Robert Nabloid

In the Long Run, the Dollar Is Dead

Thanks to Keynes, I'm sure the dollar will die sooner rather than later.

China is only buying because it needs us to continue to build their economy. If they didn't have to try and prop us up, they would stop in a heart beat. They won't always be there to prop us up...

But hey, show me any fiat currency that lives forever. Especially when fools manipulate it.

The Green New Deal: Stocks That Stand to Benefit

I agree we need to develop alternative technologies and those that invest in the right companies will do very well.

"But unlike 1932, none will be more difficult – or more important -- than weaning this nation off its 100-year dependence on fossil fuels, and repairing our aging, crumbling infrastructure."

I'd say weaning ourselves off our dependence on foreign debt is even more important to the economic health of this country - though it is certainly linked to our dependence on foreign energy (but it also has something to do with our excessive consumption of goods from foreign nations as well and our willingness to borrow against future earnings).

Our dependence on foreign energy is a major problem that needs to be fixed - and is being fixed as we speak. Look at companies like Sterling Energy Systems with their multi-billion dollar contracts to build solar concentrators in the desert. There are a ton of companies doing research as we speak and have been doing research over the last five to ten years. We are, and have been, working on the problems - the USS America is a big ship and doesn't turn on a dime.

All that said, I have my doubts about whether Obama, or any single man, can turn the ship around in short order by utilizing more debt and running the printing presses full steam ahead. I think if you take a closer look at the New Deal, you would see the only reason we came out of that recession was a world war. The New Deal didn't really help things...

Expedia: An Opportunity in Travel

Good article. I like Expedia, I'm also a customer. I think it may have a bright future, eventually. I haven't looked at the balance sheet so I don't know how much debt they are burdened with - hopefully not much as there are some turbulent times ahead!

I see promise in the travel industry after the economy begins to come back. The problem is, I think things are going to get much worse, especially for companies that rely on discretionary/leisure spending. I think we'll have plenty of opportunity to buy travel companies for cheaper than they currently are. I personally would not pull the trigger yet. To each his own. There are still plenty of downside risks in the economy. I do agree with you, Expedia is well positioned to gain market share so long as it isn't overly burdened with debt and can trim back and weather the storm.

Deflation Economics and the Dollar

Good article.

"As prices decline, a dollar buys more goods."

Not if the dollar is also declining and most goods are imported.

"The cars and houses that might have been bought with borrowed money sit unsold."

This is part of the problem - most of us can only afford to buy such luxuries with debt. Many of us have these luxuries and are already burdened with debt. How many can take on more debt? I sure don't want to. Do you?

"Is it any wonder the dollar has lost heavily in the past several weeks?"

I completely agree. The Fed will continue to print and spend until deflation is no longer a risk. That is precisely the problem I have with the USD.

Own Gold? Time to Fold

Everyone acts like gold will burst. Maybe, maybe not. What most people on here might be forgetting is that gold is still at or near all time highs in nearly every country on the planet but the US! And demand is still high. People are still buying. Shortages exist for the little guys that want small pieces of gold. There are plenty people that don't want to pay above spot price but still want to buy some and are just waiting for mints and bullion dealers to get some gold/silver in stock, though they have to wait months and months to get any smaller denominations. How can the real price of gold plummet when so many are waiting to buy it and are on backlogs? I guess anything can happen, but I think demand remains high for now...

My Economic Plan

It's not fair to attack the government? I'm being critical and trying to get people to raise suggestions! That is what we are supposed to do if this is really government OF and BY the people.

Was it really ONLY Wall Street that mucked up? And how is government going to solve the problem of debt, which I think is one of the central problems we are faced with today? I'm open to see any plans they have. So far all I've seen is plans to spend their way out of the mess by printing money, taking on debt and lowering interest rates to entice others to take on more debt. Is that the solution? We just need to spend our way to prosperity? If that's the case then why bother saving a dime for retirement?

A country with low taxes alone doesn't ensure prosperity - just like a country with high tax rates doesn't ensure prosperity. There are some other major factors like education, capital, work ethic, natural resources, etc, etc, etc. That said, I'd prefer a government to have low taxes over high as it allows more money to stay in the hands of producers and commoners such as ourselves. Government has a funny history with the use of tax money and it usually proves wasteful. You don't want to know how many scandals I've seen with government use of funds...

BTW, I'm from a country with higher taxes than you. Do you think I'm wealthier simply because I'm from a country with higher taxes? In my country, I live in the one area that has the lowest taxes in the country and it has prospered because of its lower taxes. My area of the country is the only one WITHOUT DEBT. We did not pay it off with high taxes. We paid it off with fiscal prudence and cutting budgetary spending in government. Then, our natural resources became very highly sought after - so we are lucky in that regard - but we were already well on our way to prosperity. Corporate Head offices flourish here, small businesses flourish here and the wealth is spread around quite well due to lower taxes here than the other areas of my country. In my area of the country, we have higher per capita GDP than any state in the US (with the exception of DC, which isn't a state but a district). Taxes alone aren't the sole problem for any economy, but they are a problem when they are too high.

On Dec 16 02:11 AM Blackeybart wrote:

> It's not fair to attack the attack the Government because Wall Street
> mucked up. Who is trying to solve the problems? - it sure isn't Wall
> Street.
>
> Taxes aren't the problem most people make them out to be. Everyone
> could shift to a country with lower taxes but don't because it doesn't
> make economic sense. People are wealthier is countries with higher
> taxes. That's just a fact. Don't take my word for it. It's not my
> problem if political/economic theory doest match reality.

My Economic Plan

@jlounsbury59: Thank you for the comments. I agree with most of what you wrote! I also agree that the topic is huge, too big for one short article. I was just raising the issue to start with. I'll see where my own interest and the interest or readers takes us in terms of future research and any potential future articles. I'm not the best writer. I'm just trying to raise a few issues and get people to ACT - We can't stand idle and play victim forever and we each have a personal role - what we do with our own money counts.

I do not agree with C, though. It has never been a stabilizing factor, IMHO. I realize this is debatable. Perhaps in another article we can have a friendly debate? :-)

@LarryH: It's good to see some people out there trying to pay off debts instead of taking on more debt! For too long they have coerced us to take on debt and borrow against our future. We can't borrow forever - we must eventually pay it off!

I buy used vehicles. I've been able to get some ABSOLUTE bargains in the last five years on vehicles (even during the boom times!). I bought a 2003 Chev Venture in top shape with just 60k miles for under $4,000 within the last two years. I've bought a few other vehicles in the last five years, in top shape with low mileage for under $5,000, each of them looks brand new and works perfectly. I don't feel I've compromised on ANYTHING! I'm pretty much driving new vehicles at a fraction of the price. Compared to my friend that bought a brand new Dodge Ram for $40,000, I could buy 8 newish vehicles, practically a fleet, for the same money! Just some food for thought in case you were dreading the notion of never buying a new vehicle again...

Stay the course of fiscal prudence. A little bit if your money stored in silver/gold is always a good hedge. In the future you may spot some excellent opportunities in businesses or industries you have vast knowledge of, and hopefully when the time comes, you will have some capital to deploy - and I hope your investments reward your patience, research and knowledge.

@silverslut: I agree with you, the Federal Reserve is responsible for more than some people realize. For those that want a Federal Reserve, at least make it Federal. Anytime a private corporation has power over your money, which is the world currency, there are some conflicts of interest. I've done some research on the Federal Reserve - perhaps I'll write an article later on? Maybe I won't. I do think it has a major role to play in where we are at today.

@henarl: Thanks. I don't think fiscal responsibility takes a genius to figure out but it does take some common sense. If more people around the world would act fiscally responsible we might not be in this mess.

Time to Cautiously Get Back in the Game

There are definitely some bargains out there for those really looking. That said, the fundamentals still look shaky. There is still plenty of downside risk. The layoffs have just begun. Caution is advised.

Own Gold? Time to Fold

I'm no expert, so I'm hoping you can inform me. I'm willing to learn. I was under the impression that the Fed and government have promised about $7.8 Trillion in guarantees, loans and handouts - The exact amount of each I'm not sure, but it did add up to about $8 T as per bloombergs article. Now is that money not being created out of thin air to save the banks? I realize not all would necessarily be created as some is just guarantees, but I'm assuming (perhaps wrongly) that most of it will be required due to the large derivative position. Obviously if the derivative position is as large as some think and it is destroyed, that is a lot of money being destroyed. However, I believe the Fed would continue to add money into the system until inflation occurs. We may have some deflation, but the Fed will keep on keeping on until that reverses. How far off am I?

"The government is running up debt and transferring
> wealth from the taxpayer to creditors (debtholders)."

A quote from the article: " The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago

The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program."

" Most of the spending programs are run out of the New York Fed, whose president, Timothy Geithner, is said to be President- elect Barack Obama’s choice to be Treasury Secretary.

‘They Got Snookered’

The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.

“It’s unprecedented,” said Bob Eisenbeis, chief monetary economist at Vineland, New Jersey-based Cumberland Advisors Inc. and an economist for the Atlanta Fed for 10 years until January. “The backlash has begun already. Congress is taking a lot of hits from their constituents because they got snookered on the TARP big time. There’s a lot of supposedly smart people who look to be totally incompetent and it’s all going to fall on the taxpayer.”"

So wealth is in essence being transferred from the American taxpayer to the debtholders in foreign nations. Isn't a transfer of wealth negative for both the future of the US dollar and the economy in general? What am I missing?

On Dec 08 09:19 AM Alan Brochstein wrote:

> To all of you who think that the Fed is "printing money", I ask you
> to "show me the money". The money supply numbers don't show it,
> so where can I find it? The government is running up debt and transferring
> wealth from the taxpayer to creditors (debtholders).

My Economic Plan

Like I said, my plan isn't perfect. I would assume that most banks would have money that they can lend out from their own assets they have developed over the years. I would also assume those that take longer term bonds from the bank would offer more stable money to be lent out. TO be truthful, I don't want my money in my checking account to be lent out by the bank - my savings account yes, as I want a little interest, but my checking account I want to be using right away and would prefer it not to be lent out.

Like I said, my plan isn't perfect. I'm open to suggestions and I'd love to hear your plans - both what you plan to personally do and what you wish government would do. I know we don't have much say over government, and that is why nothing will change - sad, as they say its a democracy for and by the people. Oh well, at least we are personally free to do choose most of our own actions (as long as you don't owe too many people money anyways :-) ).


On Dec 15 10:22 AM RickRussellTX wrote:

> Yeah, I cannot see how eliminating fractional reserve banking fixes
> any problems. If anything, it dramatically worsens liquidity problems
> -- look at the national bank system before the Federal Reserve existed.
> If depositors took out money, the bank had to demand immediate payment
> on loans. It makes sense in theory, until you find out that the letter
> of credit you sent to the lumber mill just got pulled. Do we really
> want to go back to the days of couriers carrying gold and paper currency
> to pay for business transactions? Without the ability to rely on
> short-term lines of credit, that is what will happen.
>

Rethinking Diversification

I personally hate diversification. It ties me to market average - and if I'm just going to do average, why get involved or worry about anything at all? It's out of my hand if that's the road I take. Why bother reading or writing anything on SA if I'm tied to average? I'd just be waisting my time and it would be better spent working overtime or with family/friends.

I'd rather do research and use knowledge and education to try and pick companies and industries I know (think) will do better than average. You will never achieve success if you strive to be average.

For some people the stock market is nothing more than a retirement fund they hope maintains value or goes up a little and for them the average diversification strategy is just fine and it is probably the best strategy for them!

Show me someone that got wealthy off the stock market by being ultra diversified? As they achieve success, then most starting moving their wealth around and diversifying it to keep it safer. The closer I get to retirement the more diversified my portfolio will become. To me, diversification is a wealth protection strategy, not a wealth building strategy. So it really depends on what you are trying to accomplish. .

Will We See a Big Upward Move in Gold?

I take a longer term view and prefer not to use leverage (though I have done so a few times).

Please look back in history and show me a good fiat currency. Why was gold at one time $42?

I don't consider gold an investment, but a store of wealth. Is it the best store of wealth? I don't know, but it works a lot better than stuffing fiat dollars under the mattress or in a bank account.

"I firmly believe that there will be a trading range for all the better commodity stocks and ETFs that will give us several chances to buy low and sell high over the months directly ahead. Your comments on that will be appreciated. Happy holidays to you all."

I don't see the price of gold crashing anytime soon if that's what your asking, so if you are a trader looking to get in and out, perhaps after December 31 I would expect the dollar to get weaker. I'm not 100% sure but I was under the impression that many companies that are based in the US but have international operations like to repatriate some of their foreign dollars into USD's for end of year accounting purposes? I could be way off and maybe they just use the exchange rate on last day of their corporate year end. Either way, I'm expecting some bad layoffs in January with most of that data about January to be coming out sometime in February. So Between Jan 1 and March 1, I think gold should get stronger? I'm only guessing and I'm not good at such short time frames. That's why I don't do short-term trading.

Where Was the Inflation?

"And as every amateur economist knows, vast expansions in money translate to inflation- right? Yet, inflation was very much in control in this decade- increasing only slightly from a minimum of 1.6% in 2002 to a maximum of 3.4% in 2005, and then lower in 2006 and 2007."

The vast expansion of money ended up inflating the price of homes! Most of that vast expansion of money was people taking on massive mortgages and bidding homes prices up! My parents home value almost doubled in one month! That's where the inflation went during this last round of money expansion. Only if you were blind could you have missed it.

I can't afford to buy a home due to all the home price inflation in my area. Now the home prices are starting to come back, but in my area they are still far above what they have been historically. Until they come back, the inflation in home prices is preventing me from buying a home. Don't act like inflation didn't occur - it did. You must have already owned a home and so it didn't affect you the same way it would a new immigrant or a 22 year old straight out of University with degree and student loans to repay. It's easy for me to see the inflation that was occurring, I would have to be blind not to see it.

The Problem with GLD and SLV ETFs

I've never fully trusted ETFs due to all the disclaimers. If you are one of those hardcore gold enthusiasts, it might be better to own the physical bullion yourself.

Yes, there are risks. The risk of confiscation exists, even with ETFs... perhaps especially with ETFs... The government has confiscated gold in the past and ETFs are an easy target of any future confiscation.

I'd rather have gold hidden where it can't be stolen or "confiscated" or re-taxed. As far as I'm concerned, the government already taxed my money. When I die, it will go to my heirs without being subject to death taxes.

I think this was an important article to be read by those that think gold or silver ETFs are completely safe and without risk. Thank you to the author!

Blogs, Profanity and Editorial Integrity

I write a few articles here and there for SA. I don't use "bad" words on my blog very often. When I do, I do so for a reason and I don't want to be censored. You can either publish it "as is" or do not publish it at all. This is a free country - I see no reason for censorship if the article is good and relevant but contains a few swear words which I'm probably only using for emphasis or to show emotion.

It is this entire culture of political correctness that is hurting us and irritates me to no end. Obviously if I write something too inflaming, I don't expect it to be published by SA and that is a much different case.

For those too innocent to see the occasional swear word - I must say to you, it is only a word and it's a word that helps many convey emotion and meaning and is generally used in a slang sense, not the direct meaning of the word itself. If you can't handle the occasional swear word perhaps you should grow up. It's a word. "Oh no, Johnny said the "F" word - I'm offended." Please, grow up and stop letting every little thing offend you. God forbid something I write offend someone!