The current economic situation in America, and for that matter the world, is very scary to me. You think America is bad off? Japan is probably worse. The Jap communist party is getting thousands of converts. The Ruskies were starving, and their situation prompted the Revolution and communism there. Could it happen to Japan? Even commie China has shut thousands of factories and has lots of unemployment, with former workers going back to the countryside from where they came. The Brits are inflating, and France and Spain have 17% unemployment and riots to protest the lack of jobs. Mother Russia’s plight isn’t too well publicized, but it’s grim there as well. What to do?
Just as happened over and over again in history, the blame can be placed right at the door of politicians. Let’s not forget that it was a Congressional vote and signing of bills by Presidents, that has given us war after war, the (un)Federal Reserve, depression, recession, inflation, huge bureaucracy and meddling bureaucrats, gun controls, loose borders, millions and millions of illegal Mexicans who won’t learn English, and sop the wealth of everyone on a daily basis. It has been politicians who installed Medicare, and subsequent states with their Medicaid, plus the illegals which are bankrupting hospitals by the dozen. The results of inflation, are high prices of things, and medical care is an absolutely classic example. When government pays for something, the costs will escalate to the heavens due to inefficiency, and everyone and their brother glomming onto something that is “free.” Bureaucracy’s cure for inflation and government caused high costs of medical care, is to nationalize it, and make government pay for all of it. Pouring more gasoline on the flames, in other words.
The cure for depressions, historically, even back to the French Revolution, is always, “Let’s print some money to pay our bills, and get things going.” In France, the first injection lasted five months, and within six years, the entire nation had collapsed. In America today, it is difficult to imagine a more screwy situation that we see now. The stock market goes up, even though there is no profit anywhere it seems, and if there is any, say with Microsoft, it’s minimal and way down from where it has been. Starbucks profit is down 77%, and even Walmart’s profit is down a bit, after going up while everyone else’s was, and still is…going down. The movie industry is virtually shut down, causing huge unemployment of technicians, cameramen, script writers, and actors. Broadway is miserable, with many dark houses and layoffs in all the theatre trades. Bankruptcies proliferate, as do foreclosures and layoffs, and the stock market goes up? Those of us in the know, realize that what we call the “Plunge Protection Team,” is undoubtedly buying stocks like mad to keep the market propped up, hoping to postpone or forestall what has to happen eventually, and that is at least a semi-catastrophe, if not a huge one.
All the while, the IMF has tons of paper money, and is distributing it as it sees fit, as is the World Bank; both supported heavily by the U.S. Treasury. The IMF also has gold and is selling it to keep prices down. Remember, gold and silver are the arch enemy of paper money, and when you buy precious metals, you are actually ’shorting’ paper money. If you’ve ever worked a jigsaw puzzle, the comparison is obvious. The more pieces you place, the easier it is to see the entire picture. In this case, the entire picture is plain…at least to me. As more and more get laid off, more and more find themselves homeless or foreclosed upon, the chain reaction is like adding two and two. With the preceding going full blast, the politicos will do the same as the French did in the 1790’s, the Germans did in the 1920’s, and the Zimbabwe guys did, and that is print. They think printing money is like a life preserver when a ship is sinking, and it isn’t. When the Titanic went down in 1912, far more died from hypothermia than were rescued in lifeboats. They had life preservers on, but they froze to death in the icy waters. Printing press scrip seems to solve problems, but the illusion is only temporary. Just like a life preserver in an icy ocean. With the Titanic, government is the iceberg or foolish captain, the lifeboats are the gold and silver, and the freezing victims are those who trust their surplus assets in paper money life preservers, which seem to work, but only for a short time.
Inflation will always rear its ugly head, and in the end, the inflation will become ’hyper,’ or extreme. When something seems to work, it is only natural for people to grab onto it. Self preservation is one human instinct that cannot be denied, and will not be denied. When hyper-inflation does come along, and with a $9 trillion deficit which will grow larger as each year passes, to say that hyper-inflation will not occur, is to deny even the most basic of fundamental economic principles. To think that with $9 trillion paper, un-backed, dollars being added to the economy, it will not produce huge inflation, or to believe what officials say when they say they can ’control it,’ is absurd. Ask yourself: When has government ever not exaggerated or downright lied? All governments sugar-coat the truth and lie to their constituents to make themselves look good.
When a family has a $100,000 CD, it seems to be a sure salvation in time of need. A life preserver. But is it? At 3% compounded interest, in ten years, $100,000 will only get you $134,391. Look back ten years and see for yourself if what could be bought for $100,000 ten years ago, could possibly be bought for $134,391 today. Examples are not difficult to discover. In 1999, (ten years ago), gasoline 95.5 cents a gallon, oil $16 per barrel, bacon $1.24 per pound, eggs, $1.05 per dozen, Ground beef, $1.09 per pound, and milk 99 cents a gallon. Guess what gold was ten years ago? Under $300 per ounce. Silver? A bit over $4 per ounce ten years ago. In ten years, gold and silver would have TRIPLED your dollars. Do I really need to say more?
Do I really need to continue with this? Neither my son, my daughter, nor I can fix stupid, and that’s what people are, who say, “I don’t understand gold,” or, “I can’t spend gold or silver,” or, other inane remarks. Now I know how a teacher must feel when her moronic kids can’t understand the simplest of things. For those of you who have or want numismatics, we are adding a sort of e-bay to our web site, which will list people who want to sell numismatics. Watch for it next week probably. Don’s away on a train trip Friday, so Call Dave or Melissa.