I was
recently asked how it was that I knew to sell my house prior to the bursting of
the housing bubble, why I sold out all my stock holdings in favor of gold and
silver long before that was an obviously sensible move, and why I am convinced
now that the recent actions by the Fed and the Treasury Department are likely
to fail.
But most
of all, how did I get it right, when so many others missed it entirely?
While I do
root around in masses of complicated data, the answer to these questions is
surprisingly simple: I trusted myself.
This and other Martenson Reports… Once again… All encompassing, honest and sound advice that you will not find elsewhere… Reason alone to subscribe to this site!
It made me realize that if I really trusted my gut, I would change my life in much more dramatic ways than I have so far. Frankly, that’s scary. I means potentially leaving behind a lot of "near and dear" things. But if I really take your advice to heart, it means making some very hard choices and completely changing everything. Where I live, how I live, and how I look at life. Scary!
About your suspicion that the FED intends to devalue, I’ve read in numerous places that Bernanke believes that FDR’s devaluation was key in ending the Great Depression. (I can’t find those references now, but Greenspan’s and Meltzer’s book, "A History of the Federal Reserve," says that "gold and exchange rate policies, culminating in the 1934 devaluation, provided the main stimulus to domestic recovery in the first two years of the Roosevelt administration."
I also recall reading somewhere (wish I could find that reference) that Bernanke wrote in one of his papers (I think before he was Fed Chair) that a 40% devaluation would be the goal in a situation similar to that in which we find ourselves. Have you come across such a reference?
With respect to the idea that the Fed is printing money as a means for causing devaluation, I see some problems. First is that for now, the money that’s being printed is simply replacing devalued assets on bank balance sheets, and is not finding its way into circulation outside the banking system. But assuming they eventually use fiscal stimulus to get the money circulating, the question is – if the currency is depreciating, what will it be depreciating against; that is, what will be appreciating?The Fed would like to see appreciation of assets such as houses and common stocks, and perhaps some appreciation of wages. But with the level of economic activity going into the tank, and with such an overhang of excess housing and excess capacity in most major industries, it’s hard to see how the Fed can do anything even to reverse the deflation that’s currently going on, much less produce a downward revaluation of the dollar.As to the dollar depreciating against other major currencies such as the Euro and Yen – is it really true that the US government is more severely indebted, and printing more money, compared to its international competitors? Mish Shedlock and the Weiss group claim the opposite, that the US (bad as it is) is in better shape than the competition. Maybe we’ll see an upward revaluation of currencies of oil producing countries.Gold is already priced well above most producers’ cost of production, and although investment demand is strong, jewelry demand is very weak. I’ve seen calls for the dollar to be devalued against gold, but how does that help the broader economy? Perhaps we could get into a situation where (due to hyperinflation) the real value of paper money in circulation would plummet even while the nominal money supply skyrockets, and at that point anything that brings real money (ie gold and silver) out of hiding and back into circulation, would help to restore aggregate demand. But we don’t seem to be anywhere near that point. Perhaps the re-emergence of inflation (that is, dollar devaluation) will happen in basic consumer goods such as food and imported clothing and supplies. The credit crisis may cause some massive inefficiencies such as farmers and shipping companies unable to finance their activities, leading to shortages. But how to profit from this, especially if a disconnect develops between the commodities exchanges and real goods that could be traded in black markets?
TO: jerryr
I read the Weiss group (from Florida) for years, and it is my opinion that what they write is with the distinct purpose of drawing people into their program. They convinced me once, some years ago, to move some investment funds to them, and it was a bad mistake. They did great sales work on the telephone with me, but never made me a cent. Obviously, I finally woke up, and left them.
I would be very wary of anything they say. I think Chris is the best source I have now, but also enjoy reading Peter Schiff, Gerald Celente, RMG and a few others. As for investment advice, I’ve learned to trust myself.
My best to you.
As usual, what if anything to do about all of this is less then clear cut. Understanding that everything we know is wrong, is always a start. Telling everyone else that everything they know is wrong, and sending them to PeakProsperity.com, is an interesting exercise.
About the only thing that has come up as a clear direction (other then stashing some grub, some coin and getting to know our neighbors) is scrapping the TV. More like land filling the TV because I don’t think much of it can be reused for anything.
The US is switching to digital TV soon and we are all being barraged with adds telling us to get with the new digital TV programing thing, or else we will be left out. The horror.
But 90+% of what’s on the tube (digital or not) is still crap, disinformation and propaganda. So being left out may be our best salvation. Not watching and hearing what we are supposed to be watching and hearing may be an opportunity. Junking the TV may help us get in tough with our gut feelings and go with them. So far, doing the opposite of what we have all been told we should do (by corporate media) has worked out pretty well.
What’s the big deal about making sure everyone is on the same (media) page? What is so important that all of us watch the same messages prepared and presented by the same corporate owned media? Isn’t that the same media that has so skillfully led us all into the catastrophic dead ends we now face?