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.

Nine Ways to Profit in 2009

It certainly was a very nice day. Silver did well all week. Also two PGM stocks: PAL and SWC. Even the commodities ETFs, DBB and DBC were up. Gold stocks turned up first, now commodities might be beginning to follow. Caution is warranted, though. This could just be a relief rally and optimism concerning what the new POTUS might be able to accomplish.


On Jan 02 07:28 PM aitvaras wrote:

> It is /was a really great day, the dollar went up, oil went up gold
> went down.
>
> I've pick a great day to enter my triple shorts, Good prices for
> them.
>
> Maybe oil goes to $50 next week, hope so. Gives me a chance to take
> a serious profit on DXO in my real time portfolio. Remember when
> oil spiked earlier, this is another spike to savage the shorts.

>
>
> IMO

Nine Ways to Profit in 2009

Thank you for making specific and detailed predictions. Right or wrong it makes for more interesting discussion.

Oil could go as low as you said. The charts suggest it is possible. But, I'm betting the low is in or close to it for two reasons. Even if some people think oil could go as low as you say, $20-$30, I think most people expect it to rebound in 2009, just as you said. If they expect it to rebound to $45-$85 by the end of the year, why risk missing the opportunity to buy at $30-$35 and chasing the price up should it head back up early? Why not buy in at $30-$35 and add more if the price weakens. I think most people would see it that way and such an attitude will prevent the price from dropping all the way down to $20.

Also, historically the price has already dropped as much percentage-wise as it did after the 1970's oil crisis. To fall all the way to $20 would mean a much larger drop percentage-wise. It could happen, but if it does, it would confirm that that this recession/depression is as bad as you think.

To me, the opportunity to buy oil at $30-$35 now and probably double the investment in a year or two years at most seems like a very good bet. I bought USO at very close to $31 with about half the money I wished to dedicate to oil before Christmas. I'll hold the other half and see how it goes 1Q '09. If the price drops to $20, I'll buy more. If the price goes up and the future looks as bleak then as it does now, I'll sell and bet on a second big decline in the market to buy back in.

Thanks again for your predictions.

Value vs. Price: Trade in Your Gold for Oil and Agriculture Futures

I've been thinking much along the same lines myself for several weeks.

Sold my gold in the mid-900s and my silver in the low 19s before the absolute highs, bought gold back in the low 800s and luckily sold again when it rallied back up into the high-800s and before gold and silver dropped off the cliff. Can't claim any genius there, just happened to trade out and stay out while they fell.

Started buying silver back gradually and averaged down, my average cost being about $12 now. Still haven't bought back into gold, worried that it will also drop like: silver, platinum, and palladium did. Platinum and palladium look very attractive at current prices, though, but I don't know the best way to invest in them.

So, I've started looking at oil, general metals and commodities ETFs, and the agricultural ETFs. Just took a small position in USO today. Will start looking harder at the commodities ETFs. Even with price deflation, I cannot see food prices dropping much. And, if the high future inflation scenario that so many are predicting plays out, food prices should be a safe bet to rise.

Who knows though? My general rule is the greater the certainty of the analyst, the more full of sh** they are. Sometimes common sense beats out the most sophisticated analysis, and sometimes the unexpected beats the he** out of common sense. You never know for sure.