Tuesday, January 5, 2010
Prejudiced Towards Insanity
Fannie and Freddie have now been given an UNLIMITED line of credit from the U.S. taxpayer as announced just before the holidays. This, of course, will ensure that the for-profit, non-federal, private federal reserve corporation will make out like bandits on their purchase of more than $1 trillion worth of toxic mortgage debt. Couple this with the health care debacle, our very real wars against make-believe enemies and the bailouts of Wall Street, the auto and banking industries and AIG. Add in the pending bailouts for multiple states, banks and pension funds. Add in an aging baby boomer population needing its entitlements.
It's a war of the true deflationary forces in the economy versus the printing press. Bernanke said years ago that the "helicopter drop" would work and a second deflationary depression could be avoided. Many smart people like Prechter said it wouldn't work. But in a fiat system unrestrained by common sense and a debt press controlled by a band of idiots and thieves, can it work?
Mises of Austrian economic fame said that there was no avoiding the final collapse of a credit-induced boom - it was only a question of whether it came as a deflationary depression or a collapse of the currency system. I am now starting to worry that we are headed for the latter route.
This is not a happy outcome. A deflationary depression is much healthier for the average sheep in the flock, despite what you may have read or heard. If we are truly headed for an inflationary spiral, Gold at $1100/ounce is WAY TOO CHEAP. Moving towards fascism at alarming speed makes America vulnerable to being shunned and isolated. We have for years preached the opposite and enforced it under the threat of a gun and our rapidly emerging fascist policies ensure that our economy will be much weaker in the years ahead. Playing chicken with the international debt markets at a time when we can no longer afford to be the world's best customer is an act of foolish desperation.
Money is now being handed out to bankstaz with no Congressional approval required and the non-federal, for-profit, private federal reserve corporation is now purchasing private assets (illegal) without a peep from Congress. The government is now officially sponsoring accounting fraud in the banking system and now backstops the ENTIRE MORTGAGE INDUSTRY in the United States. These are obvious signs that capitalism is no longer the defining force in our economy and that "emerging fascism" (we can use the euphemism of "corporatism" in lieu of fascism for those who cannot stomach the truth) is a better description of our current system.
I cannot say that the next few years are something to look forward to as a citizen of this once great nation, but it looks to be a bonanza for precious metals investors. The chaos induced by greed, power-mongering and sheer stupidity among those in charge makes $2000/oz. Gold an ABSOLUTE LOCK and puts a 5 digit Gold price in the realm of reasonable before this secular bull market in Gold is over. Could the Dow to Gold ratio reach parity at 10,000 or more?
Hold your precious metals and precious metal shares tight and buy more on any corrections. The intentional destruction of the value of cash seems set to continue. Governments all over the world are now "stimulating" themselves while destroying the confidence of all rational investors. The U.S. Dollar Index is not a reasonable measure of this problem, as all paper debt notes (i.e. currencies) are more than willing to follow 'ol Uncle Buck down the rabbit hole. Geithner and Bernanke are guilty of treason but no prosecution will take place unless the sheeple start rioting for their blood. The bull market in all things Gold has a LONG WAYS TO GO.