The Golden Truth: Observations On The Government Spending Bubble, The Dollar and Government Lies

Thursday, January 13, 2011

Observations On The Government Spending Bubble, The Dollar and Government Lies

Here's a great chart I borrowed from: HERE

The amount of debt represents the difference between Government revenues and Govt spending. Does this chart show any signs of a Government that has the ability to reduce its spending deficit? Now, the Fed balance sheet is growing multiple billions by the day, so the real spending deficit is even bigger than is represented by the above graphic.

I'm all for the tax cuts just passed, but it has to be offset by cuts in spending. Not only will we NOT get cuts in spending, the budget grows by the day more quickly than pinocchio's nose.

Here is what the market thinks about the U.S. Government's ability to manage its finances:

(click on chart to enlarge)

For sure, we get some technical dead cat bounces along the way, and a reader always busts my stones when we get one (but is radio silent when the dollar resumes its descent lol), but Geither - in so many words with his China rhetoric yesterday - essentially told the world that the U.S. is going to print the dollar to much lower levels. Bernanke is putting those words into action. It's a serious Comedy of Errors. Here's a great analysis of the U.S. dollar situation I sourced from King World News blog. I agree with this view: LINK

And what is even more humorous to me is that everyone in this country is discussing the dire multi-sovereign fiscal crisis going on in Europe. The fact is that California alone is in worse shape than several countries over in Europe combined. Then layer on top of that Illionois, NY, NJ, etc. I don't have time to add up the numbers, but if you include the full present value of Federal entitlement liabilities, State pension unfunded-liabilities, State/municipal debt obligations and private debt in this country, we would all wonder why news about the situation in Europe is even in the news. Besides, China has already said it will prevent a collapse in Europe. I have not heard China make that proclamation about this country, nor will we after Geithner took his water pistol to a battle field of political rhetoric. It was more pathetic than Poland's calvary trying to defend against Germany's tank and air attack.

Two of the biggest Government lies that grow and perpetuate on a monthly basis are the monthly employment and inflation reports. For a great explanation of the golden truth about the real numbers, this interview with John Williams is a must-read: Govt Lies

Those of us who have been investing in precious metals for at least the past decade have known all along that the Govt economic reports are bogus. The analysis of this is now starting to seep into the mainstream media, to an extent. Certainly not the most common sources of news like the night time local t.v. news broadcast or daily newspapers. But it's getting a lot more exposure and acknowledgement in blogosphere.

One more must-read. This guy has become my favorite economic analyst and his writing style is superb: Alisdair Macleod

One has to wonder how long it will be before the Obama people decide to curtail what is allowed to be posted on the internet....it gets more Orwellian by the day. Protect yourself with gold and silver.

5 comments:

rickjamescouchThursday, 13 January, 2011
On days like this it is hard for me not to pull an Elvis and fire a pistol at the computer/tv screen as I see some of my favorites (SLW, HL) get sold with reckless abandon.

So I took that as a sign and added to positions. I now know the bottom is in since I have purchased short dated calls on SLW. I would say that shares will turn in about 2 weeks.
ReplyDelete
Replies
EconomicDisconnectThursday, 13 January, 2011
I have targets for gold $1250 and silver $22.50 locked and loaded for back the truck up time. These drops are opportunity, not problems!
ReplyDelete
Replies
Dave in DenverThursday, 13 January, 2011
GYC, I'm not saying those targets won't happen, but I would be surprised. We are overdue for a 200 dma correction, but I think the physical market is too strong in Asia/India for that to happen to the phys. It looks like the HUI maybe pullback to the 200 dma though. Here's the thing, a lot of the gold mining equities are midway between the 50 and 200 dma, but a lot of the silver stocks are just now breaking their 50's.
ReplyDelete
Replies
AnonymousFriday, 14 January, 2011
Why is the 200 dma a "magic number"? Other than the fact that it might mean something because people BELIEVE it means something, I don't see why it should necessarily hold.

As the stock market melts up ever higher, people are getting out of gold and their derivatives, such as the miners. It's as simple as that, IMO. They are nothing more than a "fear trade", and with the VIX around 15 while the S&P approaches 1300, fear is absent.

You tell me when fear comes back into vogue, and I'll tell you when gold has bottomed.
ReplyDelete
Replies
Dave in DenverFriday, 14 January, 2011
Nah. For 10 years now when we've had a big pullback after a big run, it has stopped and consolidated at or above the 200 dma. No magic there, just 10 years of data.

It may overshoot to the downside for a few days. Been through that too. I think the HUI will get down to the 200 dma but many individual stocks will not and many of the juniors are outperforming this pullback. That is very bullish.

Correction to your view: dumb and momentum-oriented Americans are unloading paper gold/silver/mining stock positions. The rest of the world is still buying.
ReplyDelete
Replies

Add comment

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.