ozzy43

Are GLD and SLV Legitimate Investment Vehicles?

In response to the comment immediately above (if it does not, as the author insists, vanish quickly):

Anyone who believes that the Wall Street Journal and NY Times are disinterested, unbiased bystanders who would be willing to expose fraud by financial elites is really living in Wonderland. Many of the people benefiting from the fraud are among the same people who control those Establishment media. It's not surprising that someone who is so blind to the fraud that is the mainstream media would insist on blinding himself to other possible frauds. I notice that his post here was not even in response to the article above - did not address the significant points at all but preferred to post a diatribe on an article cited in the article above. Perhaps THAT is why the post will vanish, if it does. Sounds like obsession to me...

Now, in regard to the article in question, the issue some of us have is: self-directed 401k accounts do not permit acquisition of physical metals, but *do* permit investment in ETFs. In such a case, what would the author suggest as an alternate? Would CEF be the best bet? I don't like miners at this point because I expect this bear market rally to fail at some point, and that would likely drag down miners as well, though perhaps not to the same degree.

Japan Defends Dollar’s Status, China Tears It Down

"It certainly is not in China’s best interest as all their U.S. dollar assets will lose value."

This statement would be true if the Chinese were as concerned about short term gain/loss as Americans tend to be. However, China, like Russia, is in this for the long game. If in their view it enhances their long term geopolitical strategy, there is no reason to think they'd balk at losing money in the near term.

It's simply not wise to assume your opponent thinks just like you do, especially in the face of a few millenia of evidence that they do not.

Summer 2009 Stock Market Evaluation

In the pages of history, will this assertion:

"While uncertainty still looms, the data suggests that the worst of the economic and credit crisis appears to be behind us."

Join with these?

"The spring...marks the end of a period of grave concern ... American business is steadily coming back to a normal level of prosperity,"
Julius Barnes, Head of Hoover's National Business Survey, March 16, 1930.

"We are now near the end of the declining phase of the depression," the Harvard Economic Review, November 15, 1930

Only time will tell...

California's Default Is Certain

"Indeed, it is Reagan who has sewn the seeds of the U.S.'s inevitable march toward national default."

I had no idea that Reagan was active in 1913 in the passage of the Federal Reserve Act, and the passage of the 16th amendment and the income tax - which is when the seeds were sewn for the inevitable default that is coming. Of course, Reagan, among every other president since that time, participated in the watering of those seeds and the faithful tending of the monstrous weed that sprouted, and which now is busily devouring the rest of the garden.

It never ceases to amaze me the utter ignorance of history that is often on display in these mainstream essays. As though these problems began a few short decades ago! Puh-lease! We're seeing the ineluctable culmination of ~100 years (arguably, even more than that) worth of Statist governmental and monetary policies.

Why I'm Keeping an Eye on Corporate Defaults

I think the author is overly optimistic. The 'problem' didn't take 25-30 years - it's taken almost 100. Fiat currency and fractional reserve banking began a lot longer than a couple of decades ago. Since 1913 (and central banking as we know it didn't really come together as a consolidated whole in this country until FDR in the 30s), the dollar has lost 95% of its purchasing power. We grew up in this era, and take it for 'normal' - it's not. Current policies cannot but accelerate that ongoing loss. The difference between 'nominal' and 'real' will inevitably become apparent, and sooner rather than latter, it seems likely.

This is not a recession, cooked government figures notwithstanding. It's a depression. A fundamental restructuring of the economy is underway, masked by government bailouts of zombie companies and cooked up figures for economic indicators on all fronts. But the toxicity remains. The 'real' unemployment rate is north of 15% already - what's the 'real' GDP? The 'real' inflation rate? Who knows? I do know it is far, far worse than these metrics reveal - and that this is not an accident.

So does it really tell us anything to look at corporate defaults when you have so many sectors being artificially propped up by so many market-distorting forces? I don't know, but I think, like so many other metrics that would yield useful information in a free market, the answers from reading such tea leaves are likely to mislead.

Hyperinflation Not on the Horizon

Yes, there can be no doubt that the Fed will act in an intelligent, responsible and far sighted manner. After all, there's a first time for everything.

Rising Oil Prices: What We Have to Do ASAP

Sorry, you lost me at:

"I am very optimistic about recovery generally"

You lost me again when you suggested that one thing we could do to combat rising gas prices was to increase taxes on it.

In Defense of the Dollar

"I do not believe that central bankers will allow their power to disappear by witnessing the fall of the fiat currency system. Instead, the dollar will eventually stabilize and rebound."

The entire preceding article argues against this point cogently - and then the author makes this assertion without any argument or logic to back it up! Unconvincing.

Consider: the only real power that central bankers have comes in two forms:

1. Positive: actions like increasing the money supply, printing money, monetizing debt. All positive actions lead to currency debasement, and these are the 'standard operating procedures' for central banks - indeed, these sorts of actions are their raison d'etre - the whole goal behind establishing central banks was NEVER to 'manage' or 'coordinate' - it has ALWAYS from the very start been to exploit and inflate. This is why the USD has lost more than 90% of its value since the Fed sprang into existence in 1913. No-brainer.

2. Negative: choosing *not* to manipulate and inflate - in other words, doing nothing and allowing markets to manage themselves would be negative actions. How often in the nearly 100 year history of the Fed has it done this, especially during times of crisis? And looking at the current hyper-activist Fed and Treasury, to expect them to engage in such hands-off, negative interactions would be like expecting Ralph Nader to suddenly open a Corsair dealership. It would be to violate everything they stand for. Yet that's what would be required for the Fed to stabilize the dollar long term.

With all the incoming debt (and don't forget - there was something like $60 - $90 TRILLION in public debt incoming BEFORE this crisis [what? you didn't watch I.O.U.S.A.?], which is aggregate to recent debt developments), the Fed and the US Govt has ONLY two options, and the author's knowledge of the history of fiat currencies should make this abundantly clear:

default or debase

Those are the only POSSIBLE paths forward. What we are seeing is that they have made their choice and we're only beginning to glimpse the consequences.

Questions About the Dollar

Great example of GIGO. Any analysis that relies upon the fraudulent government-generated numbers like CPI and GDP is bound to wind up issuing fundamentally misguided conclusions. Furthermore, the assertion of Keynesian principles as though this model had not been disproven conclusively in the 70s in a period of rising unemployment AND rising inflation (something the Keynesian model said was flat out impossible) perpetuates the fantasy-based underpinnings of the logic here. And the nail on the coffin is the way in which the author presume that 'strong policy response' will result in the expansion of the economy. Hello - unemployment continues to soar and the gargantuan private debt overhang will need to be paid down, painfully, by people with fewer jobs. Meanwhile, the strong policy response by the government consists of wresting capital resources from the more efficient private sector, leaving that sector - which is the ENGINE of growth - with fewer resources to actually build capital and contribute to a REAL expansion of economic activity (this does not include digging holes and then filling them in again).

The cherry on top is where the author cites Geithner with an apparent total lack of skepticism as to whether that Wall St banker might not actually be 100% honest.

This article is an exercise in pure fantasy on virtually every level.

Look at Oil, Not Inflation, as Gold Price Indicator

Open the taps? Close the taps? So oil supply is now effectively infinite and opening and closing taps is all that's required? This ignores the very real geological fact of peak oil AND the fact that oil is consumed whereupon it disappears, whereas gold isn't and doesn't.

Inflation Expectations and the Price of Gold

Straw man argument. Analysts like Mish Shedlock make a compelling case for deflation - and it has nothing to do with looking at the CPI. If the author is willing to thoroughly address the arguments Shedlock makes, I'll be interested in reading it, but this post adds little to the debate.

Peak Oil as a Function of Earth's Volume

Seems to be a version of 'Don't worry, be happy'. This has to be the most incoherent and inane post I've ever seen on SA. There is little if any connection to economic, practical or geological reality evident in this post.

Murray Rothbard once said:

"It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a 'dismal science.' But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance."

This is as true of petroleum geology as it is of economics, and both speak to the loud and vociferous ignorance apparent in this post.

Thoughts on the Current Restructuring of Global Oil Demand

The problem I see with the article is it restricts itself to addressing cars and commuting. That's only a small slice of the oil pie. Industries in the developing world will be using as much oil as those same industrial systems do in the developed world. If you're manufacturing semiconductors or plastics in China or Schaumberg, your fossil fuel usage will not differ materially.

So you may be right that one sizable (but far less than a majority) fraction of oil consumption - that concerned with individual drivers and non-commercial vehicles - could probably be somewhat smaller in the developing nations, that seems likely to have a less-than-dramatic impact on the overall oil consumption picture once you factor in all of the other fractions.

Three Possible Causes of Yet Another Downturn

"government is rushing to help instead of making things worse"

This statement betrays a fundamental misunderstanding of, and mistrust in, market forces which cannot be denied. The 'help' government is 'rushing' to supply is, of course, 'making things worse'. Preventing insolvent, corrupt businesses from failing - at gargantuan expense - will only prolong the agony.

Two Economies, And One Must Die

Only one problem with this otherwise excellent article. Imagine for a moment that those G20 participants - those leaders of the largest Real Economies - are owned, body and soul, by the leaders of the Casino Economy. In fact, they are, and every new twist in the saga demonstrates this conclusively, the most recent being the misbegotten private-public partnership proposed by one of the architects of the Casino Economy. Calls for legislation and regulation have been and will continue to be smokescreens. There is no evidence that we are taking steps *toward* a cure - in fact, all evidence is that desperate moves by the Casino bosses and their toadies in DC and other world capitals continue to ensure that the parasitical infection continues unabated.

Putting our faith in *government* to accurately diagnose our economic disease and then to prescribe an efficacious treatment now, are we, fellow capitalists? What across all the ages of history would suggest such foolishness is justified? Government is just as much a parasite as the Casino bosses, and in fact is simply a different face of the same pathology.

Good luck to all. We're gonna need it.