Economic Collapse

Dear readers, interesting times to say the least. As stated in one of the most important articles in decades (discussed here on Mellgren.com), the denials from US media and officials are in, like clock-work:
Read the rest of this entry »

Dear readers. This might be the biggest financial news to hit the Internet since Bear Stearns and Lehman Brothers. I, and many other experts with far better understanding than I have, such as Catherine Austin Fitts and Krassimir Petrov, have been saying this for years: Oil will not be priced in US dollars for long. When the move away from the Petrodollar happens, the US Empire will fall. From The Independent:
Read the rest of this entry »

Paul Tustain, founder & CEO of BullionVault.com just put out this talk in writing. He has been touring Asia talking to investment professionals in Tokyo, Singapore and Hong Kong. It’s a very well written talk and gives you a comprehensive overview of what might be coming our way. Download the 12 page PDF here. He talks about US consumers and what an increase in interest rates would entail for the tax burden:

The cost of a $20 trillion national debt costing 5% per annum in interest rates would
be $1 trillion, or $10,000 per annum in taxes per year for every American family, just to
pay the interest, i.e. before a single government service was delivered. That is the cost of
maintaining a $200,000 per family national debt.
The unavoidable conclusion is that, on-plan, the US cannot react appropriately to a
developing inflation problem. The G20 pronouncement that interest rates would stay
low for the foreseeable future was true. There is no alternative to permanently low
interest rates on these budget figures.

Read the rest of this entry »

The FDIC stands for ”Federal Deposit Insurance Corporation” and is the United States government corporation in charge of deposit insurance. If you have your money in the bank and your bank fail, the FDIC insures that you get your money back. There are equivalents to the FDIC in almost all countries at least in the western world.

“The Federal Deposit Insurance Corp. proposed asking banks to prepay three years of premiums to replenish reserves dented by a rash of bank failures that the agency said will cost $100 billion through 2013.
The insurance fund will run a deficit as of tomorrow after 120 banks failed in the past two years, the agency said today.”
- Bloomberg.com

Read the rest of this entry »

Topics: What is money? Why is gold a smart investment?

I often get asked by non-economist friends and acquittances to explain the current economic crisis. I love those conversations because it helps me to keep my language free from the economic lingo with the complex acronyms that really helps nobody to understand what is going on around us. So, I thought I’d write articles that tries to encapsulate typical conversations I often get into in social settings. Almost always the conversation begins around the topic of how to invest in a smart way when the economy is as turbulent as it is. Since I’m a guy of the Austrian School of Economics, I think gold should be in everyones portfolio and this is often what makes people interested in what I have to say since it is not that common yet for people to advocate physical gold in your own possession. That is likely to change soon though since more and more people are moving into gold. So imagine a conversation something like this:
Read the rest of this entry »

Now, as you know, the real debt of the US will be much higher than 20 trillion in 10 years, but the concept “trillion” is nicely explained here.

Also, look at this one: Click the image to zoom.

Here is a great interview with legendary Jim Sinclair of JSMineset.com on the inflation vs deflation debate:

• Download Mp3-file
• Listen in your browser.

From the kingworldnews.com website:

“Legendary Jim Sinclair known as Mr. Gold for his remarkably accurate timing regarding the gold bull market of the 70’s is the Founder of jsmineset.com and Chairman of Tanzanian Royalty Exploration. In this interview James discusses inflation, deflation, hyperinflation, the U.S. Dollar, gold, silver, social unrest, the Federal Reserve, commercial banks incorrectly positioned on the COT, fraudulent bank balance sheets, the equity market, future opportunity, gold and silver shares and much more. King World News thanks Jim for being so gracious with his time.”

G22, Special Drawing Rights, Future of the Dollar: Jim Rickards, director of market intelligence for scientific consulting firm Omnis, shares his outlook for the dollar.

Important quote:

“The problem is, when you own gold you’re fighting every central bank in the world. Central banks hate gold because it limits their ability to print money.”

Interesting take on the need for inflation for the US debt mountain and the risk for hyperinflation as well as the role of the IMF Special Drawing Rights discussed during the G22 meeting.

Real Gold Highs 3, by Adam Hamilton of Zeal Speculation and Investment.

Summary:

“The bottom line is $1000 gold is certainly not the extreme the financial media is portraying. In the real inflation-adjusted terms that matter, gold is nowhere close to hitting new records. Using the watered-down CPI, gold’s all-time high is closer to $2350. And during and after the 1970s gold bull this metal spent the better part of 2 years continuously over $1000 in today’s dollars. This week’s $1000 is not excessive at all.

The bullish fundamental forces driving this gold bull remain very much alive and well. Until global gold supply growth exceeds demand growth, probably years away yet, the gold price has no choice but to continue climbing on balance. While $1000 is a sexy number exuding big psychological gravity, it is nothing special in a pure technical sense. It is just another temporary step on a long bullish journey.”

Big Inflation Coming 2, by Adam Hamilton
http://www.zealllc.com/2009/biginf2.htm

“The bottom line is the panic money-supply growth in the US has been very excessive, running at multiples of economic growth. And in the case of narrow M0 money, the doubling in 4 months is literally unprecedented. It scares me. With so much new money in the system, and the Fed totally unwilling to undo this terrible inflation over the 6 months since, rapidly rising prices are inevitable.

We’re on the verge of the first inflation scare of the modern era, a time when epic panic buying into hard assets and their producers is increasingly likely. Investors who ignore these dire tidings will probably get crushed by the inflation. But investors who prudently study the dangers and deploy their capital to thrive in them will make fortunes. Mark my words, the money-supply data shows big inflation is coming.”

Remark: Remaining fear-less is the best medicin against all crises.