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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.

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The Best of Jim Cook Archive

Best of Bill Buckler
June 30, 2009
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The US "pump the economy back UP" operation is failing. The Fed's published numbers show this for all to see. US household wealth fell by $US 1.3 TRILLION over the first quarter of this year, according to a Federal Reserve report released on June 11. Wealth dropped by a record $US 4.9 TRILLION in the last quarter of 2008. That's a fall in US net wealth of $US 6.2 TRILLION in six months.

Despite the incredible government stimulus, the fall in US household sector assets has brought the one-year drop to a historic $US 10.075 TRILLION. On a GDP basis, the entire US economy has most recently been estimated at $US 13.8 TRILLION. Note that the above applies to US households, not to US businesses and financial institutions. The broader American situation is actually much worse.

Watching The Real US Economy:

To really observe where the US economy is going, one has to watch commercial paper. This is the real financial engine which funds intermediary economic goods - the goods in the process of being made but not yet completed as consumer goods. Where US commercial paper goes - there goes REAL production.

Catastrophic New US Numbers:

Total US commercial paper outstanding has again fallen – to reach $US 1.202 TRILLION. Commercial paper has declined by $US 479 Billion so far this year by a full 62 percent on an annualised basis and by $US 549 Billion or 31 percent over the past full year. Please note here the accelerating contraction. Over all of 2008, commercial paper issuance fell 31 percent. Over less than half of 2009, it has fallen by 62 percent! This shows that the fall in US output has accelerated at more than twice the speed that it contracted last year. The US economy will NOT revive until US commercial paper revives.

US Bankers Either Can't Or Don't Want To Lend:

US bank credit lent into circulation as loans to borrowers' accounts now stands at $US 9.722 TRILLION. US bank credit is, in fact, up by only $US 317 Billion over the past year. This shows that US banks have not managed to restart any US credit expansion, even with all the massive Fed infusions of "reserves".

In fact, US bank credit is down by $US 191 Billion so far this calendar year. That is a literal and real contraction of credit money in use of 4.4 percent annualised. And THAT is a situation which the powers that be in Washington and New York fear like the Black Death. If this contraction in US bank credit was to gain further downwards momentum as Americans deleverage and repay their loans, it would implode the credit money side of the US monetary system in a monetary deflation of epic size.

On The Edge Of An Involuntary US Credit Money Deflation:

This involuntary US credit money contraction is the situation which the powers that be in the US are trying to stave off with their massive "replacement" borrowing. But the US Treasury and all the other US "Agencies" can only keep this up for as long as they can expand their own balance sheets by piling their own debts outstanding ever higher. There is a future point at which they will break under their debts.

The US Deflation Is Hitting Main Street:

On June 17, the US Labor Department said that compared to the same period last year, the CPI fell 1.3 percent. This is the largest decline since April 1950! The pace of the price declines also accelerated. The US CPI dropped 0.7 percent year-on-year in April. US businesses, small and large, are throwing inventories on the retail and wholesale markets with increasing speed. In all deflations - Cash Is King - and cash in hand beats hollow unsold goods, even completed goods sold at zero profit to get cash.

Ó 2009 – The Privateer

(reproduced with permission)


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