Some interesting ideas from J. Lebed:
The talk on Wall Street today is deflation, but the fact is... throughout history whenever central banks have printed gigantic amounts of money it has always led to inflation. Unfortunately, these short-term liquidations due to deleveraging of hedge funds have fooled Bernanke into believing deflation is the problem... and he is fighting the wrong war. By lowering interest rates to only 1%, he is insuring not only will we see inflation... but we will see hyperinflation that will destroy the value of the Dollar.
Bernanke has destroyed the balance sheet of the Federal Reserve while Paulson has destroyed the balance sheet of the U.S. Government. Our national debt is now approaching $11 trillion and we can't pay any of that money back because our country doesn't produce anything. With China likely to begin selling U.S. treasuries soon to fund their $586 billion stimulus, nobody is going to loan the U.S. anymore money and we will have to print trillions of Dollars out of thin air.
Ron Paul asked Bernanke last week if in his discussions with other central banks, the subject ever comes up of a new international reserve currency and if Gold is ever discussed to restore the confidence in currency. Bernanke had the audacity to lie and say that the subject of a new reserve currency never comes up and the only discussion of Gold is "sales that central banks are planning".
How is it possible for central banks to meet during this crisis and not discuss the reserve status of the U.S. Dollar and the possibility of returning to a Gold standard? I guarantee it is one of their main topics of discussion right now and Bernanke is afraid to admit they are talking about it.
Let's hope that Ford, GM, and Chrysler are allowed to go bankrupt. Believe me, $25 billion would only keep them in business for a couple of months. We would need to fund them hundreds of billions every year to keep them in business and never get any of that money back. Their healthcare/pension costs are out of control. At least in bankruptcy, competent people can acquire their assets and create new profitable automobile companies... that's how capitalism is supposed to work. By the government interfering, they are making the situation much worse.
It's possible that we have seen a selling climax in the DOW and it could make a major short-term rally, but ultimately... it will go much lower. What is important is not what price the DOW is at... but the price of the DOW when priced in Gold. The DOW is worth ten ounces of Gold right now... but eventually I believe it will be worth only one ounce of Gold. Gold is getting ready to pass the S&P 500, then it will pass the NASDAQ, and in a few years we could see Gold $5,000 per oz and DOW 5,000.
You need to invest where the fundamentals are unimpaired. While Best Buy might look cheap at 6 times earnings, major losses are ahead for the company. I predicted the bankruptcy of Circuit City earlier this year, and Best Buy will likely go bankrupt down the road. There are going to be thousands of U.S. businesses going bankrupt in the years ahead. Most companies connected to the U.S. consumer will go bankrupt unless they downsize and raise their prices.
Fortunes will be made during the next few years in commodities. Right now it is difficult for farmers and miners to get loans which is shrinking the supply of commodities... at the same time as major growth in China and India is increasing the demand.
I believe the biggest gains will be in Gold... because Gold is real money and will deserve a large monetary premium. Gold Mania is coming soon... it will be bigger than the dot-com and Real Estate booms. Once again, I believe the safest way to play it while still being aggressive is with DGP... but there are some Gold stocks I like that could make 1,000% to 10,000% gains in the years ahead.
To be is to do.(Socrates) To do is to be.(Plato) Do be do be do!!!!!(Sinatra)
