1) The strictly for-profit "Federal Reserve" corporation of privately held banks, who print then sell counterfeit cash (euphemistically called, financing our deficit spending at interest) to crooked politicians. We currently pay these world crime king pins 16% of our total Federal income in interest payments, every year and growing, according to the CBO.
2) About 90% of D.C. politicians (Republican & Democrat), including our current President, who desperately want to buy #1's freshly printed spending cash they so they may take their petty cut.
3) Islamic and Red Chinese Nationalists, who have been disenfranchised by #2 and now hold $trillions of private stock in #1, trying to displace European old money by learning the art and science of siphoning American productivity.
Saturday, September 12, 2009
Time to Rag on Criminals
It's been a while since I've ragged on the criminals hellbent on destroying America for personal profit. Roughly in order of danger to the American People, they are:
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Enlighten me please FDR. You are still talking about shorting gold when the dollar value is in decline. Why in the world wouldn't the price of gold go up if the dollars value is in decline (it takes more dollars for us Americans to purchase gold)? Wouldn't the very fact that gold is a currency of its own that is relevant to all other currencies in the world make the price of gold go up for us Americans? Besides china there are a lot of other countries hording gold right now. Wouldn't supply and demand alone at least stabilize the price?
ReplyDelete"Enlighten me please FDR. You are still talking about shorting gold when the dollar value is in decline. Why in the world wouldn't the price of gold go up if the dollars value is in decline (it takes more dollars for us Americans to purchase gold)?"
ReplyDeleteHi Anonymous,
Why do you think the value of the dollar is in decline? Today, the dollar buys roughly twice as much of everything compared to pre-crash prices, and you ain't seen nothin' yet.
Holding cash has returned a rough 100% rate of return since I recommended an all cash position in late 2007. This is because cash is strengthening its buying power, not losing it, like the crooks and inflation salesman, mentioned above, would like you to believe.
Exchange rates, as I've pointed out many times, have no bearing whatsoever on dollar strength. Exchange rates simple contrast the rate of change in the amount of available paper in two different currencies. If both currencies are deflating, the exchange rate may not budge, even as asset prices plummet due to increasing currency strength.
If an exchange rate is changing, it only indicates more inflation or deflation in one currency than the other. For example, if the dollar supply decreases/deflates by 4/5ths, causing retail merchandise, real estate, and stocks to sell for 20 cents on the previous dollar, and the Euro supply only deflates by 4/6ths, misinformed people will scream that the $ is becoming worthless, even though, empirically, that $ buys 5 times more stuff.
In other words, most major paper currencies are, and have been deflating since around the 2007 market price peak, causing global asset prices (including most industrial and precocious metals) to plunge from currency starvation. But most economists are simply, terribly, misinformed.
This has always been the case, "economists" know much less about the economy than people who aren't formally trained to be, and rewarded by becoming, robotic inflation salesman. It is worth noting that virtually all recognized mainstream economists believed we had was out of control inflation during the early 1930s, when in fact there was massive deflation.
I can't think of a single example of a major financial event that any well recognized economist understood, or even got right by accident, until after it was over. It simply never happens.
It is true that gold increased in price while the dollar was weakening in buying power due to the intentional mega-inflation (1932-2000; then 2003-2007). That is why I was so bullish on gold, and especially gold minors (as in, the "minor" gold miners).
It is also true that gold hasn't budged in price, roughly since achieving that same high.
It is also true that is about to change.
The biggest change continues to be in absolute $ buying power, but the thing that will probably trigger initial gold sales is a corresponding, though mostly irrelevant, change in exchange rates. Commercial US credit is simply vanishing faster, because it drives the rest of the worlds economies. Thus we have a cause/effect relationship between US deflation and other major currencies that leverage US productivity.
Ironically, that relationship may cause the US dollar to deflate the least, when all is said and done perhaps 20 years from now. But that will hardly be of consolation.