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"But a Constitution of Government once changed from Freedom, can never be restored. Liberty, once lost, is lost forever." - John Adams
Showing posts with label US economic decline. Show all posts
Showing posts with label US economic decline. Show all posts

Saturday, October 1, 2011

Buy Gold, While It's On Sale

Dollar Commentary:
Smart investing is about taking advantage of situations when they arise, and there are plenty of opportunities right now. On the above chart you can see that the dollar has gained 19% against gold in the last month, after falling horribly for many years. This dollar rally is effectively an invitation to increase your gold holdings, and it is what I have done this week. Gold is quickly becoming my personal currency.


Debts have to be paid, whether in one form or another. Dollar debt can be paid traditionally or by dilution. The US debt is so large that I don’t believe it can be paid traditionally, so the dollar has to be diluted. This dilution will cost all citizens in one form or another, mostly in the form of a lower standard of living.

If a currency is diluted it loses purchasing power, both here and abroad. The buyer gets less and pays more. In the next few months the dollar appears headed down to the $65.00 area on the $USD index. This technical price action represents the fundamental of debt payment by dilution.

While the time of this actual quotation is uncertain, Jim Rogers has commented on the magnitude of the US debt with this statement over the years,“Europe’s got some bad problems but the entity as a whole is not nearly as deep in debt as the U.S. They don't have a huge balance of trade deficit, like we do.”

Our debt could turn into a crisis, and it could be a lot worse than what Europe is experiencing. Will Illinois, California, and New York be viewed by the rest of America like Germany views Greece now? Where does this all end? It feels like there is no end, and much more pain to come for many years.

The dollar rally already now appears to be starting a topping out process. This process that is topping the dollar is also creating substantial bottoming action in gold and commodities. I expect this process to take another two weeks. I want to own more gold while the “sale” is on.

Gold Super Highway Chart

Gold Analysis

Two important items:

You can make the argument that chart damage has been done here. The small symmetrical triangle I highlighted last week failed, but it was a small technical formation; the big technical picture continues to strengthen. Gold has begun the journey to becoming the worldwide asset of choice in this crisis.

Massive Asian physical buying has come to the metals as a result of the three day correction that saw gold prices fall over 10%, and the Indian wedding season preparations are picking up steam.

A report was posted on Bloomberg several days ago stating that gold could go to $10,000 per ounce based upon the amount of money printed on a historical basis. That is prior to any additional QE programs. More printing allows for an even higher gold price. Many believe the US government will default on obligations. There really is no final target price for gold. Over time, governments will just keep printing paper currency to dilute their debts, as they have for thousands of years. It began with diluting gold coins with other metals. The space age has brought the electronic printing press. Gold is volatile, but the largest trend of the gold price over the longest time has always been higher, against government promise-backed currency.

I believe physical gold owners are the smartest of all investors.

To be in a market and to stay in a market, you must believe in what you own and know why you own it. Don’t buy something simply because the chart looks nice. Buy it because of great fundamentals. Use my technical buy signals to increase your core positions.

Read The Rest Here


Thursday, February 24, 2011

US Debt and Printing Press Benny's Inflation Cause Revolutions Around The Globe

Cereal Wars…and Zombie Wars…
Hey, how ’bout that Ben Bernanke… He’s a freedom fighter! Look what he’s done to North Africa!
Seems like every time we pick up the paper another dictator is toppling over. Where does it lead, we wonder? What would a world be like without dictators? Without them, who will the CIA and the State Department give our money to?
On the run this morning (but not quite given up) is Muammar Gaddafi of Libya.
Wait… Is this guy a friend or an enemy? We can’t remember. Wasn’t he a bad guy a few years ago? But recently we’ve heard that he is a good guy. He’s helped with the War on Terror. And he sells oil.
Friend or foe, we don’t know…but whatever he is, he’s beginning to look past tense. As of this morning, reports say he’s lost control of Libya’s second largest city. His troops are firing on protesters in the capital, where he and his loyal guards are holed up in a few government buildings.
His son vows to fight back. He says there will be “rivers of blood” before he gives up.
That “rivers of blood” image was used by Enoch Powell in Britain fifty years ago. It came from Virgil’s Aeneid, in which a character foresees “wars, terrible wars, and the Tiber foaming with much blood.”
Powell was referring to the effects of immigration into Britain from Africa and elsewhere. He thought he saw race wars and power struggles coming as a result.
But the younger Gaddafi uses the language as a threat, not a prophecy.
Still, it didn’t do Powell much good. Maybe Gaddafi will have better luck with it. Most likely, he’ll high-tail it out of the country before the blood is his own. That will bring to three the number of regime changes in the last few weeks. Which leads us to ask: what’s up?
The answer comes from our old friend, Jim Davidson. He pins the revolutions on Ben Bernanke. Behind the popular discontent is neither the desire for liberty nor the appeal of elections. It’s food. And behind soaring food prices is Ben Bernanke.
The Arab world is a model Malthusian disaster, says Davidson. Populations have ballooned. Food production has not. Which makes Arab countries the biggest importers of cereals in the world. And when the price of food goes up, the masses rise up too.
From Jim’s latest newsletter, Strategic Investment:
Food prices hit an all-time high in January. According to the UN’s Food and Agricultural Organization (FAO) “the FAO Food Price Index (FFPI) rose for the seventh consecutive month, averaging 231 points in January 2011, up 3.4 percent from December 2010 and the highest in both real and nominal terms” since records began. Note that prices have now exceeded the previously record levels of 2008 that sparked food riots in more than 30 countries. “Famine-style” prices for food and energy that prevailed early in 2008 may also have helped precipitate the credit crisis that Federal Reserve Chairman Ben Bernanke described in closed-door testimony “as the worst in financial history, even exceeding the Great Depression.”
This time around, the turmoil surrounding commodity inflation has taken center stage with more serious riots and even revolutions across the globe. Popular discontent is not just confined to “basket case” countries like Haiti and Bangladesh as in 2008. High food prices have roiled Arab kleptocracies with young populations and US backed dictators such as Tunisia, Egypt, Bahrain and Yemen. Even dynamic economies have been affected. Indeed, all of the BRIC countries, except Brazil, have witnessed food rioting.
Well, how do you like that, Dear Reader? All those billions of dollars spent propping up dictators – $70 billion was the cost of supporting Hosni Mubarak in Egypt alone – and then the Fed comes along and knocks them down.
The Fed lowers the cost of money so speculators can borrow below the rate of inflation. And then it prints up trillions more – just to top up the worlds’ money supply.
Is it any wonder food prices rise? Imagine you’re a farmer…or a speculator. You can sell food. Or you can hold it in storage. You know the food is valuable. You know the world has more and more mouths to feed everyday. You know food production is limited. And you know Ben Bernanke can print up an unlimited number of dollars. What do you do?
Do you sell immediately? Or drag your feet…holding onto your valuable grain as the price hits new highs?
Davidson continues:
While Mr. Bernanke modestly declines the credit for de-stabilizing much of the world, close analysis confirms that he played an informing role. His QE2 program of counterfeiting trillions out of thin air has helped ignite a raging bull market in raw materials with food and commodities – up 28% in the past six months. The fact that the US dollar has heretofore been the world’s reserve currency means that almost all commodity prices are denominated in dollars. As a matter of simple math, when the dollar goes down, the prices of commodities tend to go up.
Today, Libya. Tomorrow…Yemen? Or Saudi Arabia.
In North Africa, Cereal Revolutions…
In North America, Zombie Wars…
Yes, the battle rages in the Dairy State. And yes, Nobel Prize winner Paul Krugman (Economics!) has no idea what is going on:
It’s “not about the budget. It’s about power.”
He thinks it is a battle between the rich and powerful, whom he calls the “oligarchy,” and the decent lumpenproletariat. Wisconsin’s governor is trying to bust the union, says Krugman, so that the elite can ride roughshod over poor government workers, cut their pay, and reduce their benefits (thereby downsizing the state’s budget deficit).
It’s not about money, says the New York Times columnist. He’s wrong, as usual. The Zombie Wars are always about money. There is less money available and more zombies who want it.
In the present case, rather than hire honest people to work at market rates…Krugman wants the state to be forced to deal with a privileged union. Union zombies should bargain with government zombies, he says. Together, in cooperation, not in conflict, they should figure out how to rip off the taxpayer.
Stay tuned…the Zombie Wars are just beginning.
Reprinted with permission from The Daily Reckoning.

Friday, February 11, 2011

Obama Lecturing the Chamber Of Commerce, Laughable if it weren't true.

In an effort to counter the notion that the White House is anti-business, Barack Obama assured the U.S. Chamber of Commerce Monday that they could all be friends. "I'm here in the interest of being more neighborly," Obama said. "Maybe if we'd brought over a fruitcake when I first moved in we would have gotten off to a better start. But I'm going to make up for it." The problem is, Obama's the kind of neighbor that talks friendly enough, but then turns you in to the homeowner's association for having a garden gnome he doesn't like in your front yard.
After Obama discussed fruitcakes and a better start, his speech quickly turned into a lecture telling businesses how to do business. "American companies have nearly $2 trillion sitting on their balance sheets," he said. "I know that many of you have told me that you're waiting for demand to rise before you get off the sidelines and expand, and that with millions of Americans out of work, demand has risen more slowly than any of us would like." He continued his challenge, saying, "[M]any of your own economists and salespeople are now forecasting a healthy increase in demand. So I want to encourage you to get in the game."
Such posturing is laughable coming from a man so completely lacking in private-sector experience. Furthermore, as has been well documented in this space, Obama's Keynesian stimulus failed to keep unemployment down or to stop the feeling of economic malaise. Worse yet, his regulatory frenzy and his promises to raise taxes on small business owners have created great uncertainty.
In January, the president appeared ready to deregulate, but as we noted then, that was a farce. The pace of new regulations under Obama is historic. Monday, he talked about eliminating "burdensome regulations," while insisting that "not every regulation is bad" or "burdensome on business." In other words, businesses will take the regulations he gives them and like it.
Obama did offer what appeared to be an olive branch, saying, "[I]f there's a reason you don't share my confidence, if there's a reason you don't believe that this is the time to get off the sidelines -- to hire and to invest -- I want to know about it. I want to fix it." Of course, if we thought the problem was bad, his solutions have been worse.
Businesses didn't even wait for the speech to provide feedback. Earlier Monday, Republicans released 2,000 pages of letters from businesses detailing the negative effects of the administration's regulatory policies. Obama's message may have been that "we can and we must work together," but he needs to stop treating the Chamber of Commerce like a prison chamber for commerce. It's called the free market for a reason.
(From The Patriot Post)

Monday, September 13, 2010

50 Mind Blowing Facts About America That Our Founding Fathers Never Would Have Believed

If our Founding Fathers were alive today, what would they think of America? Surely they would be very proud that the United States stretches from the Atlantic to the Pacific and has built some of the most amazing cities that the world has ever seen. They would probably be surprised that the country they founded went on to become the greatest economic machine in the history of the world, and they would be absolutely astounded by things like our interstate highway system and the Internet. However, there are quite a number of things that they would be horrified about as well. The fact that over 40 million Americans are dependent on the federal government for their daily food would be deeply disturbing to our founders. Also, the fact that the U.S. government has accumulated the greatest mountain of debt in human history would be incredibly distressing to George Washington, Thomas Jefferson and the rest of the founders. But perhaps most of all, our founders would be absolutely disgusted that the land where Americans could once be free to pursue life, liberty and the pursuit of happiness has become so tightly regulated and controlled that Americans dare not even squeak without the permission of the federal government.
Needless to say, our founders would certainly not understand many of our institutions or many of the advanced technologies that we have today. But without a doubt they would be able to grasp how far we have fallen as a nation and how far we have strayed from the fundamental principles that they enshrined in our founding documents. The United States is a much different place today than it was in 1776, and unfortunately many of the changes have been for the worse.
The following are 50 mind blowing facts about modern America that our Founding Fathers never would have believed....
#1 In 2010, not only does the United States have a central bank, but it also runs our economy and issues all of our currency. The Federal Reserve has devalued the U.S. dollar by over 95 percent since 1913 and it has been used to create the biggest mountain of government debt in the history of the world.
#2 The U.S. Court of Appeals for the Ninth Circuit has ruled that U.S. government agents can legally sneak onto your property in the middle of the night, place a secret GPS device on the bottom of your car and keep track of you everywhere that you go.
#3 The 50 wealthiest members of Congress saw their collective fortunes increase by 85.1 million dollars to $1.4 billion in 2009.
#4 The U.S. government has accumulated a national debt that is rapidly approaching the 14 trillion dollar mark.
#5 All over the United States, asphalt roads are being ground up and are being replaced with gravel because it is cheaper to maintain. The state of South Dakota has transformed over 100 miles of asphalt road into gravel over the past year, and 38 out of the 83 counties in the state of Michigan have now turned some of their asphalt roads into gravel roads.
#6 Americans now owe more than $849 billion on student loans, which is more than the total amount that Americans owe on their credit cards.
#7 In 2010, Americans waste an astounding amount of food. According to a study by the California Integrated Waste Management board, 63 percent of the average supermarket's waste stream is food. When you break that down, it means that each supermarket wastes approximately 3,000 pounds of food each year.
#8 The city of Cleveland plans to sort through curbside trash to ensure that people are actually recycling properly. If it is discovered that some citizens are not recycling they will be hit with very large fines.
#9 Once upon a time, U.S. industry was the envy of the world. But since 1979, manufacturing employment in the United States has fallen by 40 percent.
#10 Even though the U.S. population has exploded in size, the number of Americans with manufacturing jobs today is smaller than the number of Americans who were employed in manufacturing in 1950.
#11 Having one out of every eight Americans enrolled in the food stamp program is now considered "the new normal" and Americans continue to drop into poverty in astounding numbers.
#12 One out of every six Americans is now being served by at least one government anti-poverty program.
#13 A family of four actually has difficulty surviving on an income of $50,000 a year in America in 2010.
#14 Barack Obama is backing a proposal to create a national database that will store the DNA of all individuals who have been arrested, even if they end up not being convicted of a crime.
#15 In 2010, it takes the average unemployed American worker over 8 months to find a job.
#16 The U.S. government has made some parts of Arizona off limits to U.S. citizens because of the threat of violence from Mexican drug smugglers. The federal government has actually posted signs more than 100 miles north of the Mexican border warning travelers that certain areas are unsafe because of drug and alien smugglers.
#17 One recent survey of last year's college graduates discovered that 80 percent moved right back home with their parents after graduation.
#18 In one of the very first military commissions held under the Obama administration, a U.S. military judge ruled that confessions obtained by threatening the subject with rape are admissible in court.
#19 The average American worker now pays literally dozens of different kinds of taxes each year.
#20 In recent years the U.S. government has spent $2.6 million tax dollars to study the drinking habits of Chinese prostitutes and $400,000 tax dollars to pay researchers to cruise six bars in Buenos Aires, Argentina to find out why gay men engage in risky sexual behavior when drunk.
#21 Christians are being arrested and thrown in jail in some areas of the United States for quietly passing out Christian literature on public sidewalks.
#22 The Florida State Department of Juvenile Justice has announced that it will begin using cutting edge analysis software to predict crime by young delinquents and will place "potential offenders" in prevention and education programs.
#23 Organic milk is now considered such a national crisis that the FDA has been conducting military style raids on Amish farmers in the state of Pennsylvania.
#24 The U.S. Environmental Protection Agency recently announced that they are considering a crackdown on farm dust.
#25 According to a new CDC report, nearly half of all Americans now use prescription drugs on a regular basis.
#26 Oakland, California Police Chief Anthony Batts says that due to severe budget cuts there are a number of crimes that his department will simply not be able to respond to any longer. The crimes that the Oakland police will no longer be responding to include grand theft, burglary, car wrecks, identity theft and vandalism.
#27 Today, Americans are losing their homes in staggering numbers. One out of every seven mortgages was delinquent or in foreclosure during the first quarter of 2010.
#28 Many of our leading scientists are now calling themselves "transhumanists" and are openly proclaiming that a future where men have fully merged with machines is inevitable.
#29 Americans who spend large amounts of cash are viewed as "potential criminals" by the U.S. government in 2010.
#30 New full body security scanners going into airports all across the United States can actually see through our clothing and produce very clear and very detailed images of our exposed bodies as we walk through them.
#31 The U.S. financial system has become a massive gambling parlor in 2010. As a result, a horrific derivatives bubble has developed that threatens to destroy our entire economy at any moment. Nobody knows exactly how big the derivatives bubble is, but low estimates place it at around 600 trillion dollars and high estimates put it at around 1.5 quadrillion dollars. Once that bubble pops there simply will not be enough money in the entire world to fix it.
#32 The U.S. government is spending an amount of money equivalent to approximately 25.4 percent of GDP this year.
#33 Today, 10,000 people make 30% of the total income in the United States.
#34 A 2006 Immigration and Customs Enforcement investigation discovered that 250 employees of the Defense Department used credit cards or PayPal to purchase images of children in sexual situations. However, the investigation also found that the Pentagon investigated only a handful of those cases.
#35 According to a recent poll of Americans between the ages of 44 and 75, 61% said that running out money was their biggest fear. The remaining 39% thought death was scarier.
#36 Approximately 57 percent of Barack Obama's 3.8 trillion dollar budget for 2011 consists of direct payments to individual Americans or is money that is spent on their behalf.
#37 A recent Department of Justice guide for investigators of criminal and extremist groups lists "constitutionalists" and "survivalists" alongside organizations like Al-Qaeda and the Aryan Brotherhood.
#38 The U.S. trade deficit has exploded to nightmarish proportions over the past two decades. Every single month tens of billions more dollars goes out of the United States than comes into it. Essentially, the United States is becoming far poorer as a nation each and every month.
#39 Factories are closing in droves across the United States because the American people would rather buy things made in China.
#40 Millions upon millions of good paying middle class jobs are being shipped off to China and they are never coming back. Meanwhile, U.S. politicians stand by idly and do nothing.
#41 Some analysts now believe that China could become the largest economy in the world by the year 2020.
#42 If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the annual U.S. government budget deficit would be somewhere in the neighborhood of four to five trillion dollars.
#43 According to one recent survey, 28% of all U.S. households have at least one person that is currently searching for a full-time job.
#44 The U.S. dollar continues to rapidly decline in value. An item that cost $20.00 in 1970 will cost you $112.35 today. An item that cost $20.00 in 1913 will cost you $440.33 today.
#45 Major international organizations are actually proposing that the United States start considering the adoption of a truly global currency.
#46 Students at a high school in Missouri have built a car that they claim can get up to 450 miles per gallon. On another note, some of the top energy experts in the world believe that thorium could solve our energy problems and supply very cheap energy for society for hundreds of thousands of years. But in today's world technologies such as these are endlessly suppressed by the rich and powerful.
#47 One Colorado high school student is seeking an explanation from officials at his school after he was ordered by security guards to remove American flags from his truck because they might make other students at the high school "uncomfortable."
#48 Three California high school students were recently forced to remove their American flag T-shirts on Cinco de Mayo.
#49 Memorial crosses erected along Utah public roads to honor fallen state troopers have been found unconstitutional by a federal appeals court and now must be removed permanently.
#50 One group of high school students made national headlines recently when they revealed that a security guard ordered them to stop singing the national anthem during a visit to the Lincoln Memorial.
Reprinted with permission from the Economic Collapse Blog.
September 13, 2010
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