The Golden Truth: United States: See Your Future...

Tuesday, March 2, 2010

United States: See Your Future...

Through the colorful writing of SocGen's erudite and perceptive Albert Edwards:

Either governments pursue the path of fiscal rectitude (although it is a bit late for that) and we subside back into recession or we debauch the currency through deficits, the printing press and devaluation.

The FT Alphaville blog offers a fantastic American, de-Anglicized translation of Edward's wisdom:

SocGen’s Albert Edwards says everyone should just relax and stop worrying about GBK because in an Ice Age a weak currency is the escape route of choice from the deflationary quicksand.

What's ironic is that the American public and policymakers seem to completely lack the understanding that, since 2002, the U.S. dollar has experienced substantial devaluation, with the dollar index plummeting from 120 to a low of 71 and a current reading of 80.66. That's drop of 41% from high to low and 33% from high to current. Remember, this drop is measured against a basket of global currencies, predominantly euros, yen and sterling.

Anyone want to take the position that a drop in the U.S. dollar of that magnitude is NOT debasement? Our "future" is here and now. Prepare yourself for serious price inflation ahead.

(click to enlarge the chart)

3 comments:

highcastleTuesday, 02 March, 2010
Dave,

We may not see the US dollar fall until one of the US states fail or get bailed out. Until that happens, or there is a major outbreak of civil unrest, inflation will be minimal.

I do agree with you though, the tide is turning and hyperinflation lays ahead.

-highcastle
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JoeTuesday, 02 March, 2010
This computer algorithm based financial world is going to blow sky high. The metaphor being a movie called, "The Terminator".

It's also ironic that the star of that movie presides over one of the largest, busted economies on the planet.

Joe M.
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Dave in DenverTuesday, 02 March, 2010
thanks for you commen highcastle. check out the chart i added. we've already had substantial debasement. agree that when Obama starts to bailout the States the real shit will hit the fan for the dollar

Joe: awesome observation
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.