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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
June 27, 2012
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Inflation is not rising prices; it’s an expansion in the supply of money and/or a deterioration in its value combined with an increase in the speed with which it moves through the economy.  Inflation is a natural consequence of flawed monetary policies.  It can usually be managed, but once it crosses the unmanageable line it becomes hyperinflation which is inflation on steroids.

Fiat money is currency declared by government to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves.  Most of the world’s paper is fiat money which is based solely on faith.  When there is a threat of hyper-inflation, people lose faith in the paper currency and it becomes worthless.  Sound familiar?

Once that trust is broken, people begin thinking differently about the money they spend.  As price inflation begins, people begin to buy tangible items of necessity.  As the velocity of money increases it starts a vicious cycle of increased prices with no increase in wages.

The most famous case of hyperinflation occurred in Germany during the Weimar Republic, from January 1919 until November 1923.  According to Investopedia,“the average price level increased by a factor of 20 billion, doubling every 28 hours.”

How did gold fare during that time?  In German marks, silver started at 12 and gold at 170 I January of 1919.  By then end of November 1923, silver was 543,750,000,000 and gold was 87,000,000,000,000.

During that time, gold grew faster than the rate of monetary inflation.  While hyperinflation destroyed wealth, those who had assets denominated in gold experienced no loss in purchasing power, creating a massive transfer of wealth.

“A little inflation would e good,” is crapola!  I believe we are now experiencing the calm before the storm!  And most of the storm has been created over decades by politicians who continually throw money at the problem rather than making any fundamental fixes.

With the help of the Fed, the system continues to be manipulated to try to maintain the perception that the paper currency has more value than the precious metals.

Most any move Obama makes right now will be purely political.  He bought favor with the LGBT community a few weeks ago and has just issued an executive order that will by the vote of illegal immigrants.  He’s on a roll and could very well be reelected.

Obama has craftily created a government that controls the economy, but dodges any kind of responsibility.  He comes up with the plans, but if it doesn’t’ work out he just blames the businessmen in the private sector or, of course, hold old fall guy, George Bush.

If Romney is elected, he will at least try to make some fundamental changes.  Will he be able to fix this mess?  I certainly hope so!

No matter what happens, it will be the maverick Investors who accumulate precious metals as a hedge against inflation that get the last laugh as gold and silver prices move up and up.