Investment Rarities Incorporated
History |  Q & A  |  Endorsements  |  Portfolios  | Flatware | Gold Coins  |  Silver Coins  |  Contact |  Home

Products

Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

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.

..Read More »

The Best of Jim Cook Archive

 
Best of William Histed
May 12, 2009
archive print

The Real US Bottom Line:

This week, the US Congressional Budget Office (CBO) projected that the US budget deficit will balloon to $US 1.8 TRILLION or 13.1 per cent of GDP this year. The Obama budget is $US 3.55 TRILLION. That means that more than half (50.7 percent) of the budget will be borrowed.

The Global Bottom Line:

All of the rest of the world sees this bottom line clearly. If the US budget were to be funded solely out of incoming tax revenues and therefore brought into balance, about $US 1.8 TRILLION in artificial "stimulus" would be withdrawn. The US economic and financial house of cards would instantly cave in. Were the US budget to be honestly funded by US taxes actually paid, then US spending would instantly be cut in half ( by $US 1.8 TRILLION). That would be like taking the US economy out and shooting it.

The Obama administration is in a position where it cannot raise taxes and cannot cut spending. It can only borrow, Borrow and BORROW and spend the borrowed money to stave off a debacle.

The rest of the world now knows this. They are no longer prepared to go along and to pay the costs.

Full Scale US Stage Three Deflation:

In earlier issues, The Privateer has fully analysed the three stages of deflation which take place when any credit money system reaches its limits to debts and starts to implode. Stage three is where the economy falls out from under a government, drastically contracting the inflow of taxes while all forms of government social services see their costs explode because of increased unemployment. That causes the government's budget deficit to explode. And that is what faces the Obama administration - NOW!

To pile a further "stimulative" budget deficit on top of a stage three deflation is the height of fiscal insanity. It will accelerate the pace towards a situation where NOBODY either wants to or dares lend more money to the government because the accumulated debts are so high that they cannot be repaid. Once that is recognised, any ability of the Treasury to borrow caves in along with its global credit rating. A mad scramble ensues as current holders of the government's debt paper sell it off for what they can get.

The Dethroning Of The US Dollar:

The Obama administration is not at this point yet, but it is aiming straight at it. The Fed knows this, hence its March 18 decision to publicly start to monetise Treasury debt. A global buyers' strike of Treasury debt would expose the Fed as the "buyer of last resort" and lead inexorably to a global crash of the US Dollar. That would lead to the total financial and monetary bankruptcy of the US. Ominously, a worldwide debate has begun even before the G-20 meets in London about the viability of the US Dollar as the world's main reserve currency. That debate will not end while the US Dollar maintains that role…..

THE FINAL BUBBLE YET TO BLOW - US TREASURIES

By its own 0.00 to 0.25 percent official interest rate policy, the Fed has boxed the US Treasury into a corner. From here on, US Treasury yields have only one way to go - UP! That means that all other holders of US Treasury bonds, bills, notes, etc. are staring at assured losses on their investments in US government debt when US yields climb. When yields climb, the principal value of bonds always falls.

Here, one could ask a kind of Three Stooges question: "Why do we have our money in US Treasuries?" The approved answer is: "For safety." "But how can our money be 'safe' there? When US yields climb we can only lose money!" At that point, any further conversation turns into total gibberish. The US Fed - The Hidden Enemy Of The US Treasury:

The US Fed, in its corner, can maintain these non-interest 0.00-0.25 percent official interest rates for quite a lengthy period of time. But they can do this only at the real financial and economic cost of allowing Treasury debts to soar ever higher as the US budget deficit widens because of slumping tax revenues combined with even more stimulus - piling US debts owed even higher. When US Treasury yields do climb, the matching climb in higher interest payments will eat tax revenue up from behind at a frightening rate. Here, in plain factual terms, with US Treasury debts already past the $US 11TRILLION mark, a climb of only 1 percent in US official interest rates will raise the US Treasury costs of servicing all past debts by $US 110 Billion. To borrow this additional interest payment will blow US Treasury debts into an exponential climb and that is always the final sign of a full blow-off!

Ó 2009 – The Privateer

http://www.the-privateer.com

capt@the-privateer.com

(reproduced with permission)

SUBSCRIPTIONS:

Delivery via email

Trial: 5 issues (once only)

Six-Month: 12 is

THE DOLLAR HAS ALREADY COLLAPSED

In the lifetime of some persons now living, the once "sound as a dollar"currency has collapsed. This is not a future prediction, though the dollar willundoubtedly collapse further. Something may have more than one levels thatcollapse down upon the other, just as a building may collapse floor by floor.

Inflation is a form of robbery which makes the victim feel he is better offthan before.

The late libertarian newspaper owner, R.C. Hoiles of the Orange CountyRegister in California used to argue, "I'd rather be robbed by an armed highway manthan the politicians and their bankers. A highway man gets away from you asfast as he can and lets you alone. The politician robs you and stands there andinsists he did it for your own good."

I bought a book a while back written by Fred Meijer, whose family founded andstill owns a successful chain of stores in the Midwest. He listed the prices thatwere common in his family's stores over the years. What a shocker.

Here are some examples. The book is called, "Fred Meijer In His Own Wordsand is copyrighted.

Advertised grocery prices in the local newspaper, September, 1937:---

Margerine, 2 pounds, 25 cents; 8 O'Clock coffee, 18 cents a pound, WheatiesCereal, 2 boxes for 23 cents; Cigarettes, carton, $1.15; bananas, 4 pounds for 19 cents;Shoe Polish, 9 cents; Soda crackers, pound, 18 cents; Ketsup, 9 cents a bottle;Jello, 5 cents a box; Hershy's Chocolate Syrup, 2 for 19 cents.

Same store, prices advertised in the local paper in 1943:

---Potatoes, 10 pounds, 43 cents; Carrots, 3 pounds for 17 cents; Steaks, 39 cents a pound; Flour, 25 pound bag, 91 cents; Smoked Picnic Hams, 32 cents a pound; Big Loaf Of Bread, 10 cents; Matches, 6 boxes for 25 cents; Pancake Mix, 5 pound Bag, 19 cents.

Same store, prices advertised in local paper in 1960:

---Milk, 35 cents a half gallon; Roast, 39 cents a pound; Lettuce, 2 Heads for 29 cents.

Some people will argue, "That may be true, but wages have gone up about the same." And in some cases, that may be right.

But the losers were those over the years who held paper dollars in the bank. The purchasing power of their savings went down quickly. Today, tens of millions don't save money regularly. They are constant buyers.

Now, we are going into another stage in our economy where the government and its central bankers who have a monopoly on printing "money" will not even go through the phony motions of acting like they are "borrowing" the money. They will just print.

England has already announced it is doing just that.

It is a dishonest system based on the concept that, as a balloon, it must keep expanding or it deflates. This is why the near crazed statements about "bailing out the banks" and all of the "stimulus" programs. Keep pumping and pumping!!

Someday, millions will say the wonder of it all is that it lasted as long as it did and that much of the public didn't seem to question how the system was being operated.

Belief systems can be very strange, especially when it comes to money, power or even romance. There is much mysticism in things that tickle the senses.

I have predicted the day will come when we wake up some otherwise fine sunny morning and learn that unbacked U.S. "dollars" are not being accepted by major world players, such as oil producting countries, or even China.

China is in a very interesting position. But China is waking up very quickly. It was reported in the major media the other day that China is now buying gold and is less interested in U.S. Treasury notes. I wonder why?

China is late to the card game which is about to end suddenly. It holds some cards, it has made some winnings, but it's almost afraid to close out for fear the chips won't be redeemed by those who have lost their money.

I won't try to outdo Ted Bulter and his hard efforts on showing how the metal markets, especially in silver, are being manipulated by bankers and the government. The governments and central bankers brag they can keep the price of gold down by dumping supplies on the open market---that is an open admission of price manipulation.

It has also happened in oil. CBS News reported that a few big banks now in trouble were gambling on oil a year ago or less---and lost potentially trillions.

I know there are arguments about unique industrial and high tech demand for silver.

Silver has been a monetary bi-metal for thousands of years. The religious and personal savior to hundreds of millions of people was sold out for silver 2,000 years ago. It was seen as money then, and it is seen as money today. But don't hold that against silver--- today, people are sold out for unbacked Federal Reserve Notes called "dollars."

Silver was a monetary bi-metal a century ago and during the greatest rise the United States ever witnessed. It was the main political debate in the U.S. presidential election of 1896.

I am convinced Mr. Butler is right. SOMETHING has silver very, very undervalued and that is good for investors for the long-term.

When prices have gone up in the United States around 100 times in a century: source: the U.S. government, and silver has gone up maybe 10 times in "price,"

I believe it could easily be worth ten times as much as it is now from an historical perspective alone.

Gold seemed to be undervalued to many people decades ago when it sold in the range of $35-44 per ounce. Now, take that well over 20 times. But it languished in the artificially low price area for many years.

Silver, at $13 or so a troy ounce, should be selling at well over $100 per ounce just to put it on the same level of price increases over the last century and a quarter.

Central bankers and politicians hate gold and silver because they can't be printed off big presses. It costs just 4 cents to make a $100 bill by the government's own' figures, and I suppose it doesn't cost much more than that to print up a $10,000 treasury bill.

History says if there is some major price adjustment that will be made, it will happen in such a fury that those not in the game find the game has already ended.