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So let me understand. He ain't going to do nothing. PMs seems to funny or too risky or something like that. Also, at the very least he could buy 500 shares of AGQ or if that was too volatile he could pick GLD.
Just curious PC.
thanks
A friend came to see me the other day and asked what he should do with his $750,000 in cash that he has in a savings bank drawing less than 1%. I checked the silver price about a year ago and he could have bought about 48,000 silver dollars and today that same money will buy about 16,000. That is what the "demise of the dollar" that Bozzo talked about on this board from the beginning. The friend will leave his money in the bank because he worked his whole life and saved thinking it would be the retirement nestegg but he will be shocked in another year to see how many silver dollars it will buy. I told him to invest 1/4 of the cash in PM's and in a few years the value of the 1/4 investment will we more valueable than the 3/4 fiat cash. But it is just a waste of time to explain this to most of the hard working,long time savers in America. It is tragic to me to see the older generation who saved, paid off their mortgages, dumped all they could in 401K's, limited cerdit and credit cards, and now they see those who did the opposite being given all the government breaks at their expense. Here, the few have had to pay for the many but in the next world to come , the One has paid for all. That I can sleep on. j.m.o. - p.c.
Ron Paul: I Totally Disagree with Bernanke's Central Economic Planning
Don't worry about silver until it hits at least $100, says Jim Rogers
James McKeigue
Commodities bull Jim Rogers has admitted he is worried that silver might go "parabolic" and crash later this year. The 69-year-old investor remains confident that gold will continue to rise but says that if silver continues to rise at its recent rate, "you've got a bubble".
Rogers is well known for attracting press attention, famously moving his family to Singapore because Asia is "how Europe used to be". However, investors will particularly interested in his view on silver as he has made several well-timed calls on commodities in the past.
Rogers made his name by co-founding the Quantum Fund with George Soros in the '70s but it was the launch of his first resource fund in 1998 - which benefitted from rising commodity prices in the following decade - that established him as a 'commodity guru'.
Speaking to a US radio station, Rogers acknowledged that "people are starting to notice gold" but remains confident that gold has plenty to rise. "Eventually everybody's going to be owning gold, and then we'll have to sell our gold. But that's a long way from now."
He denied that recent purchases by institutional investors, such as Texas University, marked the top of the market. "Gold's been going up for ten years in a row. I'd hardly call this a tipping point."
Rogers, however, was a little more cautious on silver. He noted that it has been "skyrocketing" recently and warned that if it hit $100 or more (it's currently trading at around $45 an ounce) this year, he "would probably start to think about selling".
On the one hand, "maybe the US dollar is going to become confetti in 2011, and if that's the case and silver goes to $150, then obviously I wouldn't sell my silver." But if silver "goes parabolic" this year without an accompanying currency collapse, "I would be very worried."
Recalling how he had begun to short gold when it "went parabolic in 1980" he reminded listeners that "there's never one [a bubble] in history that hasn't popped".
Jim Rogers is Right
Simon Black
Jim Rogers saw the writing on the wall for America several years ago. He uprooted his wife and family from New York and went where the opportunity was - Singapore. Rogers has famously said that the best career advice he can give a young person setting out to make a fortune today is to become a farmer.
Unlike some news anchors, who seem to take the comment in jest, I believe he is completely serious. Forget investment banking, derivatives trading, or managing a hedge fund. The big fortunes of the coming decade or two may well be made in agriculture.
Those quick to dismiss the notion assume this means toiling in the fields all day from dawn to dusk. Wrong. There are MANY ways of making a buck in farming and agriculture.
Farming itself is just one part of the supply chain. You could supply seeds, chemicals, fertilizer or stock feed. You could breed some exotic variety of cattle or pigs. You could provide logistics services to get products to market. You could even set up a fund to invest in agribusinesses on behalf of others.
There are literally dozens of ways to play this.
I just finished reading an uplifting account of a young Filipino entrepreneur (only thirty-one years old) who's well on the way to floating his diversified agribusiness company on the Philippine Stock Exchange for P2 BILLION ($46.5 million).
In just 7 years, he's grown the company, which does everything from selling livestock feed, to running rural supplies stores, to raising chicken hatchlings.
Annual sales have increased 9-fold from P200 million to P1.8 billion. Profits this year should hit P137 million based on company projections. By 2013 they're targeting P425 million. That's US$10 million, give or take, in net profit, all from doing something very basic.
Put simply, so little new blood and talent has entered the agriculture business in the past generation that many business practices remain stuck in a time warp.
How many people do you know who majored in agricultural science at university? How may people can you think of who stayed on to run their parents' farm, or returned to the land to run their own business?
Now, compare that to how many bankers, brokers, accountants, and lawyers you know...
Ten years ago, NOBODY studied geology and people looked at you as though you had two heads if you said you wanted to be a mining engineer. Today, agriculture is in the same boat, and the complete dearth of new talent in the agricultural industry is a sure sign to me of the wide-open field of opportunity.
In the Philippines, so low-hanging was the fruit - if you'll pardon the pun - that this young entrepreneur I just mentioned was able to double profits at his parents' farm supply business when he took it over, simply by installing some off-the-shelf accounting software.
You may think this is an extreme example, but I can tell you that there are dozens of countries in the same situation. Paraguay is one of them.
We talk a lot in our discussions about 'adding value' as a means to generate income, either as an employee, professional, investor, or entrepreneur. This is an important principle to understand because being able to generate independent income is absolutely necessary to become more self-reliant.
I'm quick to point out that the value creation process is often derived from solving problems - the bigger the problem, or the more people it affects, the greater the value created... and hence, the greater the reward.
Quite simply, there are a lot of problems to be solved in developing markets - lack of modernization, lack of technological know-how, lack of best business practice know-how, lack of financing and appropriate capital management, etc.
These are often second nature to many westerners who typically have both the knowledge and experience to make a big difference, and hence create a lot of value, overseas. One just needs the courage to do it... and prove Jim Rogers right.
www.sovereignman.com
It looks like silver is taking a breather and gold is on fire today!! The Gold/Silver ratio needs to flatten out anyways so this is what we need to see if you are long silver. I don't want to see the ratio hit 15/1 when gold is at only $1600...
The decline of the dollar is really beginning to accelerate!!
I bet you there will be QE3!! The markets won't survive without it. Plus, he never said there wasn't going to be QE3...
No QE-3 so probably no hyper-inflation.
Thanks for the green precious metals portfolio today Ben!
The Death of the Dollar: Will the Fed Kill the Greenback at Tomorrow's FOMC Meeting?
Martin Hutchinson
(Editor's Note: U.S. Federal Reserve policymakers meet today (Tuesday) and tomorrow (Wednesday) in a two-day meeting that could determine the fate of the U.S. dollar. Money Morning columnist Martin Hutchinson is betting that U.S. central bankers won't boost rates, a failure that could help bring about the long-term death of the dollar as a viable global currency.)
Months or years from now, when analysts are studying the death of the U.S. dollar, they'll look back and see that the greenback's demise began on a specific day - Wednesday, April 27, 2011.
As in ... tomorrow.
At 12:15 p.m. tomorrow, at the conclusion of a two-day Federal Open Market Committee (FOMC) meeting, we'll find out whether U.S. Federal Reserve Chairman Ben S. Bernanke and his policymaking posse opted for a sharp increase in U.S. interest rates - which appears to me to be the only solution to a looming third-quarter crunch.
Unfortunately, I don't think that Bernanke & Co. will make the needed move.
And without that sharp rate increase tomorrow, investors can look forward to rampant inflation, an evisceration of the U.S. Treasury bond market and - in a worst-case scenario - the death of the dollar.
Let me show you why....
It's Time to Worry About the Death of the Dollar
For the last two years, the U.S. economy has been supported by the twin catalysts of fiscal and monetary stimuli.
Fiscal stimulus seems likely to continue for some time yet - even the most avid Tea Party budget cutters don't see their way to cutting more than $100 billion or so off this year's $1.6 trillion deficit.
But monetary stimulus is another matter.
The Fed's so-called "QE2" (quantitative easing/second round) purchases of U.S. Treasury bonds are supposed to come to a sharp end on June 30. That makes July a crucial month - for the American economy, for the country's bond markets and, most of all, for the performance of the dollar.
These crucial monetary-policy issues will be reviewed at the two-day policymaking FOMC meeting that begins today (Tuesday) and concludes tomorrow. Policymakers are expected to leave the benchmark Federal Funds target rate in its current range of 0.00% to 0.25%.
If Bernanke wants to devise a "QE3" to follow his QE2, he needs to do it now: The next FOMC meeting is in late June, which is far too close to the expiration of QE2.
The decision as to whether to end quantitative easing - or to extend it - will be a tough one, made no easier by the fact that there is a substantial-and-growing group in the FOMC that did not like QE2 and that will strongly resist a QE3.
This "anti-easing" contingent has a strong case - and its arguments will be bolstered by figures that show inflation taking off.
Bernanke can resist these arguments for a time - either by focusing on "core" inflation, which excludes food and energy, or by looking at the "Personal Consumption Expenditures" (PCE) deflator, which is reported a couple of months in arrears. However, even with only one additional set of data from the present, he may find it difficult to argue that inflation is no longer a problem - in which case QE3 will be impossible to launch.
And without QE3, the U.S. Treasury bond market will be in real trouble.
The Looming Third-Quarter "Crunch"
Since QE2 began in November, the Fed has been buying about two-thirds of the Treasury bonds issued - or about $600 billion of the $900 billion in total bonds to be issued between November and June.
April is a particularly favorable month for the government: Because of individual and corporate-tax payments, the net issuance this month may be around zero. July through September, on the other hand, will be big months for T-bond issuance - at least $150 billion per month is needed.
It could be a tricky time, however. Credit-rating heavyweight Standard & Poor's has threatened to cut the United States' top-tier credit rating: But Japan, the world's second-largest buyer of U.S. Treasuries, isn't likely to be in the market much at that time, as it will need the money for its own reconstruction program.
Hence, expect to see a third-quarter crunch in the American Treasury market. The crunch will be made worse by the acceleration in inflation that is likely to occur between now and then: If inflation is running at, say, 0.50% per month - the equivalent of 6% per annum - by the summer, a 10-year Treasury bond yield of 3.5% will look untenable.
And so will a Federal Funds rate that remains close to zero.
The bond market won't be the only one to experience pain. The crunch we're predicting will also put a serious hurting on the currency market - specifically on the U.S. dollar.
If the U.S. government is trying to raise money that the markets don't want to give it, the U.S. dollar will decline on international exchanges, because of the continuing U.S. balance-of-payments deficit.
Thus, a third-quarter Treasury bond crisis is likely to go hand-in-hand with a third-quarter dollar crisis, as markets start to treat the United States as they would the European "PIIGS" (Portugal, Ireland, Italy, Greece and Spain). Despite their struggles, most of those countries have sounder budget policies than this one, and all of them have sounder monetary policy, thanks to the European Central Bank (ECB).
Simply extending QE2, as Bernanke almost certainly wants, won't solve this problem. The Fed would then be buying both too much debt and not enough.
You see, Treasury bond purchases of $75 billion a month would be enough to push inflation sharply upwards: This is, after all, the very same policy that gave the German Weimar Republic its trillion-percent inflation. (See the accompanying graphic: "A Grim Reminder.")
On the other hand, even if the Fed buys $75 billion of Treasuries a month, the summer months will bring with them the need to place an additional $75 billion worth of bonds every month. And with inflation rapidly accelerating, the chances of a bond market and dollar crisis would still be great.
The One Way to Avoid the Death of the Dollar
With the U.S. market straining under the burden of rising inflation and some ill-advised monetary and fiscal moves, the death of the dollar is looming as a worst-case - but still possible - scenario.
The Fed has one chance to avoid this outcome. But it has to act tomorrow.
Just to have a chance of staying level with inflation. U.S. central bank policymakers must boost short-term interest rates at least to the 3% level. That would burst the global commodities bubble, and reduce inflationary pressures.
With that accomplished, the Fed could then - if Bernanke & Co. wished - continue with a "modified QE3." For instance, perhaps it could buy $50 billion of bonds in the third quarter and $25 billion in the fourth quarter, thus breaking the Treasury bond market off its "Fed-bond-purchase fix," instead of making the market quit "cold turkey."
With inflationary pressure reduced by the interest-rate increase, the chances of a Treasury-bond-market meltdown would thus be reduced to almost zero. Interest rates would rise and bond prices would decline, but in an orderly manner. And inflation, if it continued, would do so at a more-moderate pace.
In fact, even inflation - should it remain stronger-than-desired - could be moderated, simply by raising rates a bit more, perhaps in several increments.
And the U.S. dollar would be saved.
There's only one problem with this scenario: I don't think it will happen. Bernanke won't boost rates. And we'll be back here sometime in the future, writing the epitaph for the death of the dollar.
I have never seen such volatility in the silver market as we have seen today!! There is definitely a battle going on because it is all over the place.
Silver hit a high of $49.85 in overnight trading!! It has come down from there because the Chinese raised margin requirements.
They will put a nice floor in commodity prices long term with that much buying of "resources"
If China dumps $2 Trillion dollars, then in my opinion that will be the beginning of the end of the dollar. That may trigger other counties to sell their treasuries so that they are not the ones holding the bag. Also, QE 3 will be a must if that happens because only a well lubed printing press could absorb all that liquidity!! Albeit a different form of QE because they would be buying them from a foreign country and not the U.S. treasury!! We are in unchartered territory for sure.
Even if they put 10% of that into metals, the prices would be much much higher than they are now!! I thought China only had 900 Billion in U.S. dollars...
They could buy up alot for 2 trillion.
china dumping 2 trillion us $$...
http://www.zerohedge.com/article/china-proposes-cut-two-thirds-its-3-trillion-usd-holdings
Eventually they will revalue, but they will do it a little at a time so that it does't shock the market. As far making the dollar go lower I would say yes!! The Yuan is not in the Dollar Index but it will end buy pointing investors away from the dollar because it is a better currency.
anyone think china will re-evaluate thier currency this weekend? if so, will that cause the dollar to sink even more?
Thanks for that article... That's the first I have heard about that.
Heck of a day for the dollar, could be partly because of this:
Rumor: China To Revalue Yuan 10% This Weekend?
http://market-ticker.org/akcs-www?post=184595
fxa but the yeild is smaller than on fx markets
http://finance.yahoo.com/q?s=fxa&ql=1
why not go with fx and buy aud
you can buy and sell no fee just the spread
and with aud you are getting something like 4.25 % on your money whill you hold
You can also check out eTrade.
Mostly larger city bank branches can probably help.
They have a dept in foreign currency exchanges.
can anyone give me info regarding financial institutions which have foreign currency accounts, please?
i don't want to trade currencies in a forex platform; i simply want to hold australian or other currencies, not US dollars.
any information is GREATLY appreciated.
thank you!
just my 2 cents
the eur had bad news about debt today
and took a big hit
it may not be as much as the dollar up as it was eur down
How does the dollar go up with an announcement like that??
STUNNER: S&P REVISES US OUTLOOK TO NEGATIVE
http://www.zerohedge.com/article/stunner-sp-revises-us-outlook-negative
96: We were out at one of our local cafes early this morning as usual on the weekends. My ears perked up when almost everyone in the place was talking about the price of silver. One older man was reading out of the local "Daily O" newspaper that silver is going to tank. Others said they were selling their coins and getting out of metals. I figured it was JPM who wrote the article. If silver pulls back this week, thousands of buyers will slurp up everything. The general public is starting to look at metals and when they start buying, the market will even rocket more. It would be wonderful if we could push a button and have silver at $3, gold at $50, OUR 401k'S RESTORED, help wanted signs everywhere, a growing economy, America as a hope for those in a dark land, a man's word as his bond, and a faith equal to the early Brethren. I saw some of this in the 50's and knew in the 60's as the youth headed for "California Dreaming" that we were in trouble. Those 60's dreamers are now in control of the nation. j.m.o. - p.c.
By Bill Wilson – Iceland is free. And it will remain so, so long as her people wish to remain autonomous of the foreign domination of her would-be masters — in this case, international bankers.
On April 9, the fiercely independent people of island-nation defeated a referendum that would have bailed out the UK and the Netherlands who had covered the deposits of British and Dutch investors who had lost funds in Icesave bank in 2008.
At the time of the bank’s failure, Iceland refused to cover the losses. But the UK and Netherlands nonetheless have demanded that Iceland repay them for the “loan” as a condition for admission into the European Union.
In response, the Icelandic people have told Europe to go pound sand. The final vote was 103,207 to 69,462, or 58.9 percent to 39.7 percent. “Taxpayers should not be responsible for paying the debts of a private institution,” said Sigriur Andersen, a spokeswoman for the Advice group that opposed the bailout.
A similar referendum in 2009 on the issue, although with harsher terms, found 93.2 percent of the Icelandic electorate rejecting a proposal to guarantee the deposits of foreign investors who had funds in the Icelandic bank. The referendum was invoked when President Olafur Ragnur Grimmson vetoed legislation the Althingi, Iceland’s parliament, had passed to pay back the British and Dutch.
Under the terms of the agreement, Iceland would have had to pay £2.35 billion to the UK, and €1.32 billion to the Netherlands by 2046 at a 3 percent interest rate. Its rejection for the second time by Iceland is a testament to its people, who feel they should bear no responsibility for the losses of foreigners endured in the financial crisis.
That opposition to bailouts led to Iceland’s decision to allow the bank to fail in 2008. Not that the taxpayers there could have afforded to. As noted by Bloomberg News, at the time the crisis hit in 2008, “the banks had debts equal to 10 times Iceland’s $12 billion GDP.”
“These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks,” Iceland President Olafur Grimsson told Bloomberg Television.
The voters’ rejection came despite threats to isolate Iceland from funding in international financial institutions. Iceland’s national debt has already been downgraded by credit rating agencies, and now those same agencies have promised to do so once again as punishment for defying the will of international bankers.
This is just the latest in the long drama since 2008 of global institutions refusing to take losses in the financial crisis. Threats of a global economic depression and claims of being “too big to fail” have equated to a loaded gun to the heads of representative governments in the U.S. and Europe. Iceland is of particular interest because it did not bail out its banks like Ireland did, or foreign ones like the U.S. did.
If that fervor catches on amongst taxpayers worldwide, as it has in Iceland and with the tea party movement in America, the banks would have something to fear; that is, the inability to draw from limitless amounts of funding from gullible government officials and central banks. It appears that the root cause is government guarantees, whether explicit or implicit, on risk-taking by the banks.
Ultimately, such guarantees are not necessary to maintain full employment or even prop up an economy with growth, they are simply designed to allow these international institutions to overleverage and increase their profit margins in good times — and to avoid catastrophic losses in bad times.
The lesson here is instructive across the pond, but it is a chilling one. If the U.S. — or any sovereign for that matter — attempts to restructure their debts, or to force private investors to take a haircut on their own foolish gambles, these international institutions have promised the equivalent of economic war in response. However, the alternative is for representative governments to sacrifice their independence to a cadre of faceless bankers who share no allegiance to any nation.
It is the conflict that has already defined the beginning of the 21st Century. The question is whether free peoples will choose to remain free, as Iceland has, or to submit.
Liberty Defined
Ron Paul
America's history and political ethos are all about liberty. The Declaration of Independence declares that life, liberty, and the pursuit of happiness are unalienable rights, but notice how both life and the pursuit of happiness also depend on liberty as a fundamental bedrock of our country. We use the word almost as a cliche. But do we know what it means? Can we recognize it when we see it? More importantly, can we recognize the opposite of liberty when it is sold to us as a form of freedom?
Liberty means to exercise human rights in any manner a person chooses so long as it does not interfere with the exercise of the rights of others. This means, above all else, keeping government out of our lives. Only this path leads to the unleashing of human energies that build civilization, provide security, generate wealth, and protect the people from systematic rights violations. In this sense, only liberty can truly ward off tyranny, the great and eternal foe of mankind.
The definition of liberty I use is the same one that was accepted by Thomas Jefferson and his generation. It is the understanding derived from the great freedom tradition, for Jefferson himself took his understanding from John Locke (1632-1704). I use the term "liberal" without irony or contempt, for the liberal tradition in the true sense, dating from the late Middle Ages until the early part of the twentieth century, was devoted to freeing society from the shackles of the state. This is an agenda I embrace, and one that I believe all Americans should embrace.
To believe in liberty is not to believe in any particular social and economic outcome. It is to trust in the spontaneous order that emerges when the state does not intervene in human volition and human cooperation. It permits people to work out their problems for themselves, build lives for themselves, take risks and accept responsibility for the results, and make their own decisions.
Do our leaders in Washington believe in liberty? They sometimes say they do. I don't think they are telling the truth. The existence of the wealth-extracting leviathan state in Washington, DC, a cartoonishly massive machinery that no one can control and yet few ever seriously challenge, a monster that is a constant presence in every aspect of our lives, is proof enough that our leaders do not believe. Neither party is truly dedicated to the classical, fundamental ideals that gave rise to the American Revolution.
Of course, the costs of this leviathan are incalculably large. The twentieth century endured two world wars, a worldwide depression, and a forty-five-year "Cold War" with two superpowers facing off with tens of thousands of intercontinental missiles armed with nuclear warheads. And yet the threat of government today, all over the world, may well present a greater danger than anything that occurred in the twentieth century. We are policed everywhere we go: work, shopping, home, and church. Nothing is private anymore: not property, not family, not even our houses of worship. We are encouraged to spy on each other and to stand passively as government agents scan us, harass us, and put us in our place day after day. If you object, you are put on a hit list. If you fight to reveal the truth, as WikiLeaks or other websites have done, you are targeted and can be crushed. Sometimes it seems like we are living in a dystopian novel like 1984 or Brave New World, complete with ever less economic freedom. Some will say that this is hyperbole; others will understand exactly what I'm talking about.
What is at stake is the American dream itself, which in turn is wrapped up with our standard of living. Too often, we underestimate what the phrase "standard of living" really means. In my mind, it deals directly with all issues that affect our material well-being, and therefore affects our outlook on life itself: whether we are hopeful or despairing, whether we expect progression or regression, whether we think our children will be better off or worse off than we are. All of these considerations go to the heart of the idea of happiness. The phrase "standard of living" comprises nearly all we expect out of life on this earth. It is, simply, how we are able to define our lives.
Our standards of living are made possible by the blessed institution of liberty. When liberty is under attack, everything we hold dear is under attack. Governments, by their very nature, notoriously compete with liberty, even when the stated purpose for establishing a particular government is to protect liberty.
Take the United States, for example. Our country was established with the greatest ideals and respect for individual freedom ever known. Yet look at where we are today: runaway spending and uncontrollable debt; a monstrous bureaucracy regulating our every move; total disregard for private property, free markets, sound money, and personal privacy; and a foreign policy of military expansionism. The restraints placed on our government in the Constitution by the Founders did not work. Powerful special interests rule, and there seems to be no way to fight against them. While the middle class is being destroyed, the poor suffer, the justly rich are being looted, and the unjustly rich are getting richer. The wealth of the country has fallen into the hands of a few at the expense of the many. Some say this is because of a lack of regulations on Wall Street, but that is not right. The root of this issue reaches far deeper than that.
The threat to liberty is not limited to the United States. Dollar hegemony has globalized the crisis. Nothing like this has ever happened before. All economies are interrelated and dependent on the dollar's maintaining its value while at the same time the endless expansion of the dollar money supply is expected to bail out everyone.
This dollar globalization is made more dangerous by nearly all governments acting irresponsibly by expanding their powers and living beyond their means. Worldwide debt is a problem that will continue to grow if we continue on this path. Yet all governments, and especially ours, do not hesitate to further expand their powers at the expense of liberty in a futile effort to force an outcome of their design on us. They simply expand and plummet further into debt.
Understanding how governments always compete with liberty and destroy progress, creativity, and prosperity is crucial to our effort to reverse the course on which we find ourselves. The contest between abusive government power and individual freedom is an age-old problem. The concept of liberty, recognized as a natural right, has required thousands of years to be understood by the masses in reaction to the tyranny imposed by those whose only desire is to rule over others and live off their enslavement.
This conflict was understood by the defenders of the Roman Republic, the Israelites of the Old Testament, the rebellious barons of 1215 who demanded the right of habeas corpus, and certainly by the Founders of this country, who imagined the possibility of a society without kings and despots and thereby established a framework that has inspired liberation movements ever since. It is understood by growing numbers of Americans who are crying out for answers and demanding an end to Washington's hegemony over the country and the world.
And yet even among the friends of liberty, many people are deceived into believing that government can make them safe from all harm, provide fairly distributed economic security, and improve individual moral behavior. If the government is granted a monopoly on the use of force to achieve these goals, history shows that that power is always abused. Every single time.
Over the centuries, progress has been made in understanding the concept of individual liberty and the need to constantly remain vigilant in order to limit government's abuse of its powers. Though steady progress has been made, periodic setbacks and stagnations have occurred. For the past one hundred years, the United States and most of the world have witnessed a setback for the cause of liberty. Despite all the advances in technology, despite a more refi ned understanding of the rights of minorities, despite all the economic advances, the individual has far less protection against the state than a century ago.
Since the beginning of the last century, many seeds of destruction have been planted that are now maturing into a systematic assault on our freedoms. With a horrendous financial and currency crisis both upon us and looming into the future as far as the eye can see, it has become quite apparent that the national debt is unsustainable, liberty is threatened, and the people's anger and fears are growing. Most importantly, it is now clear that government promises and panaceas are worthless. Government has once again failed and the demand for change is growing louder by the day. Just witness the dramatic back-and-forth swings of the parties in power.
The only thing that the promises of government did was to delude the people into a false sense of security. Complacency and mistrust generated a tremendous moral hazard, causing dangerous behavior by a large number of people. Self-reliance and individual responsibility were replaced by organized thugs who weaseled their way into achieving control over the process whereby the looted wealth of the country was distributed.
The choice we now face: further steps toward authoritarianism or a renewed effort in promoting the cause of liberty. There is no third option. This course must incorporate a modern and more sophisticated understanding of the magnificence of the market economy, especially the moral and practical urgency of monetary reform. The abysmal shortcomings of a government power that undermines the creative genius of free minds and private property must be fully understood.
This conflict between government and liberty, brought to a boiling point by the world's biggest bankruptcy in history, has generated the angry protests that have spontaneously broken out around the country - and the world. The producers are rebelling and the recipients of largess are angry and restless.
The crisis demands an intellectual revolution. Fortunately, this revolution is under way, and if one earnestly looks for it, it can be found. Participation in it is open to everyone. Not only have our ideas of liberty developed over centuries, they are currently being eagerly debated, and a modern, advanced understanding of the concept is on the horizon. The Revolution is alive and well.
The idea of this book is not to provide a blueprint for the future or an all-encompassing defense of a libertarian program. What I offer here are thoughts on a series of controversial topics that tend to confuse people, and these are interpreted in light of my own experience and my thinking. I present not final answers but rather guideposts for thinking seriously about these topics. I certainly do not expect every reader to agree with my beliefs, but I do hope that I can inspire serious, fundamental, and independent- minded thinking and debate on them.
Above all, the theme is liberty. The goal is liberty. The results of liberty are all the things we love, none of which can be finally provided by government. We must have the opportunity to provide them for ourselves, as individuals, as families, as a society, and as a country. Off we go: A to Z.
www.ronpaul.com
Why Are The Republicans So Silent On The Falling Dollar?
Seth Lipsky
(Editor's Note: I reluctantly post this report from Seth Lipsky, not because it was reprinted by Forbes (immediately suspect) and not because I find fault with the basic premise of the piece; that the government is mindlessly allowing the Fed to intentionally debase the dollar, destroy the middle class and wreck the global economy, but rather that he attempts some mystical distinction between Republicans and Democrats. If you, dear reader, still consider yourself either a Republican or a Democrat you haven't yet fully opened your eyes to reality. The only way we will ever rectify the almost insurmountable problems our "sock puppet" leaders have caused with our political/economic system is to end the Fed (and incarcerate its members), prosecute the Wall Street banksters (and incarcerate its members), and vote out any incumbent that is not an independent (save Ron and Rand Paul). Our "two party system" has devolved into a contrived distraction.- JSB
The most astounding feature of the political fray as the 2012 election comes into view is that not a single Republican other than Congressman Ron Paul is stepping forward to brand as his or her own the issue of honest money. The whole party is into the negotiation with the president over the budget, and the underlying issue - the failure of our fiat currency - is up for grabs.
It is true that there's plenty of blame to go around on the dollar. It had a value of 265th of an ounce of gold on the day that George W. Bush acceded to the presidency and was worth less than an 853rd of an ounce of gold on the day he left office. The New York Sun, which supported Mr. Bush in 2000 and 2004 elections, issued in December of 2005 an editorial called "The Bush Dollar," warning of the collapse of the greenback. It had just sunk below a 500th of an ounce of gold.
Today, of course, it is worth barely more than 1,500th of an ounce of gold. The giddiness of the plunge of the dollar really started to be felt in the years after the Democrats acceded to the leadership of the House. At the time the Sun called for renaming the dollar "The Pelosi." The collapse has been so dramatic that the Europeans, the United Nations and even the Chinese communists are talking about the need to create a new international reserve currency. Yet not a single Republican has stepped onto the national stage and declared a run for the presidency on a platform containing the strong dollar as a major plank.
Now that the Republicans are back in control of the House they are in a perfect position to press this issue. Congressman Paul has been on the issue at least since the early 1980s, when he, with Lewis Lehrman, issued his dissent to the final report of the United States Gold Commission. The commission had been established in 1981, a decade after the collapse of the Bretton Woods system. It ultimately endorsed a continuation of fiat money. It's hard to think of a longer, more faithful adherence to constitutional principle than that which has been maintained by the physician turned legislator in the 30 years since. But Dr. Paul has yet to announce his run for president.
Neither has Sarah Palin. The alert Alaskan - as the Sun likes to call her - has made it clear she's watching the issue. In November, as the Group of 20 was preparing for its doleful meeting at Seoul, she leaked to National Review a speech she was about to make at Phoenix, confronting Chairman Bernanke over his program of quantitative easing. The demarche ignited quite a tumult for a few days (and an editorial salute from TheWall Street Journal), but Palin, too has hung back from a campaign.
A number of other Republican governors - current ones like Mitch Daniels and Tim Pawlenty and former ones, like Mitt Romney - would seem to adhere to the principles of political economy that would put a premium on sound money. But none is preparing to make campaign on sound money. Nor is Paul Ryan. He clearly sees the issue out there. It was he who elicited from Mr. Bernanke the famous reply, "I don't fully understand the movements in the gold price." But Mr. Ryan is focused on the details of the budget.
The conservative intelligentsia is waiting for a champion on the issue. The Wall Street Journal editorial page has been pressing the issue in op-ed pieces and editorials. So has Forbes. Lawrence Kudlow of CNBC has been calling for a return to "King Dollar." James Grant is illuminating the issue in his Interest Rate Observer (and TheNew York Times).
Even a group of our greatest federal judges is asking the Supreme Court to hear their plea for a ruling that Congress must reinstate the automatic inflation adjustment in their salaries that the legislature had suspended - a suspension that was, the judges contend, in violation of the constitutional prohibition of diminishing the pay of a judge while he continues in office.
And then there are the states. The other week Utah became the first to take advantage of an opening left to the states by Article One, Section 10 of the Constitution to make gold and silver coins legal tender. The Constitution prohibits states from coining their own money and/or making anything other than gold or silver coins a tender in payment of debts. Now, spurred by the American Principles Project, at least a dozen states are at least tentatively exploring doing just that.
In Utah's case, what it has done is not only make gold and silver coins legal tender but remove the state capital gains tax on any gain persons in Utah might get from holding gold and silver coins. There are those who set down the gesture as irrelevant and even flaky. But if several other states actually pass laws similar to what Utah has done it will add up to a remarkable vote of no confidence in the system that has been creating the money that we call dollars.
Could value start to return to the dollar without any candidate seizing the issue? No doubt it's possible. The bad-cop, good-cop team of Paul Volcker and Ronald Reagan used the combination of the chairman's tight money and the president's supply-side fiscal and regulatory reforms to achieve just such a turnaround during the 1980s. But can one expect the same from a combination of Chairman Bernanke and President Obama?
The fact is that the ground is so ripe for a candidate to seize the lead on monetary reform that one has to wonder why no one is stepping up. Is there what might be called the William Jennings Bryan effect? In 1896 he made the most famous attempt to run for the presidency on a monetary campaign. It produced his speech against crucifying mankind on a cross of gold. He lost. But then his campaign - a call for debasing the dollar - was the opposite of the opportunity that is beckoning the Republicans today, which is a campaign for a return to sound money. So let it be a lesson.
Silver: The Canary in the Gold Mine
Darryl Robert Schoon
Silver, the Canary in the Gold Mine was my talk at a Gold Standard Institute symposium in Canberra, Australia in November 2008. The topic could well describe today’s gold and silver markets.
Today, both silver and gold are achieving record highs but silver’s accelerating price indicates silver may indeed be the canary in the gold mine, the leading indicator for gold’s long-awaited explosive move upwards, a move the Fed and major bullion banks have colluded since the 1980s to prevent.
In 1979, the price of silver accelerated along with the price of gold. Silver had spent 1977 and 1978 hovering between $4 and $5 but in 1979 silver began to move upwards - as did gold.
In late January, silver moved to $5.94. Six months later, silver tripled, trading in the $16-$18 range before beginning a meteoric ascent in December, doubling from $17 to $34 , rising 33% on the first trading day in 1980 and peaking January 21st in intraday trading at over $50 per ounce, almost a 1,000 % rise in a year.
Silver=black: gold=red (source)
On January 21st, gold also peaked at $850. The simultaneous top of both gold and silver is all the more metaphysically coincidental because the factors driving the two metals were far different, i.e. the gold price was being driven by inflation while the Hunt Bros.’ squeeze attempting to corner the silver market was responsible for the spectacular ascent of silver.
Now, three decades later, a similar scenario is about to unfold, albeit with a different ending. The current decade will not only repeat what happened in the 1970s but it will bring to its inevitable end that which was set in motion in 1971.
The end of paper money is now in sight.
1970s REDUX
On August 15, 1971 President Nixon announced that the US would no longer convert US dollars to gold. For the first time in history, money was no longer gold or silver or convertible to either. On that day, because of Nixon’s actions all money everywhere became but government issued coupons with unknown expiration dates.
The reason behind Nixon’s extraordinary action was that US gold reserves had been virtually emptied by US overseas military spending. The massive outflow of US dollars needed to maintain America’s global military presence had far outweighed any corresponding inflow from America’s significant positive balance of trade.
By 1971, it was clear the US owed more far gold than it possessed. The closing of the gold window by Nixon constituted the largest monetary default in history. Now, thirty years later, the final consequences of that default are unfolding.
After 1971, governments everywhere borrowed, printed and spent even more money as gold no longer was a constraint on the global money supply. Additionally, gold was no longer exchanged in order to rectify global trade imbalances.
It was Milton Friedman - the monetary poster boy of the right - who advised Nixon to cut all ties between the dollar and gold. Friedman, like Keynes - the monetary poster boy of the left - was a strong believer in fiat money and Friedman advised Nixon that floating exchange rates would balance global trade flows. Friedman was wrong.
The 1971 cutting of ties between money and gold instead led to increasingly unbalanced trade flows, rapid increases in government debt, and by the late 1970s, increasingly high rates of inflation.
In January 1978, US inflation measured 6.84%. In January 1979, it was 9.28% and by January 1980 inflation had risen to 13.91%. Gold, the traditional refuge from monetary inflation, rose accordingly. In 1978, the average gold price was $193.40. In 1979, it was $306; and in January 1980, gold spiked to $850 with inflation peaking two months later at 14.76% in March.
In August 1979, President Jimmy Carter appointed Paul Volcker to head the Fed hoping to control inflation. Volcker’s aggressive rate increases brought down both inflation and the price of gold (note: Volcker was also responsible for the demonetization of gold in 1971).
Today, aggressive rate increases to prevent high inflation are almost impossible. As inflation moves higher - and irrespective of distorted US figures, it is already doing so - higher Fed rates would end the Fed’s liquidity-driven recovery and cause payments on the now astronomical US debt to rise to unsustainable levels.
Expect, then, that gold will move far higher before the Fed is finally forced, if ever, to raise rates. This long-delayed reaction will cause gold to move even higher as a slowing US economy would more than offset any potential rise in the US dollar until the US dollar crashed; and, in such an event, gold would be the only safe haven left standing.
The reason why gold is not rising as rapidly as silver as in the 1970s is because since the 1980s the Fed has focused on keeping the price of gold low à la Gibson’s paradox; and, as a consequence, instead of rising equally with silver, gold is lagging and silver is leading.
Silver, however, is clearly the canary in the gold mine and as the below chart shows, silver has now broken out.
Good article P.C., us Americans think things like that only happen in other countries, but we will see what happens here once the dollar really begins its death march!! That is also why we all need to have a little gold and even more silver in our hands when the day of reckoning comes to our shores.
We do not have an "in and out burger" but we have gone to Wendy's a couple of times in the last two weeks. I pointed out to the wife that the place had several senior citizens older than us and they were buying the $1 menu items. Two people can eat there for $6. I sat there watching and said " this is a horribe thing for me to watch and gives me a heartache when I see what the greed of the few has done to the retirements of the many". Be thankful if you have a job and food on the table. j.m.o. - p.c.
Goodbye $42...
http://www.zerohedge.com/article/goodbye-42
Oh no...what will we do with out Turbo Tax Timmy???
In and Out Burger is that expensive now??? That sucks!!
Geithner says Congress cannot take US too close to the edge of default when negotiating debt limit increase... or he will blow himself up? -- zerohedge tweet
We should be so lucky..... LOL
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All about the fall of the dollar and the economic repercussions. This board was started so that we can do much complaining about the fall of the dollar and why. I am really, really, angry about this mess our government and the Federal Reserve have created. It's wreaking havoc through out the world's economy.
These are links to a few websites that are relevant to the 'Demise of the Dollar'. :
http://www.dollarcollapse.com/default.asp
http://silverbearcafe.com/private/home.html
Here are some must watch videos to help explain the ponzi scheme that we call our monetary system. :
http://silverbearcafe.com/private/02.09/moneyasdebt.html
http://silverbearcafe.com/private/6.08/difference.html
http://video.google.com/videoplay?docid=5355374476580235299
http://silverbearcafe.com/private/mises.html
Fiat Money ~ Toilet Paper Money
The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well.
Why would it be different here in the U.S.? Well, in actuality, it hasn’t been. In fact, in our short history, we’ve already had several failed attempts at using paper currency, and it is my opinion that today’s dollars are no different than the continentals issued during the Revolutionary War. But I will get into that in a moment. In the meantime, I will show you that fiat currencies have not been successful, and the only aspect of fiat currencies that have stood the test of time is the inability of political systems to prevent the devaluation and debasement of this toilet paper money by letting the printing presses run wild.
Fiat Money -Rome — The Denarius
Although Rome didn’t actually have paper money, it provided one of the first examples of true debasement of a currency. The denarius, Rome’s coinage of the time, was, essentially, pure silver at the beginning of the first century A.D. By A.D. 54, Emperor Nero had entered the scene, and the denarius was approximately 94% silver. By around A.D.100, the denarius’ silver content was down to 85%.
Emperors that succeeded Nero liked the idea of devaluing their currency in order to pay the bills and increase their own wealth. By 218, the denarius was down to 43% silver, and in 244, Emperor Philip the Arab had the silver content dropped to 0.05%. Around the time of Rome’s collapse, the denarius contained only 0.02% silver and virtually nobody accepted it as a medium of exchange or a store of value.
Fiat Money -China — Flying Money
When the Chinese first started using paper money, they called it “flying money,” because it could just fly from your hands. The reason for the issuance of paper money is simple. There was a copper shortage, so banks had switched to the use of iron coinage. These iron coins became overissued and fell in value.
In the 11th century, a bank in the Szechuan province of China issued paper money in exchange for the iron coins. Initially, this was fine, because the paper money was exchangeable for gold, silver, or silk. Eventually, inflation began to take hold, as China was funding an ongoing war with the Mongols, which it eventually lost.
Genghis Khan won this war, but the Mongols didn’t assume immediate control over China as they pushed westward to conquer more lands. Genghis Khan’s grandson Kublai Khan united China and assumed the emperorship. After running into some setbacks with paper currency, Kublai eventually had some success with fiat money. In fact, Marco Polo said of Kublai Khan and the use of paper currency:
“You might say that [Kublai] has the secret of alchemy in perfection…the Khan causes every year to be made such a vast quantity of this money, which costs him nothing, that it must equal in amount all the treasure of the world.”
Even Helicopter Ben would be impressed. Marco Polo went on to say:
“This was the most brilliant period in the history of China. Kublai Khan, after subduing and uniting the whole country and adding Burma, Cochin China, and Tonkin to the empire, entered upon a series of internal improvements and civil reforms, which raised the country he had conquered to the highest rank of civilization, power, and progress.”
Wait a second, I thought we were bashing fiat currencies here…Can anyone say crackup boom? Since Marco Polo experienced this firsthand, and has been very helpful to us thus far, I think I will allow him to finish his analysis of China’s paper money experiment.
“Population and trade had greatly increased, but the emissions of paper notes were suffered to largely outrun both…All the beneficial effects of a currency that is allowed to expand with a growth of population and trade were now turned into those evil effects that flow from a currency emitted in excess of such growth. These effects were not slow to develop themselves…The best families in the empire were ruined, a new set of men came into the control of public affairs, and the country became the scene of internecine warfare and confusion.”
I wonder if Keynes read Marco Polo’s experiences with Chinese fiat currencies when he said that the U.S. government should just bury bottles full of money in old mine shafts to spur economic growth.
Fiat Money -France — Livres, Assignats, and Francs
The French have been particularly unsuccessful in their attempts with fiat money.
John Law was the first man to introduce paper money to France. The notion of paper money was greatly helped along by the passing of Louis XIV and the 3 billion livres of debt that he left.
When Louis XV was old enough to make his own mistakes, he required that all taxes be paid in paper money. The currency was backed by coinage…until people actually wanted coins.
The theme of the day…the new paper currency rapidly became oversupplied until nobody wished to own the worthless junk anymore and demanded coinage for their currency.
Oops. It looks like Law didn’t think that anyone would actually want coins ever again. After making it illegal to export any gold or silver, and the failed attempts by the locals to exchange their paper currency for something of actual value, the currency collapsed.
John Law became the most hated man in France and was forced to flee to Italy.
In the latter part of the 18th century, the French government again tried to give paper money another go. This time, the pieces of garbage they issued were called assignats. By 1795, inflation of assignats was running at approximately 13,000%. Oops.
Then Napoleon stepped on the scene and brought with him the gold franc. One of the good things that Napoleon realized is that gold is the way of a stable currency, and that’s what pretty much ensued during his reign.
After Waterloo had come and gone, the French gave it another go in the 1930s, this time with the paper franc. It took only 12 years for them to inflate their currency until it lost 99% of its value. History has proven a couple things about the French: 1) They are quick to surrender and 2) They are very talented at making worthless currency.
Weimar Germany — Mark
Post-World War I Weimar Germany was one of the greatest periods of hyperinflation that ever existed. The Treaty of Versailles was essentially a financial punishment placed on Germany to make reparations.
The sums of money to be paid by Germany were enormous, and the only way it could make repayment was by running the printing press. (Huge unpayable debt — that sounds familiar. I wonder what the solution in the U.S. will be.)
Inflation got so bad in this period that German citizens were literally using stacks of marks to heat their furnaces. Here is a brief timeline of the marks per one U.S. dollar exchange rate:
April 1919: 12 marks
November 1921: 263 marks
January 1923: 17,000 marks
August 1923: 4.621 million marks
October 1923: 25.26 billion marks
December 1923: 4.2 trillion marks.
Fiat Money -More Recent Times
In recent times, fiat failures have become more common occurrences. For the sake of time, I won’t go into extensive details of all these examples of paper money failures, because there are SO many. But here you have it:
In 1932, Argentina had the eighth largest economy in the world before its currency collapsed. In 1992, Finland, Italy, and Norway had currency shocks that spread through Europe.
In 1994, Mexico went through the infamous “Tequila Hangover,” which sent the peso tumbling and spread economic hardships throughout Latin America.
In 1997, the Thai baht fell through the floor and the effects spread to Malaysia, the Philippines, Indonesia, Hong Kong, and South Korea.
The Russian ruble was not the currency you wanted your investments denominated in in 1998, after its devaluation brought on economic recession. In the early 21st century, we have seen the Turkish lira experience strokes of hyperinflation similar to that of the mark of Weimar Germany.
In present times, we have Zimbabwe, which was once considered the breadbasket of Africa and was one of the wealthiest countries on the continent. Now Mugabe’s attempts at price controls, combined with hyperinflation, have the nation unable to supply the most basic essentials such as bread and clean water.
Fiat Money -Lessons to Be Learned
Here in the U.S., I should say the lessons were not learned. There are many consistencies from the above-mentioned stories that led up to the eventual collapse of the currencies.
The scary thing is that the U.S. has some of these above-mentioned characteristics, the ones that lead to toilet paper money becoming just that. More on that in just a second. I would first like to give a brief look at the U.S. attempts with paper money in our short history.
The first attempt with paper money came in 1690 with the issuance of Colonial notes. The first Colonial notes were issued in Massachusetts and were redeemable for gold, silver, corn, cattle and other commodities.
The other Colonies quickly jumped on the toilet paper money bandwagon and began issuing their own paper currencies. Like a broken record, the money quickly became overissued. The lessons of John Law and others were definitely not learned. It is not good enough just to say that a currency is backed by commodities. It actually HAS to be backed by commodities. Essentially, it was still a fiat money, and in a short period of time, Colonials became as good as toilet paper.
The next experiment came during the Revolutionary War. Big surprise — the issuance of paper money was used to finance the war efforts. This time, the currency was called a continental.
The crash of the continental was spectacular, and the phrase “not worth a continental” was coined. This brought on a large distrust for paper currency, and until 1913, toilet paper money in the U.S. wasn’t used. Enter the infamous Federal Reserve and its monopoly on money and interest rates. Now we have the greenback.
Although the money was “officially” backed by a gold standard until 1971, it wasn’t a true gold standard. When the government found it inconvenient to have a gold standard, it just made it illegal for U.S. citizens to hold gold or exchange dollars for gold.
As reported on Strike-the-root.com:
“Under the infallible leadership of President Franklin Roosevelt, it was made illegal to own gold. On March 11, 1933, he issued an order forbidding banks to make gold payments. On April 5, Roosevelt ordered all citizens to surrender their gold — no person could hold more than $100 in gold coins, except for collector’s coins. He also made it unlawful to export gold for payment abroad, unless done through the Treasury. The penalty for defying Roosevelt was 10 years in prison and a $250,000 fine.”
But the official demise of the dollar was locked into place in 1971 when “Tricky Dick” Nixon completely severed all ties between the dollar and the gold standard. During the decade that followed, the U.S. experienced some of the worst inflation in its history, only matched by today’s U.S. monetary and fiscal irresponsibility.
The U.S. of A. has all the characteristics set in place that have led to the collapse of every other fiat currency money in history.
We are currently at war, and the financing of this war is extremely inflationary. In fact, if you look back at our history, since 1914, the U.S has engaged in 16 military conflicts. We have been involved in some form of violent international accord in 44 of the past 93 years. The overwhelming majority of military conflicts result in monetary inflation.
The U.S. has a debt similar to that of Weimar Germany. All though the reasons for the debt are completely different, it appears that this Mount Everest of IOUs is going to be impossible to pay back. I guess the U.S. could just print 10 trillion dollar bills and hand them out, but the implications of such actions are obvious.
We are currently increasing the supply of dollars at a rate of 13% per annum. This overissuance of a currency has been the leading indicator of a currency on the brink.
So what’s in the future for the dollar?
Some, myself included, might say that the dollar has already failed. It has lost over 92% of its value since its initial issuance in 1913. After the revaluation in 1934, the dollar dropped another 41%. In my opinion, it already is toilet paper money, but for the above-mentioned characteristics, which are alarmingly similar to the circumstances that led up to the eventual collapse of the dollar’s toilet paper predecessors, I believe that we have seen only the tip of the iceberg of the dollar’s inevitable path toward becoming toilet paper money.
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