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


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.


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.



"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.



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.


A Jim Rogers interview, about 28 minutes long:


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.

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