Friday, March 25, 2011
Something to throw a little fun into the mix: The Poor man's trader mentality
This cracks me up at how accurate this chart is.
Thursday, March 24, 2011
Wow, this guy called the end game back in 1986!
The following correspondence was the reply to our objections in the establishment of the G5 in 1985 to “manage” the global economy through intervention on a coordinated basis. Given the fact that the floating exchange rate system affords governments the freedom to now spend as they like pursuing their domestic policy objectives separate and apart from the international fiscal responsibility behind the value of the currency in global capital flows, it is simply unlikely that the current system will be sustainable long-term. Volatility will rise and will spread among the markets driven by swings in currency values. Eventually, in the course of events that will now follow, the global economy will become increasingly more unstable and reflect much higher degrees of volatility as historically has always taken place under floating exchange rate systems. In the end game, the global economy will be attracted to the next major sovereign debt crisis that should appear going into 26 years from the 1985 birth of the G5 (2011) and perhaps culminate in a new global monetary system by 2016.
- Written by Martin A. Armstrong’s Princeton Economics International in 1986
- Written by Martin A. Armstrong’s Princeton Economics International in 1986
Wednesday, March 23, 2011
Quick neat video on why you should hold Gold versus cash
Oh and with silver hitting fresh 30 year highs today, you should own some of that as well ;)
Monday, March 21, 2011
Guest Post: QE Is The End Of America As We Know It
Via www.zerohedge.com
Guest Post: QE Is The End Of America As We Know It
Submitted by The Paper Empire
QE is the End of America as We Know It
Each time we begin to approach the end of an announced QE period, the nervous jitters of financial markets start to set in. Will Bernanke continue with QE(n+1) or won’t he? Now it’s true that professional traders live and die by their ability to front run rumor and perception, but for long term investors who fret over such decisions, it demonstrates a fundamental lack of understanding of what QE really is. To put it succinctly, QE is an economic deal with the Devil. Once it is begun in earnest there can be no turning back. It must be played to its ultimate conclusion.
In Bernanke’s 2009 interview on 60 Minutes, he suffered a momentary lapse into honesty and stated that Quantitative Easing was effectively money printing. So why then the complicated euphemism of Quantitative Easing? Because that is what modern central banking sponsored economics is all about – the intentional obfuscation of otherwise simple economic principles to cause the eyes of normal people to glaze over. Once accomplished, the central bankers (and their financial community brethren) are able to pursue policies that greatly benefit themselves but are devastating to everyone else.
Long term investors who worry about whether QE will continue clearly recognize the fact that everything is now correlated to the Fed’s balance sheet. What they don’t understand is how QE is related to the larger economic cycle and its mission of preventing economic recessions.
Keeping the tent inflated
Sometimes physical analogies are the most helpful in understanding complex relationships. Let’s think of the economy as a large inflated tent. The extent of the tent’s inflation is the health of the economy. Under normal economic conditions the tent is fully inflated. In the course of time, events take place that cause the need for a correction to the economic system. New technology can come along which obsoletes old industries, bad investments and debt must be liquidated etc. When this happens a free market economy will correct itself. Capital tied up in failed industries will be reallocated and invested in new businesses. New jobs will ultimately be created and people will go back to work. Of course this reorganization takes place over time and this is what a recession is – a healing process for the economy. In our tent we can think of this as a tear that forms in the fabric. While this hole is being repaired, air escapes and the tent begins to sag a little. The extent of the drooping is the extent of the recession. Once fixed, the tent and the economy go back to normal.
QE is a wholly different method of keeping the tent propped up. It does not repair the hole, but rather attempts to keep the tent inflated by pumping more air in than is escaping through the hole. This is the new money being created and pushed into the economy to offset the credit destruction in the banking system. This is a dynamic process that must be maintained. The catch is that the hole doesn’t just stay a fixed size. The tear begins to lengthen allowing greater amounts of air to escape. The economic tent begins to sag until the volume of air being pumped in is increased to overcome the outflow. This is why QE can never end. To stop now, with such a large hole, would result in a severe and frightening recession. The tent would lose a tremendous amount of air in the time it takes to make such an extensive repair.
This process continues until eventually the hole is so large that the tent collapses around the massive flow of pumping air. This is the ultimate fate of money printing as policy – a currency crisis – the endless flow of new money loses purchasing power faster than it can be created. We are left with an inflationary depression in which savings are decimated and the standard of living of most Americans is dramatically lowered.
QE is economic central planning
When an institution such as the Federal Reserve is allowed to create as much money as it wants and do with it whatever it pleases, without any oversight or transparency, then the free market and its self correcting mechanisms no longer exist. How can capital from failed business and banks be reallocated to more efficient uses when these institutions are bailed out and not allowed to fail? Prices and interest rates are the nervous system of a free market economy. They are the feedback mechanisms that direct all of the individual participants to behave in the most productive and efficient manner. There can no free market when prices and interest rates are de-linked from supply and demand. We are now a centrally planned economy run by our central bank.
But here’s the really insidious part of QE that almost no one in the general public understands: A free society cannot exist independent of free markets. There is a disequilibrium that occurs between the two and over time one will win out over the other. And so here we are, stuck in a decaying economic system that prevents resources from being used in their most efficient manner. We simply can no longer compete with freer markets in other parts of the globe. We are saddled with the weight of central economic planning much like the old Soviet Union was. There will be no recovery and no rush of new jobs created. We will live under the burden of a burgeoning Federal government that operates completely independent of the will of its citizens. It is now beholden only the money manufacturers at the Federal Reserve and will spend money as fast as Bernanke can add zeros to its account.
The problems we are experiencing have been a long time in the making. They began in earnest in 1913 with the formation of the Federal Reserve. It’s taken several generations for the Federal government and its central bank to usurp the world’s monetary system and as such few have noticed. But what’s different now is that we have hit the knee in the curve, the point at which events start to accelerate dramatically as we approach the end of the line. Those who understand QE realize that America as we knew it is already gone. Over the next decade the rest of America will become painfully aware of that fact as well.
Monday, March 14, 2011
The road to QE3 and the U.S. rigged stock market
You know it's amazing that as soon as some headlines come out saying "The economy is getting stronger! We no longer need quantitative easing and the government's help. Things are turning around!" and that's exactly when the stock market falls out, and starts its decline. Throw a huge devastating earthquake in the mix, a war in the middle-east, and you have one hell of a fallout.
Now, with the stock market going up every day, and fudged government statistics coming out on a monthly basis, it's hard to not think things are at least getting a little better. But let me clarify and re-assure you, they are not. The big boys of wall street know this. And they know that without some market intervention from the Federal Reserve and their crony bankster friends, the market as a whole would be tumbling and volatility would be out the wazoo. Remember that they do not care about your retirement, or your 401k. They are focused on making cash, and lots of it. Bet you didn't know that the average time a stock is held on wall street, is less than 30 seconds. So much for the "buy and hold" for the long term strategy BS that they sell you. This is no self sustaining recovery. It is a government perpetuated recovery, and without it, the whole lot would come crashing down. They know it, and you should to.
This is why unless you are a trader, your assets, and especially your retirement should be no where near this mess.
This is the truth we can rely on. When the Federal Reserve comes out and says we will be buying a specific amount of Treasuries and Securities for the next (throw in any number) months/years. You can now smile, because we have evidence that the market will be propped up for a few more months, and it's all aboard the gravy train from here. That is until that time starts to run out (like it is now), and they aren't so sure they will continue the tax-payer fraudulent and corrupt program. Let's call it for what it really is, since we are all being duped to think things are getting better. But their plan is backfiring as this is becoming ever more mainstream, and having a less of an effect on the overall market(s).
And as they pretend to wind down their beloved QE program, the market starts to fall, volatility increases, and people start to panic. Before all this negativity can spark a market reversal, and start the trend down, they step in. This is generally the last step before the Federal Reserve magically shows up and announces another round of securities purchases, and voila! The birth of QE3, QE4, and so on. This whole process happened at the beginning, and end of QE1, and ultimately is what gave way to QE2.
Well guess what? We are on that last step, with even more global and economical harbingers. Buckle your seat belts, and get ready for QE3.
Now, with the stock market going up every day, and fudged government statistics coming out on a monthly basis, it's hard to not think things are at least getting a little better. But let me clarify and re-assure you, they are not. The big boys of wall street know this. And they know that without some market intervention from the Federal Reserve and their crony bankster friends, the market as a whole would be tumbling and volatility would be out the wazoo. Remember that they do not care about your retirement, or your 401k. They are focused on making cash, and lots of it. Bet you didn't know that the average time a stock is held on wall street, is less than 30 seconds. So much for the "buy and hold" for the long term strategy BS that they sell you. This is no self sustaining recovery. It is a government perpetuated recovery, and without it, the whole lot would come crashing down. They know it, and you should to.
This is why unless you are a trader, your assets, and especially your retirement should be no where near this mess.
This is the truth we can rely on. When the Federal Reserve comes out and says we will be buying a specific amount of Treasuries and Securities for the next (throw in any number) months/years. You can now smile, because we have evidence that the market will be propped up for a few more months, and it's all aboard the gravy train from here. That is until that time starts to run out (like it is now), and they aren't so sure they will continue the tax-payer fraudulent and corrupt program. Let's call it for what it really is, since we are all being duped to think things are getting better. But their plan is backfiring as this is becoming ever more mainstream, and having a less of an effect on the overall market(s).
And as they pretend to wind down their beloved QE program, the market starts to fall, volatility increases, and people start to panic. Before all this negativity can spark a market reversal, and start the trend down, they step in. This is generally the last step before the Federal Reserve magically shows up and announces another round of securities purchases, and voila! The birth of QE3, QE4, and so on. This whole process happened at the beginning, and end of QE1, and ultimately is what gave way to QE2.
Well guess what? We are on that last step, with even more global and economical harbingers. Buckle your seat belts, and get ready for QE3.
Wednesday, March 9, 2011
The real reason behind rising gas prices.
A lot of large oil and gas companies will come under scrutiny as they post record profits(yet again) as the gas prices skyrocket. This is set in the wrong direction in which we target the problem and not the source. Remember that it's the government who sits idly by and lets all of this happen. Just like they sat by and watched the large banks rape us, the taxpayer. If we as America would stand up to the government and real in the Federal Reserve the speculation would implode and commodities along with everything else would fall through the floor. The Fed is providing the excess liquidity in the market to push the stock market higher, and cause speculation in the market in a flight to hard assets, including oil, as they debase our currency.
This is a direct result of their inflationary QE policy in which now that we are on it, they will never be able to end it. And more and more people are waking up to this fact, and questioning it at the congress meetings with Fed Chairman Ben Bernanke in which he lies about it every time. He says there is no inflation under oath, even though prices are going up every day. He should be charged with treason for either lying under oath, or being a total idiot. And this guy is in charge of Americas future! Nothing has brought down an empire faster than misuse of its monetary policy.
If you look at the Dow Jones, and the time lines in which QE was started and then re-initiated, then you can see just how propped up by the program it is. It was initiated pretty much at the bottom of 2009's market crash. And remember that QE1 were purchases of over a trillion dollars of Mortgage backed Securities and treasury bonds. The only thing providing some stability to the market, as its ass was falling out. Basically it's what has kept this whole ponzi scheme(our government) afloat. If the Fed had not intervened, the businesses that should have been forced into bankruptcy would either be gone or have to completely change. There would actually be people in jail for all of the fraud that took part in this whole mess. And we would more than likely already be on a steady natural recovery. Which is what we needed, but the system is even more fraudulent now! And it has put our entire future in jeopardy.
QE2 was initiated after QE1 ended, along with all their other failed programs(cash for clunkers and home-buyer tax credit) and as soon as the market showed some volatility in mid 2010, they leaked news of QE2 in August. This time severely affecting the commodities market. Here is a chart here for QE and the Dow's reaction. http://calculatedriskimages.blogspot.com/2010/10/s-500-and-quantitative-easing.html Smooth sailing ever since. And just look at any commodity chart from August 2010 forward, and you will see a direct correlation to the rise in commodities!
Pretty soon we wont be able to afford anything much less than gas, and we have control as the people to stop it, yet we sit idly by and complain about gas prices. Our government allows all of this to happen in the first place! And another thing you should focus on is OPEC, they said they wont even consider having a meeting to increase oil production until it's over $120 a barrel! Why don't we have our hand in this?? We provide foreign aid to almost every oil producing nation! Rising oil prices is just the start, and we have to focus on why this is happening in the first place.
This is a direct result of their inflationary QE policy in which now that we are on it, they will never be able to end it. And more and more people are waking up to this fact, and questioning it at the congress meetings with Fed Chairman Ben Bernanke in which he lies about it every time. He says there is no inflation under oath, even though prices are going up every day. He should be charged with treason for either lying under oath, or being a total idiot. And this guy is in charge of Americas future! Nothing has brought down an empire faster than misuse of its monetary policy.
If you look at the Dow Jones, and the time lines in which QE was started and then re-initiated, then you can see just how propped up by the program it is. It was initiated pretty much at the bottom of 2009's market crash. And remember that QE1 were purchases of over a trillion dollars of Mortgage backed Securities and treasury bonds. The only thing providing some stability to the market, as its ass was falling out. Basically it's what has kept this whole ponzi scheme(our government) afloat. If the Fed had not intervened, the businesses that should have been forced into bankruptcy would either be gone or have to completely change. There would actually be people in jail for all of the fraud that took part in this whole mess. And we would more than likely already be on a steady natural recovery. Which is what we needed, but the system is even more fraudulent now! And it has put our entire future in jeopardy.
QE2 was initiated after QE1 ended, along with all their other failed programs(cash for clunkers and home-buyer tax credit) and as soon as the market showed some volatility in mid 2010, they leaked news of QE2 in August. This time severely affecting the commodities market. Here is a chart here for QE and the Dow's reaction. http://calculatedriskimages.blogspot.com/2010/10/s-500-and-quantitative-easing.html Smooth sailing ever since. And just look at any commodity chart from August 2010 forward, and you will see a direct correlation to the rise in commodities!
Pretty soon we wont be able to afford anything much less than gas, and we have control as the people to stop it, yet we sit idly by and complain about gas prices. Our government allows all of this to happen in the first place! And another thing you should focus on is OPEC, they said they wont even consider having a meeting to increase oil production until it's over $120 a barrel! Why don't we have our hand in this?? We provide foreign aid to almost every oil producing nation! Rising oil prices is just the start, and we have to focus on why this is happening in the first place.
Tuesday, March 1, 2011
Silver reaching 30 year highs! and why it's still a great time to get in.
Well I have just about doubled my money from when I got into silver at about $18 an ounce last August, but don't get discouraged if you haven't joined in on the fun yet. There is still plenty of room for this puppy to grow. See, even though we hear about it every time Gold makes a large move (and sometimes silver too, but only when it's headed down) the mainstream media does an excellent job of leaving out silver and all its glory, for the majority of Americans to hear about. Which I think is an atrocity to the public! Some of you, will more than likely never be able to buy Silver for less than $30 an ounce! And just maybe, if something had caught your attention on MSNBC money, or some other program, you might have been interested enough to check it out. Maybe that's just wishful thinking on my part, but how can you know if no one ever talks about it! And that is exactly my point.
We are nowhere near the end of this secular bull market, it has only just begun. And it is gonna be exciting! As I write this, Gold is teetering underneath its all time high of $1433 by a dollar! And Silver is actually at a new 30 year high of $34.50 as of today. If I had a little more capital (investment cash) and more patience I would be in the oil game right now. That is about to blow up in our face, and send gas prices through the roof! Now that does indeed suck for most people, but over the course of history, Silver and Gold have done very well in rising in value compared to oil. So if you own some and keep accumulating them on a regular basis (as I do, and encourage everyone to do) then you will be just fine. But if you keep your dollars in cash, you can guarantee you will be losing purchasing power on a weekly, and even daily basis.
But back to the main point, it's very easy to tell when something is overbought or becoming what some would call a "bubble". Just ask yourself a few questions. Have I seen or heard about it on TV? Have I overheard anyone at work, friends, or strangers out at a restaurant or bar talking about it? If you asked 100 people if they owned even an ounce of Silver, or know anything about how rare it is, would even one person say yes? Just think back to the tech stock boom and bust, or the real estate boom/bust. Everyone towards the end was either talking about it, or making money off of it. Those that do not rely on the fundamentals get burned 99.9% of the time, and usually show up late or at the end of the game.
Obviously we are nowhere near a bubble in Silver and the price has been rising significantly for over the past 10 years now, due to solid supply and demand fundamentals. And the fundamentals have never been more bullish for precious metals, there is already a supply deficit in Silver and the media hasn't even started mentioning it on a large scale! As our financial system deteriorates on paper, and the majority start shifting there assets into Gold, Silver and Platinum the price will explode! There are already shortages of the shiny white metal now, and the shift has already begun.
Just ask yourself this simple question. Would I rather buy Silver now at $35 an ounce, and rely on the fundamentals and take a chance. Or would I rather buy when it's every days' news headline, and feel comfortable because everyone else is doing it at $100 an ounce? Believe me, it is gonna happen.
For thousands of years Gold and Silver have been money, even in Chinese the word Silver means money. Paper currencies like our Federal Reserve Note, which is not even money, it is a debt instrument (if you don't believe me pick up a dollar bill and read it) have only lasted an average of fourty years, from its inception to its demise. Well it's 2011 and we got off of the gold standard in 1971, it is time for change. But I bet Obama wont see this one coming ;)
Take care and have a great day!
We are nowhere near the end of this secular bull market, it has only just begun. And it is gonna be exciting! As I write this, Gold is teetering underneath its all time high of $1433 by a dollar! And Silver is actually at a new 30 year high of $34.50 as of today. If I had a little more capital (investment cash) and more patience I would be in the oil game right now. That is about to blow up in our face, and send gas prices through the roof! Now that does indeed suck for most people, but over the course of history, Silver and Gold have done very well in rising in value compared to oil. So if you own some and keep accumulating them on a regular basis (as I do, and encourage everyone to do) then you will be just fine. But if you keep your dollars in cash, you can guarantee you will be losing purchasing power on a weekly, and even daily basis.
But back to the main point, it's very easy to tell when something is overbought or becoming what some would call a "bubble". Just ask yourself a few questions. Have I seen or heard about it on TV? Have I overheard anyone at work, friends, or strangers out at a restaurant or bar talking about it? If you asked 100 people if they owned even an ounce of Silver, or know anything about how rare it is, would even one person say yes? Just think back to the tech stock boom and bust, or the real estate boom/bust. Everyone towards the end was either talking about it, or making money off of it. Those that do not rely on the fundamentals get burned 99.9% of the time, and usually show up late or at the end of the game.
Obviously we are nowhere near a bubble in Silver and the price has been rising significantly for over the past 10 years now, due to solid supply and demand fundamentals. And the fundamentals have never been more bullish for precious metals, there is already a supply deficit in Silver and the media hasn't even started mentioning it on a large scale! As our financial system deteriorates on paper, and the majority start shifting there assets into Gold, Silver and Platinum the price will explode! There are already shortages of the shiny white metal now, and the shift has already begun.
Just ask yourself this simple question. Would I rather buy Silver now at $35 an ounce, and rely on the fundamentals and take a chance. Or would I rather buy when it's every days' news headline, and feel comfortable because everyone else is doing it at $100 an ounce? Believe me, it is gonna happen.
For thousands of years Gold and Silver have been money, even in Chinese the word Silver means money. Paper currencies like our Federal Reserve Note, which is not even money, it is a debt instrument (if you don't believe me pick up a dollar bill and read it) have only lasted an average of fourty years, from its inception to its demise. Well it's 2011 and we got off of the gold standard in 1971, it is time for change. But I bet Obama wont see this one coming ;)
Take care and have a great day!
Subscribe to:
Posts (Atom)