asleeper

Let's Just Say It: Print More Money

The author is badly mistaken in his advice as most commentors have noted by saying that more of the same that got us into this mess will not get us out. That is, given the existing monetary system remains intact. However, I am perpetually amazed at how few commentors are willing to go beyond that realization to say that a wholly new monetary system is needed.

When the banks deny credit, our system falters because our system is based on dollars being created by banks in response to people and organizations being willing to take on debt. If new credit (equal to the debt principle) is not continually added to the system in response to such willingness to take on debt, then paydown of debt by existing debtors extinguishes the money supply causing other debtors to find it even more difficult to earn the funds needed to pay down their debts, principle plus interest.

The author is therefore correct in saying the essence of the problem in a crisis such as this, a credit crunch, is not enough money in the system. He is incorrect in saying that the Government and the Fed are capable of supplying that money in a way that will help, given our debt-based origination mechanism for creating new money.

I understand that this is an investment web site, and very few who post here consider it likely that our monetary system will be redesigned in the next year, so any mention of what is needed to REALLY solve the financial crisis is not likely to help make investment decisions in the next six months. However, if the dollar truly does self-destruct in a hyperinflationary scenario at some point down the road, because of Government and Fed efforts to pump cash into the economy, a rare opportunity to re-design the monetary system might present itself.

We would all be better off if some way could be found to transition to a better monetary system without a collapse of the existing system, but as the existing system is a private, for profit system, the Fed and its supporters are not likely to look favorably on any proposal for a new system. For the present, we remain desperately searching for ways not to be screwed by the financial machinations at the highest levels in Washington and Wall Street.

Marc Faber on the Economy, Gold, WWIII

Bookmark this video and refer to it frequently in coming months. Lots of good investment advice in it. Market hit an interim bottom in Nov., rallied in December. Rose a little too fast in early Jan., and is now correcting. After correcting in Jan/Feb, market will likely rally in March/April. Sell in May and go away. The market after that will likely be a tough one and hard to predict for many years.

Focus on beaten down issues or market leaders that will emerge unimpaired as Jim Rogers also says. The world will continue to need base metals, food, oil, coal, bulk cargo shippers, semiconductors, etc. Be selective. Pay attention to timing, market psychology, Government and banking actions as well as stock-picking fundamentals. Stay on top of the news. In other words, it's still a battle for investment survival out there as it always has been.

My one word of caution is that although Asian market prices are tempting, beware of individual stocks. Stick with funds, ETFs, and companies with excellent reputations. As corrupt as individual American companies can be, foreign companies can be even worse and even less transparent.

My worst losses in the market have been complete blindsides by individual companies hiding bad news. Intel may be OK, but below that level, due diligence may not be enough.