Investment Rarities Incorporated
History |  Q & A  |  Endorsements  |  Portfolios  | Flatware | Gold Coins  |  Silver Coins  |  Contact |  Home


Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

..Read More »

The Best of Jim Cook Archive

Best of Bill Buckler
February 7, 2008
archive print

As of mid January 2008, Mr Bernanke is looking at some very scary data. The M2 "money" supply fell by $US 16.9 Billion to $US 7.441 TRILLION. True, this contraction in the quantity of US Dollars is tiny. Nonetheless, it is deflationary. Over the fourth week of January, US currency in circulation contracted in quantity by $US 1.6 Billion. The quantity of US demand and checkable deposits fell by $US 14.4 Billion. US savings deposits also contracted by $US 5.4 Billion while US bank credit contracted by $US 8.9 Billion to $US 9.293 TRILLION. The US is gripped by a credit standstill.

This data shows that the long US credit expansion has come to a dead halt and that the US monetary and financial system has actually contracted - or deflated - though by a very small amount. This is Mr Bernanke's greatest publicly professed fear. And that is shown by the Fed's actions to trim 1.25 percent off their Fed Funds rate (and Discount rate) in eight days. On January 21, the Fed Funds rate was 4.25 percent. By January 30 it was 3.00 percent. That's a cut of almost 30 percent of the way to ZERO!

By hook or by crook, using fair means or foul, Mr. Bernanke wants to forestall any event that could lead the US economy to fall backwards into a deflationary collapse. The LAST thing he wants to see is the entire financial and banking system crash under the weight of its own accumulated debts.

From now on, expect the Bernanke Fed to cut repeatedly as it tries to restart the credit expansion. As a result of this, expect a sudden and massive global fall in the value of the US Dollar - at ANY time…..

When stock markets are flying, individuals and institutions see themselves well placed and act accordingly. They are disposed to borrow money and many borrow lots of it. But after major stock markets falls, these same individuals (and institutions) see themselves as not so well placed as before. The first thing they do is to stop adding to their debts. That slows down the rate of credit creation. If they can, many of them start to lower their debts by repayment. This is important. If such repayment of debts outstanding goes far enough, it has both the monetary and economic effect of deflating the credit system. Contracting or deflating credit systems have the economic effect of contracting the total quantity of the means of payment. And that has the effect of leaving many existing prices of goods too high.

Unsold economic goods pile up, until they have to be sold simply to raise some much needed cash. To sell in such economic circumstances means meeting the current market. That means sudden and often savage downward breaks in prices. As these price breaks proliferate, entire economies dive into economic recession. Downward price breaks and the falling valuations of similar goods also have the economic effect of cutting a swathe in under whatever debts are leaning against these economic goods. That feeds backwards into the financial system which lent the money in the first place. The many lenders find that even taking legal possession of the goods and selling them will not recover the money they had originally lent. And at that point - their balance sheets take


Financially, the US economy resembles Swiss cheese. The "difference" is that the holes in it are now so large that it is hard to find any cheese at all. In terms of basic economics, the US is a national bankruptcy waiting to happen. Worse, in both economic and political terms, any attempt to address these problems will act to call attention to them and in the process, risk precipitating the crisis. Meanwhile, most Americans are living in a dream world created for them by the US media and by their politicians.

A lot of Americans sense that something is very wrong without knowing exactly what the root problems are. This is clearly shown by a recent New York Times/CBS News national poll which shows that the percentage of Americans who believe the country is on the wrong track stands at 75 percent while just 19 percent believe it is on the right track. And all the world knows it. In Davos, the situation was expressed openly. Many speakers stated that a full-blown and prolonged recession in America is now inescapable, with the rest of the world set to be dragged into a severe global slowdown despite the Fed's panic US interest rate cut this week. The global economic recession has now begun.

Ó 2008 – The Privateer

(reproduced with permission)


Delivery via email

Trial: 5 issues (once only)

Six-Month: 12 issues

Annual: 25 issues

Two-Year: 50 issues

Subscribe at