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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 Howard Ruff
May 1, 2012
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Government spending is out of control, and people have followed that example with their personal budgets.   Spending has become a virtue and government interference continues to liquidate America.  If government had gone cold turkey back in 2008, drastically cutting spending and encouraging us to do the same, the crisis would have run its course and we would be back on the road to prosperity.  They did just the opposite, and the meat grinder is looming over us ready to turn us into hamburger.

As trillions of dollars became available with each new Quantative Easing (the printing press), individuals and corporations thought they were wealthier than they really were and consumed accordingly.  Much of the money was seductively sent to the states and some favored corporations.  (Our tax dollars make us shareholders of GM.)  In an effort to show they are doing something to correct the economic problems, regulatory demands have made entrepreneurial success almost impossible.

Keeping interest rate low encourages borrowing, and discourages saving.  In the crisis of the early 1980s, Ronald Reagan and then-Fed Chairman Paul Volker headed off a depression and set the stage for a strong recovery by keeping rates very high (15 – 18%).

If that were to happen today, those rates would mean $2.5 trillion in annual interest payments alone on only the acknowledged government debt.  That would be more than the government currently receives from annual taxes.

Washington will continue to play the great Oz behind the curtain, but I don’t see any way out of the mess that has been created and gets worse with each passing day.

In the early ‘70s, the Consumer Price Index (CPI) was just over 3%, but soared to 11% within two years.  We are at similar levels today, thus we could be 11% in 2014/

My friend John Williams, who writes Shadow Government Statistics says we are already at 10% inflation based on 1980 methodology.  John reports the real government figures instead of the contrived numbers that come from Washington.  If he is right, price inflation would be 17% within two years.

Remember, in all times and in all places, inflation has always been a monetary phenomenon: an expansion in the supply of money and/or deterioration in its value, combined with an increase in the speed with which it moves through the economy.

Inflation is in your future, so bet on rising gold and silver.  The ride may be more turbulent than expected, but the fundamentals have not changed.  Why hasn’t price inflation picked [up] as much as I thought it would have?

First, politicians have lied about it.  There is a lot more inflation than admitted.  Much is left out of the inflation calculations.  If added back in, it would have been dramatically increased.

And remember, inflation is an increase in the supply of money.  It takes as much as three years for it to work through the economy and reflect itself in prices.

The velocity of money is very important.  As it is created through the banking system, it has to be turned into money by loaning.  Banks have been reluctant to loan because of the uncertainties created about the future of the economy.  If they continue to print money, which they will, it will eventually be felt as price inflation. 

Gold and silver do not necessarily respond to price inflation but to actual monetary inflation; they reflect the amount of money being printed.  Sooner or later it will burst out into inflation at the super markets and the hardware stores, as it is already doing at the gas pump.

If you want to see more priced inflation, just be patient.  You will get more than you ever wanted; it’s already in the warp and woof of the economy.  It’s just lurking in the shadows for now; when it shows itself it won’t be pretty.