Helicopter Ben lowers interest rates

Well... the Federal Open Market Committee did it again and lowered interest rates. While it didn't really matter if they lowered it or now because effective interest rates were close to 0% before the meeting, it just shows how desperate the Federal Reserve is to jumpstart the American economy again.

This only proves that it is more of a reason to own commodities more than ever now. We all must be prepared for the future.

Madoff and Manipulation of the Silver Market

I'm sure that everyone has heard about the Madoff case where he potentially lost $50 billion for his clients. Cases like these only add insult to injury to our economic system.

I mean... how could this person lose $50 billion and get away with it? I guess if you compared it to the United States's $10 trillion national debt it would look meaningless.

I read a convincing article on the manipulation of the silver market today. In it, David Morgan tells about the widening disparity between paper silver on the futures markets and physical silver. It's worth a read.

http://www.marketoracle.co.uk/Article4796.html

I believe silver is extremely undervalued right now. At a ratio of nearly 80 ounces of silver to 1 ounce of gold at today's prices (about $10.70 an ounce), it is extremely underpriced compared to the historical ratio of 16 to 1. If the ratio were 16 to 1, the price of silver should be roughly around $52.25.

Physical silver is becoming increasingly difficult to buy. I've visited many bullion dealers online, and they have all charged ridiculous premiums to the spot price of silver. For those interested in investing in silver, I would look at the silver ETF that is traded on the NYSE with the symbol SLV. I've listed the fund summary below.

The objective of the investment is to reflect the price of silver owned by the trust less the trust's expenses and liabilities. The fund is intended to constitute a simple and cost-effective means of making an investment similar to an investment in silver. Although the fund is not the exact equivalent of an investment in silver, they provide investors with an alternative that allows a level of participation in the silver market through the securities market.

All the money that were or will be used for the Wall Street bailouts will eventually make its way into the system. Inflation will cause everything priced in dollars to increase, and silver is included. The government can only do two things to pay for the bill: 1) Raise Taxes or 2) Print Money. Since the Obama presidency will probably not lead to an increase in taxes, the government will need to run the printing presses on for longer periods of time.

Nationalization of the United States - Ron Paul 12/10/08

Ron Paul's comments to the House Of Representatives on 12/10/08.



The American government cannot keep bailing out companies without collapsing the dollar. The Detroit bailout is the first major bailout outside of the financial sector. This will only open the zipper further, and more and more companies will ask the government for money.

Load up on gold, silver, agriculture, and oil now! Shorting the 30 Year Treasury bond is also a wise course for the future.

Are we really in a democracy? Treasury and White House defies Congress

Well as many of you must've heard... the White House and the Treasury plans to bail out the automakers anyway even though the Senate voted down the bill.

Are we really in a democracy? We need to stand up and make our voice heard! Why does the government keep bailing out these companies when it is clear that the majority of the people oppose them?

Can we learn from Japan? History does indeed repeat

Quoted from Wikipedia:

In the decades following World War II, Japan implemented stringent tariffs and policies to encourage the people to save their income. With more money in banks, loans and credit became easier to obtain, and with Japan running large trade surpluses, the yen appreciated against foreign currencies. This allowed local companies to invest in capital resources much more easily than their competitors overseas, which reduced the price of Japanese-made goods and widened the trade surplus further. And, with the yen appreciating, financial assets became very lucrative.

With so much money readily available for investment, speculation was inevitable, particularly in the Tokyo Stock Exchange and the real estate market. The Nikkei stock index hit its all-time high on December 29, 1989 when it reached an intra-day high of 38,957.44 before closing at 38,915.87. The rates for housing, stocks, and bonds rose so much that at one point the government issued 100-year bonds. Additionally, banks granted increasingly risky loans.

At the height of the bubble, real estate values were extremely over-valued. Prices were highest in Tokyo's Ginza district in 1989, with choice properties fetching over US$1.5 million per square meter ($139,000 per square foot). Prices were only slightly less in other areas of Tokyo. By 2004, prime "A" property in Tokyo's financial districts had slumped and Tokyo's residential homes were a fraction of their peak, but still managed to be listed as the most expensive real estate in the world. Trillions were wiped out with the combined collapse of the Tokyo stock and real estate markets.

With Japan's economy driven by its high rates of reinvestment, this crash hit particularly hard. Investments were increasingly directed out of the country, and Japanese manufacturing firms lost some degree of their technological edge. As Japanese products became less competitive overseas, the low consumption rate began to bear on the economy, causing a deflationary spiral.

The easily obtainable credit that had helped create and engorge the real estate bubble continued to be a problem for several years to come, and as late as 1997, banks were still making loans that had a low guarantee of being repaid. Loan Officers and Investment staff had a hard time finding anything to invest in that would return a profit. Meanwhile, the extremely low interest rate offered for deposits, such as 0.1%, meant that ordinary Japanese savers were just as inclined to put their money under their beds as they were to put it in savings accounts. Correcting the credit problem became even more difficult as the government began to subsidize failing banks and businesses, creating many so-called "zombie businesses". Eventually a carry trade developed in which money was borrowed from Japan, invested for returns elsewhere and then the Japanese were paid back, with a nice profit for the trader.

The time after the bubble's collapse (崩壊, hōkai^?), which occurred gradually rather than catastrophically, is known as the "lost decade or end of the century" (失われた10年, ushinawareta jūnen^?) in Japan. The Nikkei 225 stock index eventually bottomed out at 7603.76 in April 2003 before resuming an upward climb.

This sounds remarkably similar to what has happened in the U.S.'s recent past, and history could very well repeat itself. We're doing the same exact thing as the Japanese are now... bailing out banks and not letting anyone fail... and creating "zombie businesses". People will eventually lose confidence in the dollar, and will start to shift their wealth out of dollars and into tangible assets.

However, this time there is no "carry trade" available to us. My prediction is that many of the bondholders of the U.S. will start to lose confidence and sell U.S. treasuries. They need to do so in order to raise money for their own purposes. China, India, and other asian nations are the major bondholders of U.S. treasuries. This selling will lead to a decline in the dollar because the government needs to print money to repay the bonds and lead to major increase in all the prices tangible assets.

History does indeed repeat my friends. Soon the United States will be a "zombie" nation, and it will be Asia (most notably China and India) that will rise out of this economic disaster the best prepared and ready to rule to future.

Job Market

It's very painful for the job market now. Just today, a report by the Bureau of Labor says that employers have slashed HALF A MILLION jobs in November. This is a very bad time for everyone, especially new job seekers like me who are struggling to find employment.

It's funny how Citigroup had a career fair at my college to recruit bankers and financial advisors. This was before the mess when their bailout happened. I didn't attend but that room that they had their presentation in was full with job seekers and emotional students. I've talked to many of my classmates, and none of them were contacted by Citigroup again.

We live in very scary times. Right now I'm looking at employment in the defense industry as that seems to be the only industry which our government subsidizes to the extreme.

According to http://www.nationalpriorities.org/costofwar_home, the United States has spent over $577,000,000,000 in the Iraq War.

Ron Paul's Texas Straight Talk 12/1/08

From Ron Paul's Texas Straight Talk dated 12/1/08:

The Neo-Alchemy of the Federal Reserve

As the printing presses for the bailouts run at full speed, those in power are no longer even pretending that the new giveaways will fix our problems. Now that we are used to rewarding failure with taxpayer-funded bailouts, we are being told that this is “just a start,” more funds will inevitably be needed for more industries, and that things would be much worse had we done nothing.

The updated total bailout commitments add up to over $8 trillion now. This translates into a monetary base increase of 75 percent over the last two months. This money does not come from some rainy day fund tucked away in the budget somewhere – it is created from thin air, and devalues every dollar in circulation. Dumping money on an economy, as they have been doing, is not the same as dumping wealth. In fact, it has quite the opposite effect.

One key attribute that gives money value is scarcity. If something that is used as money becomes too plentiful, it loses value. That is how inflation and hyperinflation happens. Giving a central bank the power to create fiat money out of thin air creates the tremendous risk of eventual hyperinflation. Most of the founding fathers did not want a central bank. Having just experienced the hyperinflation of the Continental dollar, they understood the power and the temptations inherent in that type of system. It gives one entity far too much power to control and destabilize the economy.

Our central bankers have had a tremendous amount of hubris over the years, believing that they could actually manage a paper money system in such a way as to replicate the behavior and benefits of a gold standard. In fact, back in 2004 then Fed Chairman Alan Greenspan told me as much. People talk about toxic assets, but the real toxicity in our economy comes from the neo-alchemy practiced by the Federal Reserve System. Just as alchemists of the past frequently poisoned themselves with the lead or mercury they were trying to turn to gold, today’s bankers are poisoning the economy with accelerated fiat money creation.

Throughout the ages, gold has stood the test of time as a consistently reliable medium of exchange, and has frequently been referred to as “God’s money”, as only God can make more of it. Seeking superhuman power over money in the way alchemists did in ancient times caused society to shun them as charlatans. In much the same way, free people today should be sending the message that this power and control over our money is no longer acceptable.

The irony is that even had the ancient practice of alchemy been successful, and gold was suddenly, magically made abundant, alchemists still would have failed to create real wealth. Creating gold from lead would have cheapened its status to that of rhinestones or cubic zirconia. It is unnatural and dangerous for paper to be considered as precious as a precious metal. Our fiat currency system is crumbling and coming to an end, as all fiat currencies eventually do.

Congress should reject the central bank as a failure for its manipulations of money that have brought our economy to its knees. I am hoping that in the 111^th Congress my legislation to abolish the Federal Reserve System gains traction so that the central bank can no longer destroy our money.

Gold to $2000/ounce next year according to an internal note at Citigroup

The same bank that got bailed out by the American government is now predicting that gold will rise above $2000 an ounce next year.

Read it here at the Telegraph.co.uk

Peter Schiff gets Cut off on CNN

I encourage everyone to watch the YouTube video below. Peter Schiff is a genius and knows exactly what's wrong with the financial system. I just find it strange how he gets cut off at the end.



Buy REAL assets today and you will be rewarded.

We're Officially in a recession! Also Oil Thoughts

Yes... they've announced the obvious... and the Dow Jones Industrial Average drops 680 points. I'm sure that everyone knew that from the beginning.

I would recommend buying USO (United States Oil Limited Partnership) which is supposed to track the performance of a barrel of crude oil. There is too much negative news on oil and I believe it will be a good investment. Regardless if it goes down further from here, oil will never go to zero and there will always be a demand for it. China and other Asian countries are growing and everyone everywhere will not have faith in the United States anymore. I believe that this will trigger a chain reaction, prompting bondholders to sell U.S. Treasuries and collapse the value of the dollar.

Protect your wealth now by buying "real" assets, and not the phony crap like Lehman Brothers, Citigroup and Fannie Mae which the media keeps pumping up. In a bear market, even good companies like Apple and Microsoft are punished. I would stay away from any stocks and encourage everyone to own something of real value to prepare for the coming dollar collapse.