Bill Jencks

As the Dollar Continues to Collapse, Where Will You Put Your Money?

Paco,
A good honest article....The only thing I would question and disagree with is your advice investing in such things as paper gold through EFTs. I see absolutely no point at all in investing in dollar denominated EFTs since, as you say, the dollar is going to fall -- so even if gold does goes up in value , you will lose all your gain through dollar devaluation when you cash out into dollars.

Secondly, not many people are aware that, about three weeks ago, the NYSE-Liffre futures exchange defaulted on its deliveries of 1Kg gold bars. Read it here:

www.marketskeptics.com...

www.marketskeptics.com...

www.marketskeptics.com...

Stay well away from dollar denominated stocks, the dollar and all EFTs.

Buy gold that you can hold.

The Bubble of Uncertainty Is About to Burst

The number of investors like Jason, giving such advice is astonishing. No real economics here, just wishing really.

I'm waiting for Volcker's influence to come thru, here is a man who isn't scared of dealing with massive economic problems - he is a man who known for 'thinking outside the box'. Trouble is, Volcker has to get past Larry Summers ego to have any influence.

And Summers was the main man involved with the final repeal of the Glass-Steagal act in 1999. This repeal completely de-regulated the markets and this, some say, is more than a partial cause of our current economic mess.

Will China Continue to Buy U.S. Debt?

China has already said that their purchase rate for US Treasuries will be reverting to pre-Bailout levels - ie will be muxh less than now. And with US Fiscal Debt continuing to skyrocket towards Mars, I would say this is a bad turn of events for America.

Add to this that China has been purchasing fairly large quantities of gold in the last several months(spot gold has gone up 20% since Oct 2008), and I think we might have an inkling in what direction China is headed with her "savings".

But I still read tracts of opinion like, "...Ah, but China must support the American Debt, otherwise she will lose her biggest market !!"

China is, at the moment, gearing up to her domestic market(which consists of 1.3 billion people, 4 times the population of the US) and at the same time will decouple from the dollar and switch her external markets to India, The Middle East and Europe(as a whole a far larger market than America) instead of the US.

The fact is without China, or some other idiot paying the US Debt, the dollar and the American Economy will collapse - and this is a fact. The US government has lost control of its own dollar internationally, causing a huge weakness in America's influence and the reason for this is simple.

The US government has either forgotten or simply refuses to look after its own huge fiscal debt. This is clearly apparent in US fiscal policy.

After all, why the hell should ANY country pay another country's debt for them?

Laughable.

5 Indicators the Economy Is Recovering

Too detailed, alot of the reasons not related to economics. Here are another 5 economic reasons why the US Economy will not recover this year:

1. China has recently reduced its Treasuries purchases to pre-Bailout
rates - China now fully realizes that the more US Treasuries she buys, the less they will be worth at maturation - all due to Bernanke's massive 'quantitative easing' play - where he is trying to 'inflate away' US foreign debts. Trouble is, this also reduces the dollar value - this will hit mainstreet pockets hard. It is very likely that China will tail off her purchases of Treasuries in preference to purchasing more gold.

2. The dollar will fall as a result of the above and many other reasons.

3. China will soon be introducing the Yuan as the reserve currency of Asia. Russia will also be a party in this currency play. The dollar will be given the boot in Asia as the reserve currency. Another reason for the dollar to fall.

4. OPEC has been slashing the number of its refineries and reducing its oil reserves - to reduce supply - in order to drive up the price of oil. This will happen soon - and the dollar will trash, just like it did last time. This will prevent the US coming out of the recession anytime soon.

5. George Soros, this week said that the markets still haven't found bottom - there is no indication of this yet.

5 reasonably good reasons why the US economy will not come out of recession in 2009.

Obama's Tire Tariff Could Help the U.S. Win a Trade War with China

Also you mention America insisting on "balanced trade". Really? According to whose rules -- America's? What about the "free market" -- which is something not seen in the world for about the last 100 years.

And what about the so-called no-protectionist-policy agreement at the last G20 in London. I might also add that the G20 agreement and Obama's agreement to it succeeds and comes after the WTO agreements with China in 2001, therefore nullifying its clauses.
Obama's officials at the last G20 also worked very hard to support non-protectionist policies.

Obama has plainly broken this G20 agreement by instituting self-serving protectionist policies on China.

Therefore Obama's world leadership dwindles in the eyes of the rest of the world because Obama can't keep his word.

That's how it will be seen outside America by China, Russia, the Mid-East states and probably Europe.

Good for America?

Trade Wars: Understanding Complicated U.S. / China Relations

I keep reading blogs and articles like this, written by western and American authors who can only ever see the harm that China's economic policies are doing to America. The fault is always China's, indeed China's insolent, self-serving economics must be taught a lesson....blah, blah. Your one-sided arguments just don't convince.

If you look at America's own very blemished economic history, if you take a long, hard and deep look at institutions such as the WTO, IMF, World Bank etc. -- all institutions touted to "help" under-developed countries, then you will be shocked at the one-sided, self-serving and protectionist rules and policies that they promote for only America. Try Googling the "Washington Consensus" for some confirmation of this.

So, simply put, if America has been so protectionist for the last quarter century, is there any surprise that China is now playing just as dirty economics as America, since America has indeed set the precedent and had the economic advantage for so many years? How can anyone argue with this, since America was the first to dirty its hands with its very own brand of longterm, protectionist, controlling economics?

Therefore, with this precedent already set by America, who can possibly complain that China is now playing dirty, since China has only learnt from The Master?

Or ist it to be one economic law for America and another law for the Rest of the World?

GDP and Debt: On the Cusp of Rampant Inflation?

According to the Shadowstats site -- a site that strips away ALL government adjustments from its charts -- The actual current CPI inflation is not below zero -- but is actually at about 7% and dropping. The Real GDP is -5% and unemployment is now at 20%.

Check it here:
www.shadowstats.com/al...

2009 Depression Will Be Nothing Like 1929

I agree with seldon. It's pretty stupid to invest in anything. We are currently in rapid deflation right now - which is why the govt. and the Fed are buying so many useless assets - to inflate the economy. And, strangely, this is not working.

Methods like Elliot Wave, Dow Theory, Trend Analysis and even Value Investing strategies are plainly not working - probably because so many investors really don't understand economics.

My own strategy is to stay in cash(not dollars, anything but dollars) until the end of this year. Then, when China starts to emerge out of her own recession - and since all western wealth is moving from West to East - it would make good sense to invest in China.

For all those investors out there who have such faith in the American markets - this is very dangerous. The trashing dollar(later this year) will kill anything that's left in the American markets.

Gold: Now Demonstrating Trust in Obama

The US is certainly trying to inflate away its massive debt. Unfortunately China has now spotted this ploy and is reducing it's Treasury buying rate to pre-Bailout Levels. Well done Bernanke !!

Meanwhile Pres. Obama seems to be throwing more truck loads of dollars at the financial problems, the same as Bush, except more. Wow, what a solid, original strategy.....And everyone wonders why 'market confidence' hasn't returned yet?

And then there is this teensy problem of the $65 trillion US Fiscal Debt which is still rocketing skywards towards Mars - I guess this is what's called laissez-faire economics, right?

And I'm thinking, perhaps this is why 'market confidence' is still shaking it's head vigorously and laughing its socks off....

Trade Protectionism Benefits No One

I completely agree with this article, the author has proved his case from history well.

Another thing to consider in these tit-for-tat tariff wars is this: Virtually every article I read concerning this problem sides with the American case. But there is no assessment of its real economic effects(except for this article).

So I would also add the we have a large debtor nation(US) warring economically with a large creditor or saver nation(China) who are both mutually dependent on each other economically. So these tariff wars will only promote more financial problems for both nations. I also feel, with America's slim and fragile manufacturing sector that is so dependent on China, that America will come off far worse than China economically if these tariff wars persist.

And another thing that was not mentioned in the above article -- at the last G20 meeting in London, Obama strongly adhered to, promoted and advised anti-protectionist global policies across the board.

Plainly, President Obama has reneged on his own word and advice.

Good for America?

Obama's Tire Tariff Could Help the U.S. Win a Trade War with China

I'm afraid your dreaming wildly.

My evidence covers more than just tires:
slowsmile.hypocrisy.co.../

Also in the news, a Chinese Treasury official on a visit
to China openly advised the Chinese to diversify out of Dollars
into other currencies and gold. He thought "this was a good
idea..."

Evidence from Reuters:
www.reuters.com/articl...

I think China is winning the war, don't you?

What Keynesian Actions Should the Government Take?

Everybody is infatuated with Keynesianism. This is what got the US financial system in a mess in the first place. A little bit of inflation is good, a small amount of debt is OK, a small fiscal deficit is manageable. But all these amazing excesses now?

Why should any country have to pay back any other country's heavily excessive debt? Where is the legitimacy in that?

Have a good look at China's economics. Their banks are lending now. Their stimulus package appears to be working - they aren't throwing truckloads of money away for nothing. Their debt to GDP ratio is 18.4% - America's is 60%, but if you include all commitments to the US fiscal deficit - it works out to about 462%. Sound good?

So tell me now - is consumerism and debt a sound economic method? Or does the tenet of "Savings is the reward of Production" perhaps make you feel a wee bit more secure?

An Alternative to Schiff's Doomsday Scenario

Nice argument - but incomplete. Trouble is the US government, as well as the very currency used - the dollar, are in such a mess. In Monetarist or Keynesian terms a little bit of debt is good, a little bit of inflation is good, a little bit of fiscal deficit is good. I don't have to go on about excesses do I? Plainly - alot of govt. debt is very bad, so the US government is not even following Monetarist or Keynesian tenets properly.

After all, how can you cure a huge financial credit mess with more ridiculous credit and therefore debt?

And so what is better then and what makes more sense - the Austrian School tenets of "Savings is the reward of Productivity" or is it to be "Consumersim and Debt must be always be supported by never ending credit from other foreign countries" ? Which one of these tenets makes you feel all warm and cuddly inside and which one makes you feel insecure ?

Sickness May Be the Cure for the U.S. Economy

Leave socialism and politics out of this !! This is about bad economics - economics is regarded as a pure science, politics is not a pure science, very dirty at best, so dragging politics into economics doesn't help. In fact politicians usually have no real depth of understanding in economics at all. You could count the number of wise economists in Congress and in The Senate - on your thumbs(..and that's in a good year).

To blame 'creeping socialism' is no solution to an economic problem. And it doesn't really matter whether your a Democrat or a Rebuplican - if politicians do not understand how to pay back there own country's debt, if the President of the US and the Fed are happy to try and inflate away the US Debt as well as tend its own feckless dollar with continuing "benign neglect" - well, come on - that's not socialism.

That's just complete economic stupidity.

More Contrarian Chatter That a Rally Is Imminent

So, with the financial crisis at full crunch, with OPEC shutting down oil refineries like crazy and reducing its oil reserves continuously to soon drive up the oil price, with the Chinese about to introduce the Yuan as the new reserve currency of Asia giving the big boot to the dollar(didn't know about that one did you?), with expensive climate change adjustments, with the Treasury bubble at full stretch and China reducing its Treasury purchase rate to pre-Bailout levels and with Bernanke pumping out greenbacks like there's no tomorrow, the inevitable coming dollar plunge - well, what do you really think folks? These are all good economic reasons for the continuation of the market dirge, not Elliot Wave reasons.

Elliot Wave theory might have application with day traders, but in the long and medium term - I would seriously suggest that watching the economic ball will pay more dividends than matching squiggle patterns on a chart.

Real economics is simple. Economic cause and market effect. That's it.