313,000,000 percent.
..."






The gold price is making a nice downward sloping flag as part of what will probably be the right hand shoulder of an upside down head and shoulders bottoming pattern. Downward sloping flags are a common occurance in bull markets.

"Gold and all things gold are now a lifeline more than an investment. If you don’t have gold you may be putting more than your portfolio in danger." - Jim Sinclair

Thursday, March 26, 2009

Gold and Silver Can Protect Your Stashed Value From Really Wild and Crazy Far Out Stuff

The lower the gold price is when you buy, the better it can protect you down the road. It can make some wild moves to the upside and leave you standing there, not on the gold train, wondering what happened.

CNN uses this "Road to Recovery" and sometimes now a days this "Road to Rescue" concept, one of those fuzzy concepts to refer to, misslead about, the governments current financial moves. If the US government's "rescue" (which is an impossibility) can be graphically illustrated, it has been:




Suuuuuuuuuure

"Road to Rescue" visualization.pdf


The more wealth a person has or a group of people have,
usually the higher the standard of living they have.

Wealth is goods and services people are willing to pay for.

Wealth is not money, currency or government fiat tokens.

However, money, currency and government fiat tokens can be stores of value.

Value can be converted into capital.

Savings has to happen before capital creation happens.

Capital is the means of production.

Capital plus the use of minds and hands can create wealth.

There is no theoretical limit to the creation of wealth.

Statist governments screw up this process time and time again. Sometimes they stomp on it particularly badly which is what is going on in the US right now.


In reality the "rescue" being attempted is the consumption and the destruction of capital. The US government is doing nothing to promote savings which can be used to create more wealth, assuming savings is used properly. This is one thing governments know nothing about and are only concerned with the short term. In fact the last thing the US government wants, as well as some others, is for the public to begin saving wealth. The saving of wealth is necessary for real wealth creation (an increase in a standard of living) but that is the type of thing that does not artificially increase GDP, something politicians do not like. Real wealth creation can take some time. They like a faster phony growing economy, a set of circumstances that creates a phony sense of well being, a phony sense of getting ahead amongst their constituents, as long as they can keep it going because many/most of their dumb constituents do not consider their own net worth, only what material things they have some degree of control over. But, at some point the economy can take on only so much debt. If an economy could take on any amount of debt, then people could exist without working by borrowing only.

I guess there is a significant percent of people in the US that believe that work, the creation of value, is not necessary for survival; and/or, that workers will put up with any amount of theft of their property for the purposes of it being tranfered to those that do not work. At least this is suggested by yesterday's poll results showing about a 60% approval of Obama's overall performance and an about 50% approval for his financial/economic efforts. They can't see/comprehend one of the biggest thefts/heists in modern history currently underway by a tiny select few on "The Street" that has major control of the Fed/US Treasury/White House/Congress and Senate. This is despite the large number of information sources telling it like it is, providing the facts. Never mind the Net, this is even going on to a significant extent in the traditional mass media.

Man uses his mind and his hands to create value. Hopefully more than enough for survival. If more, he saves the excess value and usually lends it or invests it with those that are capable of creating even more value (wealth). When savings are put into the hands of those capable of creating more wealth (goods and services that people are willing to pay for) it becomes capital. Businesses that increase the standard of living of people in a large way need large amounts of capital to start up.

Capital is necessary to create and increase wealth in a radical way.

Money, currencies and tokens are not capital itself (the means of production). It is true that they are stores of value, something that can be converted to capital. Just because someone creates tokens out of thin air does not mean that wealth has been created/increased. It seems that most people do not understand this. Thus, along with some other reasons, most of the US and most of the rest of the Anglo Saxon world (and some other parts of the world) are going into another philosophical and intellectual dark age or endarkenment. Economically this means third world, banana republic status. It is too late for the US to avoid it. Too much debt has been taken on. Never mind the huge amounts of debt that is continuing to be taken on by the Treasury and the Fed. Too much capital has been consumed rather than maintained and increased.
















However, not everybody is taking it hard. Some are making out like bandits.

The Goldman Trough
"I just finished reading Goldman Sach’s latest Form 10-k annual report. As of the end of November 2008, they had cash and cash equivalents of $122 billion."



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Peter Schiff, one of the few telling it like it is, explains "Why the Meltdown Should Have Surprised No One". About 2 hours long but worth it:

Mises Institute's 2009 Austrian Scholars Conference




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"...
But after the economic revolution which may be dated at 1787 (the year Jeremy Bentham’s “Defense of Usury” was written) we know this argument to be false. During the 19th century the economies of Britain, America and several other countries made more progress than had been made in the previous 3000 years, indeed than had been made since the beginning of the human race. We found out that the human capacity for producing wealth, if properly organized and harnessed, is so amazingly large that economics does not have to serve as a limit on the human population. This refutes the argument that war is necessary to keep the population in check. To take one simple example, when the American settlers reached the Great Plains, they found the land infertile. The soil was so tough that the type of plough needed to turn it was so heavy that it could not be pulled by a team of oxen. Enter John Deere. Mr. Deere invented a plow that was strong enough to break this soil but light enough to be pulled by a team of oxen. Today the Great Plains are the breadbasket of the world.

In 1798, Thomas Malthus published his Essay on Population in which he argued that population expanded faster than the food supply thus leading inevitably to famine and disaster. His timing could not have been worse. All history up to that point seemed to support him. All history since he wrote has served to refute him. During the 20th century the world’s population multiplied by a factor of 4 times, but the food supply multiplied by a factor of 5 times. With the same amount of arable land in cultivation, the average farmer was able to grow 5 times as much food. To prevent the extra grain from going to waste, it was fed to meat animals, and more humans were able to eat meat. (In 1928, the Republicans bragged that they had put “a chicken in every pot,” meaning that they had made it possible for just about every American to eat meat every day.)

Clearly this economic revolution removes the economic reason for war. However, this revolution occurred only once in human history. There are over a hundred different human societies on earth in every generation. Going back 300 generations to the invention of agriculture this gives us over 30,000 different societies. Only one, the Age of Reason which occurred in the Anglo-Saxon world in the 18th century, gave us such a revolution. Quite clearly, it is not a type of thing that humans are likely to stumble upon by accident. It represents a unique achievement, and the men responsible for it are some of the greatest geniuses in human history.
..." - from PEACE
by Howard S. Katz




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There is some grand grand grand theft (of stored value in US dollars and USD denominated financial instruments) going on, the whole point to the existence of a central bank, a huge transfer of unearned wealth. Gold and silver are protectors in this situation.

Recently, Fed credit has been pretty constant at a little over $800 billion. Based on their most recent actions, the Fed is aiming to increase it to about $3 trillion. That is roughly a good 2 thirds devaluation of the US dollar over the next few years. The gold price and the silver price will automatically protect owners of gold and silver from the dollar devaluation actions of the Fed. This is already in the pipeline. It could be just for starters. The BIS's total for derivatives is over $1 quadrillion, over $1,000 trillion. A really scary thought is not having any gold and/or silver.

Monday, March 23, 2009

Gold Price Pattern

The graph of the gold price shows what is probably going to be an upside down head and shoulders pattern showing around 1300 as the next stop for the gold price. Take the difference between the gold price at the head and the gold price at the neckline and add it to the gold price at the neckline.





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The Mexican 1 oz gold libertad

















A member of the banking committee thinks the US is still on the gold standard:











Did not catch the second up move in US equities?
Did not catch the up move in real estate?
Gold is a barbarous relic?
Gold does not pay interest?
Silver does not pay interest?

No problem for those that were early buying gold and silver and waiting patiently. The best part is that there are still years to go in the gold and silver bull markets.

Saturday, March 21, 2009

The Gold Price and Armstrong's Cycle

March 19th was the top of Martin Armstrong's mid down cycle uptrend. On the 18th, the gold price and the silver price made big gap up moves probably never to get closed. The US dollar made a big move to the downside. And, US government debt made big moves to the upside (by people that do not understand the significance of the Fed buying US Treasury debt). The Endarkenment is well underway.

The 19th was the day the Fed ran hard a ground announcing the purchasing of US Treasury debt...




and put a call out for larger "money" pumps:





















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Jim Willie:

GOLD & TREASURY FEEDER SYSTEM
" ...
If the USTreasurys are so pristine and risk-free, then why did they recently hit 1.00% for Credit Default insurance protection cost? The 5-year USTNote bears roughly a 2% yield, but its default insurance cuts that effective yield to 1.0% only. A year ago the same default insurance cost a mere 1 basis point, as in 0.01 percent, one hundred times less. Maybe someday soon the shorter term USTreasurys will cost in default insurance more than their measly yield paid out. The world's financial markets are realizing that USTreasurys are not so free of risk at all, and surely not a safe haven. ASK THE CHINESE FOR AN OPINION.
.... "


Finally, Zimbabwe's hyperinflation blows up:

Zimbabwe chooses rand as reference currency

HARARE, March 20 (Xinhua) -- The Zimbabwean government has chosen the rand as the country's reference currency but will not randify the economy, local media said.
...
"STERP, responding to the hyper-inflationary environment, will permit use of multiple currencies for all business transactions, including stock exchange trading, sale of agricultural commodities and payment of salaries.

"All taxes will, therefore, be paid in foreign currency," the minister said. The government adopted a multiple currency trading system last month where the rand, the U.S. dollar and Botswana pula operate as legal tender alongside the Zimbabwean dollar.
...





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Silver:


Gold:


10 year note:


US dollar:


The 18th was a Wednesday, the day of the big gold price, silver price, US dollar Index and US Treasury debt moves. Unlike the dollar and debt moves, gold and silver made their moves after the Comex closed on Wednesday, so that their moves show up in the futures charts on the next day, Thursday. The June 13th, 2011 date is ominous for US stock markets. There are many that still do not get the enormity of what is happening or are simply in denial. Both of these could end soon so that the US stock markets continue their major greater depression down trend.

Friday, March 20, 2009

The Gold Price Is Saying A Lot

The US dollar is just a government fiat token not redeemable in anything, merely backed by the "full faith and credit" of the US government. The gold price is saying that its "faith" and "credit" are going down the tubes, its "backing" is going down the tubes. The more there is of something, the less it is worth. The less value it has. What is a real restraint on the US Treasury's and the Fed's ability to create more US dollars. Nothing much other than politics.

The gap up in the gold price and the silver price yesterday will probably not be filled, probably a break-a-way gap.


Here are just 2 examples of the implosion of the "full faith and credit of the US government", right out of reality. But, also right out of Atlas Strugged. So, if you are wondering what's going on, what's happening, read Atlas Shrugged.

Atlas Shrugged Sales
"Washington, D.C., February 23, 2009--Sales of Ayn Rand’s “Atlas Shrugged” have almost tripled over the first seven weeks of this year compared with sales for the same period in 2008. This continues a strong trend after bookstore sales reached an all-time annual high in 2008 of about 200,000 copies sold."

"From fiction to fact in 50 years..."


From Chris Laird’s PrudentSquirrel.com…

The US congress is proposing new very restrictive mining regulations like yearly inspections and a whole gamut of new regulations specifically on precious metal miners….in the name of the environment… it’s hard to say the effect on big US mines, but the smaller ones will have lots of trouble with this if it gets through.

Rahall Proposes Bill to End All Mining in the U.S.
by Scott Harn

Nick Rahall, chairman of the House Resources Committee, reintroduced mining reform legislation in the House of Representatives on January 27, 2009. The Congressman has obviously been away from real work for far too long. H.R. 699, the Hardrock Mining and Reclamation Act of 2009, should be labeled H.R. 666 because it appears to have been written by the Devil himself. If it passes as written, it will completely destroy an entire industry.

H.R. 699:

· Casual use would be redefined to allow only those activities that do not cause “any disturbance of public lands and resources.” The collection of samples, use of gold pans and non-motorized sluices would be the only activities allowed without a Notice or Plan. Taking a vehicle off-road would also require a Notice or Plan. Any extraction of minerals for sale or use would require a Notice or Plan.

· H.R. 699 would be retroactive. Existing mining that is not already operating under a Notice of Plan would require proof of a valuable discovery to retain a mining claim, and those operating under a Notice or Plan would have ten years to bring their operation under compliance with the new regulations.

· The patenting of mining claims, which has been suspended by yearly legislation since 1994, would be permanently discontinued.

· The federal government would be entitled to an 8 percent gross royalty for all locatable minerals for any new mining operation.
Link to article…



Government Regulators Aided IndyMac Cover-Up, Maybe Others
Darrel Dochow May Not Be the Only Official Who Helped Banks Hide Financial Problems
By BRIAN ROSS, JUSTIN ROOD, and JOSEPH RHEE
Jan. 16, 2009—

A brewing fraud scandal at the Treasury Department may be worse than officials originally thought.

Investigators probing how Treasury regulators allowed a bank to falsify financial records hiding its ill health have found at least three other instances of similar apparent fraud, sources tell ABC News.

In at least one instance, investigators say, banking regulators actually approached the bank with the suggestion of falsifying deposit dates to satisfy banking rules — even if it disguised the bank’s health to the public.

Treasury Department Inspector General Eric Thorson announced in November his office would probe how a Savings and Loan overseer allowed the IndyMac bank to essentially cook its books, making it appear in government filings that the bank had more deposits than it really did. But Thorson’s aides now say IndyMac wasn’t the only institution to get such cozy assistance from the official who should have been the cop on the beat.

The federal government took over IndyMac in July, after the bank’s stock price plummeted to just pennies a share when it was revealed the bank had financial troubles due to defaulted mortgages and subprime loans, costing taxpayers over $9 billion.
More…


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It looks like the "full faith and credit" of the US government is struggling, or shares of USA, Inc. are struggling.






Current M3 "money" supply.
More "money" related supply charts at A world of possible futures.














Despite the decrease in M3 "money" supply (debt default, debt pay off) it can be astounding what people in power will do to hang on to political power, as in a freeking 100 trillion dollar token:










Wait for the Treasury and Fed to put the pedal to the metal. The more they stomp on it, the more the gold price does its protection job. Heck, the Treasury and Fed can burn rubber if they want. The gold price and the silver price will just burn rubber, too.

Wednesday, March 18, 2009

Gold Price Protection

The gold price and the silver price are providing protection from central banks.




The US dollar:



The Fed announced today that it would buy US Treasury debt. The Fed will create dollars out of thin air by typing on a key board, moving some digital bits around on their hard drive, and send them to the US Treasury in exchange for digital bits from the US Treasury representing US Treasury debt. Of course the US Treasury will pay interest to the Fed. Central banking is quit the racket. We should all have monopolies like that.

Anyways, are those good pictures of gold and silver protection from central bank monopoly scams, or what? Unfortunately most in the anglo saxon world do not have protection, are clueless as to what is going on, what to do.

Friday, March 13, 2009

Another Possible US Dollar Index Top That Could Be Really Important

The gold price and the silver price can benefit from a declining US dollar. After all, they are real, actual, time tested monies.




Detour

"Heidi is the proprietor of a bar in Berlin Germany. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around and as a result increasing numbers of customers flood into Heidi’s bar.

Taking advantage of her customers’ freedom from immediate payment constraints, Heidi increases her prices for wine and beer, the most consumed beverages. Her sales volume increases massively.

A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi’s borrowing limit.

He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

At the bank’s corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items.

One day, although the prices are still climbing, a risk manager (subsequently of course fired due to his negativity) of the bank decides that the time has come to demand payment of the debts incurred by the drinkers at Heidi’s bar.

However they cannot pay back the debts.

Heidi cannot fulfill her loan obligations and claims bankruptcy.

DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80 %.

The suppliers of Heidi’s bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor.

The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties.

The funds required for this purpose are obtained by a tax levied on the non-drinkers."

End Detour



Second Detour

"The Federal Reserve is the culprit."



"A central bank setting interest rates is price fixing, and is a form of central planning." ... "Let's end the Fed."

[Central planning is a major tenent of Communism. The USSR imploded on itself without going to war, and broke up into pieces. It looks like most Americans learned nothing about a history making event. Mental lazyness and ignorance can be extremely costly.]

End Second Detour


Again, the US dollar index has broken down through it's short term uptrend line, a bit more than the last time during this short uptrend.

It may be forming a more overall double top with the the right hand top being higher, being a final stronger shake out of the weak US dollar shorts. By the end of next week, we should have a better idea which in turn gives us a better idea of where the gold price is going.

Tuesday, March 10, 2009

Another Reason Why The Gold Price Should Skyrocket

The gold price should skyrocket because of the bailouts the US government and its central bank are making.




Source

The US Treasury and the Fed have to create all these dollars being spent on bailouts out of thin air adding to the "money" supply, devaluing the US dollar. The US federal government is broke. Not that all 8.5 trillion is spent, yet. To give 8.5 trillion perspective, M3 is about 14 trillion. Who is to say when this gravy train will end? This scam could go on and on and on. The gold price is definitely going up. It is already making new highs in other government fiat tokens.

Possible Last Down Day For The Gold Price

Tuesday's down day in the gold price may be its last for a short term.



The amazing US dollar:



The gold price hit both its uptrend line and the bottom of a resistance level. It probably will now try and get back to the $1,000 level. Whether it makes it up through $1,000 on the second attempt remains to be seen. It might take 3 tries.

Monday, March 09, 2009

The Rising Gold Price Is Saying That The Wrong Actions Are Being Taken To Fix The Problem

The rising gold price is saying that the wrong actions are being taken to fix the problem. True, the repayment of debt, the partial pay down of debt, and debt default reduces the "money" supply which is deflation, and which is going on right now in many parts of the world, particularly in a few countries in the western hemisphere. On the other hand governments and their central banks are spending, making plans to spend or guaranteeing trillions of dollars. This means that the governments that are broke have to increase their debt in order come up with the fiat tokens that they want to spend to "fix" the problem. Since an economy can only take on so much debt, since there is only so much savings in the world, at some point governments can cause the consumption of existing capital. Lack of maintenance is also consumption of capital.

When governments set their minds to it, they can produce massive amounts of their tokens, thus devaluing them. Look at what one of 'em did just recently:



No, the above is not a cartoon or joke. A freeking 10 trillion dollars government fiat token.

People in the Anglo Saxon world should be scared silly since there is no change and there does not look to be any on the immediate horizon:



The scam rolls on.


FDIC Bill Dodges a New TARP Fight

By DAMIAN PALETTA

WASHINGTON — A three-page bill designed to bolster the Federal Deposit Insurance Corp. could let the Obama administration sidestep a huge political problem: securing more financial firepower without opening a debate over the Troubled Asset Relief Program.

The legislation, introduced late Thursday by Senate Banking Committee Chairman Christopher Dodd, would temporarily allow the FDIC to borrow $500 billion to replenish the fund it uses to guarantee bank deposits, if the Federal Reserve and Treasury Department concur. Those funds would be distinct from the contentious $700 billion financial-sector bailout, which lawmakers are loathe to expand.

The FDIC can presently only borrow $30 billion from Treasury. The bill would permanently raise that level to $100 billion, which the FDIC could tap without prior approval from the Fed and Treasury.

Mr. Dodd, a Connecticut Democrat, already has four Republican co-sponsors for the bill and it could quickly gain momentum, in part because of strong backing by community bankers.
....





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THE OBAMA POLICY
Howard S. Katz
March 2, 2009
It is your misfortune to live in an evil age, an evil age and a stupid age. As a result, the entire economic discussion today is a concoction of deliberate lies and muddled confusion. The longer an economist's title the stupider he is.

The greatest economist of the 20th century was Ludwig von Mises. Von Mises was the leader of the Austrian school of economics and predicted (what is conventionally called) The Great Depression.

Von Mises taught that there are two (not one) aspects to the production of wealth:

* The actual wealth must be produced.
* The resources of the community must be directed toward producing those particular goods which are most desired by the consuming public.

Most of the country's economists understand point 1. But they do not have a clue about point 2. To illustrate, let me take an example when this point was ignored in economic history.

In the late 1920s, Joseph Stalin decided on the industrialization of the Soviet Union. He took farmers off the farms and put them into factories. He wanted to make the U.S.S.R. into an industrial country like the United States. The result was that by the early 1930s the Soviet Union had an increased amount of industrial goods. BUT THEY DID NOT HAVE ENOUGH FOOD. Today the Encyclopedia Britannica estimates that between 6 and 8 million people died of starvation from 1932-1934. The system had produced more goods, but it had not produced the goods that people really needed. So the increased production did not do them any good.

This is the reason that Gross Domestic Product does not accurately measure the wealth of a society and cannot be spoken of as the economy. It measures the quantity of goods, but it takes no cognizance of the importance of particular goods for the people of the society. Because he did not understand this, Alan Greenspan did, in a subtle and roundabout way, in the recent past what Stalin had done in the 1930s. He devoted the resources of his society to the production of goods which the consuming public did not want (or did not want as much as other goods which did not get produced).

You have been told that our society is now in a housing crisis. This much is true. But the crisis described in academia and in the media is the decline in housing prices. This is only a crisis if you are a housing speculator. If you are a young couple trying to buy your first house, then the decline in housing prices is a good thing.

...


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"We Will Recover," Says Obama. "No We Won't," Says Celente; Government Policies Doomed to Fail

KINGSTON, NY, 27 February 2009 -- The wealth of plain, hard facts upon which The Trends Research Institute's forecasts are based belie the lofty promises made by President Obama's first address to Congress.

"We will rebuild, we will recover, and the United States of America will emerge stronger than before," said President Obama.

Said Celente, "The government has yet to fix the levees in New Orleans. There is still a hole in the ground where the World Trade Center once stood. Washington has started two wars it can't win and doesn't know how to finish. The massive bank, brokerage, auto and insurance company bailouts have done nothing to resuscitate the sinking economy. The Troubled Assets Relief Program (TARP) that candidate Obama championed has not "relieved." President Obama's $787 billion American Recovery and Reinvestment Act will not lead to recovery and the nation will not 'emerge stronger than before,'" Celente continued.

....


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Obama Puts the Economic Cart before the Horse

In his first televised speech before Congress, President Obama asserted that prosperity will return once the government restores the flow of credit in the economy. It may come as a surprise to him, but an economy cannot run on consumer loans. Furthermore, credit stopped flowing in the U.S. for a very good reason: there was no more savings left to loan. Government efforts to simply make credit available, without rebuilding productive capacity or increasing savings, are doomed to destroy what's left of our economy.

The central tenets of Obamanomics appear to be that access to credit will enable people to borrow money to buy stuff, the spending will spur production and employment, and thus the economy will grow. It's a neat and simple picture, but it has nothing whatsoever to do with how an economy works. The President does not understand that consumption is made possible by production and that credit is made possible by savings. The size and complexity of modern economies has obscured these simple concepts, but reducing the picture to a small scale can help clear away the fog.

....

The sad truth is that the productive capacity of the American economy is now largely in tatters. Our industrial economy has been replaced by a reliance on health care, financial services and government spending. Introducing freer flowing credit and more printed money into such a system will do nothing except spark inflation. We need to get back to the basics of production. It won't be easy, but it will work.

President Obama would have us believe that we can all spend the day relaxing in a tub while his printing press does all the work for us. The problem comes when you get out of the tub to go to dinner and the only thing on your plate is an IOU for steak.



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A Jim Rogers interview, about 28 minutes long:



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And now for some related fun:



What does one TRILLION dollars look like?


Unlike plants and non-human animals, man needs property to survive, which is why the theft of it is such a terrible thing. The possession of gold and/or silver for some will make the difference between survival or not. The gold price and the silver price are suggesting this.

Saturday, March 07, 2009

New Gold Based World "Monetary" System Possible

There is little capitalism in the world now and there is little in the way of free markets in the world, also. So, those things are not at fault despite government types saying those are what failed. They sure as heck can't be expected to blame themselves or their failed "monetary" "systems". Honesty is not a con man's or a thief's specialty.

Probably we are going to see the end of the USD as the world's single reserve currency and in its place a number of gold "backed" government fiat tokens, starting with Russia, the Arabs and a Persion Gulf token. Probably in 2010. If they were to be **redeemable** in gold, they would not be tokens. They would be currencies. Gold and silver are not redeemable in anything. That makes them ***money***. Something that has no liability attached to it, no debt attached, zero, zip, nada attached. Money is final settlement!!!! Since 1971 there has been no final settlement which is why the "system" broke back then and is now about to end (the broken pieces finally stop moving). Since 1971 we've been watching a blow up scene in a movie in slooooooooww motion. "gold backed" probably means that the supply of tokens will be tied in a ratio to some supply of gold that the government has control over. So, they will probably use gold to control the supply of tokens but they will still be tokens.

For how long can governments keep their promise to not create more fiat tokens unless they go get some more gold first to keep the ratio between tokens and gold the same remains to be seen. One generation? One decade? Two decades? After all, even with a new "monetary" system, we will still have organized crime in charge of the "monetary" system. Probably it depends on how long a majority of their citizen units remain in a mentally childish and dependent state of mind, how long they constantly produce something to be constantly stolen. Of course if they have no savings, they can not go on strike to stop producing that which is constantly stolen from them and still survive, stay alive. The masters know this. But, then again, some of the masters are just getting by by the skin of their teeth.

So, the fiat token price of gold and silver can go up to the top of this bull market and stay up there with no substantial correction / reaction, in the fiat token price of, if governments adopt some discipline.


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The race to the bottom:

BKX Kbw Bank Index USD (INDEX)

(Right click to open in a new tab for an increased size of this astounding chart.)

*JPM fell 67 cents to $15.93, after breaking $15 on the downside.
*Goldman Sachs dropped a hefty $6.07 to $75.65, with a low of $73.25.
*GM is truly disappearing. It sank another 41 cents to $1.45.
*Citigroup (C) held above $1 at $1.03.
*Bank of America (BAC) traded as low as $3 before finishing the day at
$3.14, off 3 cents.
*AIG managed to hold the lead in the race to zero, finishing the week at
35 cents, unchanged on the day.

Government types are saying that these types of institutions are too big to fail, that it will cause more damage if they are allowed to fail. Not. Trying to save them will cause even more damage because to save them, governments have to do more of what caused the problem, taking on more debt, too much debt.

They are not too big to fail. They are "Too big to bail." - Bill Murphy, LeMetropoleCafe. Try as they might, it looks like they will ruin the dollar and some other government fiat tokens in a failed attempt.

Some people will never learn. Oh, wait, maybe they in fact know what they are doing, or at least a tiny group know. What? They don't know what's happening in Zimbabwe right now? They know absolutely nothing about history? Oh, wait. That type of history, the really important stuff, is not taught in government schools. Can't have the slaves learning about reality, they might start running off the "plantation" and jack up "plantation" security costs.

Or, what was that joke... ? ... something about make the jail big enough and they won't know they are in jail?



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And now for some fun ("the crappiest generation" "you non-contributing zero"):
Lewis C K, a YouTube video:
Everything's amazing, nobody's happy
(YouTube is not allowing the embedding of this one)


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When all hell breaks loose, the real purchasing power of gold and silver can buy a huge amount of real wealth because of temporarily depressed real prices, particularly that in which leverage is usually involved in the purchase of (businesses, real estate). At a certain time in this major cycle there will be a big time transfer of wealth, particularly for those with gold and silver, the actual metals in there own control, own hands, actual ownership.

Remember, there is some tiny percentage of organized crime that gets this and has been working on collecting gold and silver just like the little guy that was hip to the scene and collecting gold and silver way back there. Funny, there is a tiny percentage of organized crime that wants to see gold and silver go up in real terms, purchasing power, just like the little guy does.

Wednesday, March 04, 2009

Gold Price To Skyrocket - II

The gold price should skyrocket due to out of control, whacked out, senseless, irresponsible congress critters, senators, bureaucrats and some large percentage of citizen units.

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Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University. He was awarded the Legion of Honor by French President Francois Mitterrand. He is the author of Supply-Side Revolution : An Insider's Account of Policymaking in Washington; Alienation and the Soviet Economy and Meltdown: Inside the Soviet Economy, and is the co-author with Lawrence M. Stratton of The Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the Constitution in the Name of Justice.

He has produced a March 01, 2009 article:

a banana republic by 2012?
Change for the Worse


"President Obama has presented the most irresponsible budget in US history. His fiscal year 2010 budget projects federal spending of $3.5 trillion and a federal deficit of $1.75 trillion. In other words, 50 percent of the government’s budget consists of red ink.

...

The bald fact is that the US government is going to have to borrow--or print--half of the money it intends to spend in Obama’s first budget. This fact has fallen through the cracks as New York Times headlines proclaim "A Bold Plan Sweeps Away Reagan Ideas." It certainly does sweep away Reagan ideas. No Reagan budget ever presumed that the federal government could borrow half of its annual expenditures. Indeed, Obama’s budget deficit for 2010 alone exceeds the totality of "Reagan Deficits" for Reagan’s two terms of office.

As presidential budgets are marketing devices rather than financial statements, they are imbued with optimistic assumptions. Obama’s budget is based on optimistic assumptions about the extent of decline in GDP. A more realistic projection of GDP decline would reveal that Obama’s budget is the first since World War II in which more than half of the government’s expenditures must be financed by red ink. I suspect that the red ink component of the FY 2010 budget will surpass World War II budgets.

..."


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Jim Rogers is saying essentially that if gold goes down buy all you can:




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Celente: U.S. Has Entered "The Greatest Depression"
...
“The global financial system, built on endless supplies of cheap money, rampant speculation, fraud, greed, and delusion is terminally ill and will not be coaxed into remission by stimulus packages nor restored to health by government buyouts and bailouts,”
...




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"Get it while you can." - Janice Joplin

Most people, at least in the Anglo Saxen world, still do not understand what is going on, and do not want gold or silver, would wonder what to do with the stuff, do not know what money is, but in the future will want them when the gold price and the silver price are beyond their reach and there is a major change in the world's monetary "system" underway.

Gold Price To Skyrocket

The gold price should skyrocket as nothing has changed in Washington DC.

The bums in Congress could care less about the fact that their spending plans that keep increasing will not work as Ron Paul explains why:



Heck, they don't even bother to read these huge spending bills that they vote on. Amazing! They are reckless and out of control. The federal government is broke and they have to borrow all these extra dollars they plan on spending. There is not enough savings in the world, literally, for them to borrow. They will have to have the dollars created out of thin air by the Fed. The numbers are getting huge.


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John Williams of ShadowStats.com:

...
“What promises hyperinflation this time is the lack of monetary discipline formerly imposed on the system by the gold standard, and a Fed dedicated to preventing a collapse in the money supply and the implosion of the still, extremely over-leveraged domestic financial system.”

“The limits to the unlimited abuse of the debt standard are particularly evident in the GAAP-based financial statements of the U.S. government, which show the actual federal deficit at $4.0-plus trillion for 2007 alone, with total federal obligations standing at $62.6 trillion. With no ability to honor these obligations, the government effectively is bankrupt.”

"Although the U.S, government faces ultimate insolvency, it has the same way out taken by most countries faced with bankruptcy. It can print whatever money it needs to create, in order to meet its obligations. The effect of such action is a runaway inflation - a hyperinflation - with a resulting, full debasement of the U.S. dollar, the world’s reserve currency.”

“Oil prices are near historic highs, the dollar is near historic lows, and money growth is at an all-time high. The near-term outlook for all three is for new record levels and for extremely strong upside pressure on U.S. inflation. … gold prices should continue setting new historic highs.”

“The difference is in accounting … for unfunded Social Security and Medicare liabilities.”

“Put into perspective, if the government were to raise taxes so as to seize 100% of all wages, salaries and corporate profits, it still would be showing an annual deficit using GAAP accounting on a consistent basis. In like manner, given current revenues, if it stopped spending every penny (including defense and homeland security) other than Social Security and Medicare obligations, the government still would show an annual deficit.”

“U.S. federal obligations are so huge versus the national GDP that the country’s finances look more like those of a banana republic than the world’s premiere financial power and home to the world’s primary reserve currency, the U.S. dollar.”
...


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Peter Schiff's reaction to Obama's state of the union address:



Peter Schiff explaining why Obama is not causing change, but is causing continuation of what TPTB (The Powers That Be) want, the same stuff as under the Republicans. The Puppet Masters just changed some of the puppets.

Part 1:


Part 2:



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Human nature being what it is people in power will do everything they can to counter act the deflation (contraction of the "money" supply) going on due to debt repayment and debt default. The gold and silver prices will go up due to fear as well as greed.