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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
October 16, 2009
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Fed Chairman Ben Bernanke was an outstanding intellect when he was a prof at Princeton. Bernanke wrote the definitive study on the Great Depression. But the situation in the 1930s was a lot different than the situation today. For instance, back in the '30s nobody worried about the dollar. What they worried about then was that they didn't have any dollars. But as far as a safe haven, during the '30s the dollar was IT. The dollar was "as good as gold." If you didn't believe it, you could turn in your dollars for gold at any Federal Reserve bank.

As we used to say, "Them days is gone forever." Today, anybody who knows anything is worried about the dollar. And that includes the Russians, the Chinese, the Norwegians and Fiji Islanders. Bennie Bernanke is intent on solving one problem at a time. His current main problems are deflation and unemployment. Thanks to his studies at Princeton, Bernanke has figured out how to halt a bear market and its accompanying deflationary recession. Why it's simple, you just flood the system with money, trillions of dollars if needed, and when you do that, how can you have deflation and a recession? "Print the money by the carload," thinks Bernanke, "and they will come -- and they will spend it." And he adds, "That's what the Fed should have done during the Great Depression. If I had been there, we wouldn't have had any stinkin' Great Depression."

But Bennie Bernanke wasn't there. We've got him here now -- along with his pal, Treasury Secretary Geithner. Between the two, they're trying to start an inflationary fire, but there's a problem -- the bloody logs won't burn. To put it succinctly, America's frightened consumers refuse to increase their consuming.

"Things are getting better," announces Bernanke repeatedly, "the great recession is history. Spend, you stubborn fools, look at what the stock market is doing -- be patriotic and spend your money. How about a new house or a new car?"

But the man in the street sees things differently. He's lost his job, and he can't find another one. His neighbor's house is in foreclosure. He'd like to start a business, but the bank shows him the door. His 401K is shredded, and the porch on his house just fell apart. When he goes for a rare interview he's wearing a three-year old suit, and he hasn't got the dough to buy a new one. Now he's listening to Bernanke on the radio. When Bennie announces that "the worst is over," the man in the street shakes his head and growls aloud, "Why doesn't this yo-yo get out of the Fed building and see what's happening? What's he smoking?"

The economist have a fancy name for it -- they call it a "disconnect" between the Federal Reserve and the common man.

Meanwhile, "unintended consequences" are emerging from all this money creation. The stock market is "juiced up" and it's going higher on bubbling liquidity. Many commodities are rising. Gold has climbed above 1000 and appears to be heading for 1100. Silver, only eight dollars an ounce last year, is now above 17 bucks an ounce. The dollar has fallen to new lows. What to do about it? "The US is in favor of a strong dollar policy," insists Treasury Secretary Geithner. That same day the dollar sinks to another new low. Our overseas creditors squirm in discomfort.

Now I'll let you in on an awful secret. The US, despite all its BS talk, really wants a lower dollar. The fact is that the US is doing absolutely nothing to defend the dollar. Of course, if the Fed wanted to defend the dollar they could halt their mass printing of dollars, and they could raise interest rates. And Bernanke could win the 800 meter race at the next Olympics at Rio. But let's be rationale -- how in God's name is the US going to pay off trillions in debt? By raising taxes? Impossible. They could renege on the debt like Argentina -- unthinkable. But there is a way -- they'll try to minimize the importance of the debt with a cheaper devalued dollar. That's the time-honored US way, but loyal Americans don't believe it. If they did, gold would be selling at $4000 an ounce.

It's all so smarmy, but c'mon, what do you think the Fed has been doing since World War II? It's been systematically inflating. They can't fool me, I was around after the War, and I remember prices in 1945. Maybe the chief culprit was Alan Greenspan, but Bernanke is carrying on. There's a lot of inflating coming up. "Strong dollar policy." Bite your tongue, and give me a break.

And poor Obama, the golden-voiced president doesn't have a clue. Oh yes, he means well, but he still thinks he's the second coming of Franklin D. Roosevelt. Remember the National Recovery Act (NRA)? "We do our part." And the Works Project Administration (WPA), and the CCC (Civil Conservation Corp). I was there, guys -- see, I still remember all those alphabet agencies.

Below from the DailyTelegraph by the brilliant Ambrose Evans-Pritchard.

You can date the end of dollar hegemony from China's decision last month to sell its first batch of sovereign bonds in Chinese yuan to foreigners.
Beijing does not need to raise money abroad since it has $2 trillion (£1.26 trillion) in reserves. The sole purpose is to prepare the way for the emergence of the yuan as a full-fledged global currency.

"It's the tolling of the bell," said Michael Power from Investec Asset Management. "We are only beginning to grasp the enormity and historical significance of what has happened."

It is this shift in China and other parts of rising Asia and Latin America that threatens dollar denomination, not the pricing of oil contracts. The markets were rattled yesterday by reports – since denied – that China, France, Japan, Russia, and Gulf states were plotting to replace the Greenback as the currency for commodity sales, but it makes little difference whether crude is sold in dollars, euros, or Venetian ducats.
What matters is where OPEC oil producers and rising export powers choose to invest their surpluses. If they cease to rotate this wealth into US Treasuries, mortgage bonds, and other US assets, the dollar must weaken over time.

"Everybody in the world is massively overweight the US dollar," said David Bloom, currency chief at HSBC. "As they invest a little here and little there in other currencies, or gold, it slowly erodes the dollar. It is like sterling after World War One. Everybody can see it's happening."

"In the US they have near zero rates, external deficits, and public debt sky-rocketing to 100pc of GDP, and on top of that they are printing money. It is the perfect storm for the dollar," he said.

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