We have not had an audit as to the amount of Gold that the US has in 75 years. Why should we be surprised? We have absolutely no idea how much money has been injected into the banking systems through the various loan and bailout packages. It is all being kept under wraps on a “need to know” basis. It must be all part of that change that we all voted for. The money supply numbers seem to be purely a figment of someone’s imagination as any monies supposedly injected in the economy through TARP are purposely being withheld, so we do not know how much money was injected or in what form.

We know as a matter of fact that numerous countries, especially China, have curtailed their purchases of Treasuries during the auctions. We also know that two new Bond Agencies have been appointed recently (one German, the other Canadian). Yet in spite of worries over their solvency, the Treasuries are being purchased; the question is by whom? If it’s not by the Chinese or the Japanese, how come the rates are going down? Economic projections are being discussed as if they were all being made in a vacuum.

In all macro economics, one of the single most important factors that must be taken into consideration is human nature. Is the overall level of confidence rising or falling? This is probably more important than any other numbers, manipulated or otherwise, that will determine the success of a projection. Let’s take last week’s unemployment numbers as an example. At first glance, they seemed highly positive. That is until the numbers were examined and they turned out to be highly negative. The same is true for the 2nd quarter earnings. In many cases, they were positive until we looked beneath the surface to see how they were arrived at. Slackening sales, major cost cutting and the biggest GDP drop in 75 years is not normally conducive to raising equity prices.

THE GREAT BANK ROBBERY

Let’s examine the recent bank information that has been released to the public. We have absolutely no idea how much money was either given or loaned to the banks nor do we know how much of their worthless paper has been taken on to the Fed’s balance sheet at face value. Timothy and company couldn’t stop crowing about the $40 billion in profit that the Government made from Goldman Sachs repaying its TARP money. Oh, really? How come he wasn’t specific about the $3 - $5 trillion in Fed funds loaned to Goldman Sachs who then promptly used the money to buy 4% Treasury Bonds? That’s a 3 ¾% spread X $3 trillion which amounts to $111 billion per year. After 3 years, that’s $333 billion – not a bad deal. Of course not one cent of that went into the hands of the public. Perhaps if it did, we wouldn’t be talking about taking out a new Stimulus Package.