Economic Collapse

This is a great article by Alar Tamming, Tavex, Estonia and Dr. Krassimir Petrov, Ahlia University, Bahrain on the situation we are in right now minus all the mass-media propaganda. Their cannot be a “jobless recovery”, you can’t print your way out of this mess. Keynesianism is wrong at the core, no matter what bureaucrats, politicians, journalist or bankers tell you. The printing of money of Central Banks around the world has gone parabolical and the paper will return to its intrinsic value of zero. Read the rest of this entry »

Powerful article on sovereign debt and gold. Here’s a quote:

Wherever we look at the world economy today, we see a wall of risk…and potential financial catastrophe. We see a large number of virtually bankrupt major sovereign states (US, UK, Spain, Italy, Greece, Japan and many more) teetering atop a financial system that is bankrupt, but is temporarily kept alive with phony valuations and unlimited money printing. Increasingly, therefore, investors will want to exchange this funny money for gold.

Duck Tales explains the dangers of loose monetary policy and hyperinflation. Very close to whats going on now in the world today.

Great interview with John Embry. He really makes the case for gold. As he puts it the question isn’t how high gold can go but how low fiat paper can fall:
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/2/6_John_Embry.html

- “You should be in wealth-protection mode, not in trading mode”
John Williams

Very good audio interview with John Williams of Shadowstats.com released today. Listen carefully:
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/2/6_John_Williams.html

As many of you know Peter Schiff is now running for Senator in the State of Connecticut. Schiff is an American economist of the Austrian School, author, commentator and popular video blogger who regularly appears in the role of a bearish pundit on numerous financial news networks. He predicted the Dotcom crash of 2000 and the Housing crisis of 2007/2008 and like the author of this blog he belives that the US Dollar is heading for hyperinflation. He is a licensed stock broker, the president of Euro Pacific Capital with a 100 employees who successfully protect their clients wealth by moving out of the US dollar and into real money such as gold etc.

If you want a crash course in the problems with the US economy, watch this. A good hour well spent with a lot of information and humor. Enjoy.

Disclosure: I have no vested interest in Euro Pacific Capital nor do I receive any payment for writing this.

Agora Financial, LLC & The Daily Reckoning interview with Marc Faber:
http://bitcast-a.v1.iad1.bitgravity.com/agorafinancial/DR/faber/indexAF.html

Rocky Vega of The Daily Reckoning took the effort to transcribe some quotes from a little video clip of Marc Faber, publisher of The Gloom, Boom, and Doom Report:

“There’s this huge debate between the inflationists and the deflationists… I belong more to the camp that looks at inflation and deflation from a different perspective. In the sense that in every system you can have some prices going down up and some prices going up. Say if you have a glut in consumer goods, then consumer goods prices can go up. But if you print money and have a zero interest rate, then home prices theoretically could go up, or stocks, or commodities. In any event your cash purchasing power goes down, that’s a symptom of deflation.”

“The worst investments in an inflationary period, when you print money and have large fiscal deficits are, of course, long term bonds and then cash. The best is to have foreign currency and commodities… also equities can protect you to some extent because they adjust upward as the currency goes down.”

“Regarding the dollar he says, “well, it will go to a value of exactly zero eventually.” When pressed for a timeline he explains, “Looking at Mr. Obama and his administration it should already be there, but I think it will take roughly ten years until people really realize that the fiscal position of the US is a complete disaster.”

My personal favorite from this clip:
On Bernanke: “He’s a money printer. He does that well.”

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.

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Comments: This is a funny list of events to look for to pinpoint the next peak in the gold price. My favorite one is “Jim Sinclair is chosen ‘Man of the Year’ by Time magazine”. Sinclair accurately pinpointed the last top of the gold price in 1980 at 850 USD/Oz.
I tag this one as “financial humor” not only because its funny but because I believe there will never be a new top in the gold price. What I mean is that gold will regain its status as money and will not be priced in any amount of paper money. Or, another way of putting it, is that paper assets will be backed by gold once again. In a hyper-inflation environment gold cannot be bought with any amount of fiat paper. This is the difference between “price” and “purchasing power”. As the old saying goes: “Gold will buy you land, silver will buy you bread”. Thats a hint of the future I and many other see coming our way. Enjoy the read…
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