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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 Richard Russell
January 20, 2011
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Question -- Would you be satisfied to retain your current standard of living during the coming decade? I've thought a lot about that. After all, what are we working and struggling for? The answer is that we're working so that we can enjoy "a decent life." Isn't that what all the buying and borrowing has been about? Americans want the good life, and they've been borrowing their heads off to have it.

The question I ask myself is, "What do I have to do so that I can continue to enjoy the great American 'good life'?" What comes to mind immediately is gold and the dollar and debt. The national debt of the United States is roughly $13.9 trillion. We've carried that huge debt in an atmosphere of historically low, low interest rates. But what happens as rates rise (as they are now doing)? How will our government deal with our unmanageable mountain of debt? I'm afraid that our debts are on the way to eating us up alive.

Which is another reason to own gold. When all else is lost, or maybe I should say lost in depreciated dollars, gold will be there as it has been for over 5,000 years. Gold is the ultimate survival mechanism.

We can't pay off our national debt with higher taxes. To do that would throw the nation into a second Great Depression. The only way we can deal with the debt is through a severely devalued dollar. I can't think of any other way -- but wait, there is one. That other way is to ignore the debt, kick the can down the road. Let other presidents and other Congresses wrestle with it. Of course, I doubt if we could get away with kicking the debt down the road.. I'm not even going to talk about defaulting on our debt. That would be unthinkable, and would put the US firmly in the banana republic class. In that case, the new best-seller would be a book entitled, "The US, Death of a Nation."

So far, the US has been borrowing to finance our good life and our debts. We borrow from other nations, we borrow from Social Security, we borrow from whom ever will lend us money. To make our obsessive borrowing more attractive, we will have to raise rates. And that's when the trouble begins.

The bond vigilantes are sophisticated and absolutely ruthless. They see the big picture, and the immediate big picture -- is rising rates. As a result, the vigilantes have been selling their Treasuries, and to Ben Bernanke's consternation (let's call it his horror), as the vigilantes dump their Treasuries, rates are rising. As rates rise, mortgage rates rise, and the specter of a second "thud" in housing comes into view. So, is this a good time to sell your house? Probably it is. Remember the old admonition, "Your first loss is your best loss."

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