In the last five months, according to the Federal Reserve Board, the
money supply in the
You do not have to have a degree in economics to understand that
when governments turn on their printing presses and massively increase their
nation’s money supply – their money becomes deflated in value, to the tune of
the percentage of the currency’s increase.
A tidal wave of inflation will strike this nation sometime during late
2010 or early 2011 when the economy begins to expand again, “just in time” for
the mid-term elections. The Democratic
Congress and President Obama will move heaven and earth to make things happen,
so that they can hold on to their No Checks and No Balances grip on the
What will massive inflation do? It will strip out the value of everything
that every responsible man, woman, and company has set aside in savings, placed
in government bonds, or otherwise has squirreled away. When this hyper-Inflation tidal wave strikes all
that money by design will lose a staggering 66% of value. Or in other terms every
dollar you have will become worth a piddley-ante .33
cents. This is not by error, but by
design.
Gold has been sold to the public as being recession proof and
inflation proof, I can tell you based on memory that this is not at all so. The last time Gold really hit the roof was in
the mid 1970’s. The question that should
be asked is how has gold done in intervening 35 years between then and now? It
went down, way down from its great high to the place that gold mines were being
shut down all over the place as it was no longer profitable to mine gold. And then gold was mediocre for a very long
time.
Just as their was an oil bubble, a housing
bubble, and all the other related bubbles, there is now a Gold bubble. And when that bubble pops the price of God will
precipitously fall, just like the oil and housing market did. The problem with metals is you can not eat them.
You can not pay your mortgage, or make car
payments with Gold. You can not make insurance
or healthcare payments with Gold, buy gasoline or use it in the grocery store. The point is when gold’s price drops and demand
flounders, metals lose all liquidity. It
would be wise to jettison your gold while it is high at near peak, then to ride
the price back down and find you can not sell it.
What will hold its value? – You might laugh at what we are going to
say here, but housing and investment property, raw goods and minerals that can
be piled up, oil, natural gas, and gasoline will all greatly increase in value
in a runaway inflationary market. Corn, wheat,
rice, soybeans, cattle, pigs, chickens will all dramatically rise.
The coming inflation is coming to be the “cure” for the housing
bust, and the subsequent 30 % or so drop in housing and property values that
started all this mess. The result of this is that all the people with
“underwater” mortgages, the sea will suddenly part and their real estate will skyrocket
40, 50, or 60 %. Resulting in homeowners,
business people and investors to again profitably begin to buy and sell their
properties, effectively ending the housing crisis.
This great wave of inflation will have a great effect on stocks, retirement
funds, IRAs and other stock based equities that have suffered staggering losses,
greatly inflating their value making them profitable one again.
It is not our purpose here to speak here of investment plans and strategies. We are just expressing that which we see and
hear, as a warning to fellow believers.
Once again speaking to the poorest of believers here; dry food
goods and canned goods will keep for quite some time (Years) and in a the coming
world-wide overheated inflation, any stored away food that has been bought while
the prices are low, is a wise and sound strategy to keep bread on the table for
one’s family and household, in such tumultuous times.
Have car sales tripled? Home
purchases? Consumer spending? Corporate
investment? Not only have they not tripled, they have all declined more
sharply than they have since at least the recession of 1981-82, and perhaps
since the Great Depression.
So where is the money? If it isn’t being spent, where is it?
It is being parked, squirreled away. Consumers are using it to pay
down their credit card balances, pay off their mortgages, reduce their student
loans, make the payments on the car sitting in their driveway — not the one in
the dealer’s lot. Businesspeople are buying T-bills, investing the money and
saving it. They aren’t spending, either.
(Understand that with what Obama is doing
that all these debts and loans will lose 66% of their value as wages and prices
rise in this tidal wave of hyper-inflation. Know that businesses are ready and
waiting for this to happen, and going to ride out this wave and profit from it for
all it’s worth. It’s the Obama tax
policy that has these people shaking in their boots. If your are anywhere near the 250,000 mark
Obama has created as his “Millionaire tax”, when this inflation strikes, you
will blow past that 250,000 mark and suddenly be paying taxes on a level like
you have never seen, as the Bush tax cuts run out, and Obama’s tax increases kick
in at the same time. Against who? All the rich that this
coming hyper-inflation will create. You
will be hit full-blast taxation as you are coming and going on all your
inflated earnings, inflated profits, inflated houses and properties.)
But one day this recession — despite Obama’s best efforts — will
end and things will begin to look up again. Then we can expect all of this money to come
out of its parking space and get back on the highway of commerce. All at once. The
inevitable result will be double-digit hyperinflation.
Since this spending and borrowing splurge is not confined to
The point of this gloom and doom is that all this pain is entirely
preventable. It will be caused by Obama’s excessive spending and
trillion-dollar-plus deficits. This spending, of questionable utility in
overcoming the current recession/depression, is so far out of line with what
the economy can handle that it will do more harm than good when the inflation
hits.
Proof that his spending will have
little impact on the depression is the vast increase in money supply with no
commensurate improvement in the economy. Providing money, via spending hikes or
tax cuts, does not guarantee that the money will be spent. Tax cuts can be
saved and spending increases, while surely spent once (on the initial project),
can rapidly lose their multiplier effect as wage-earners on the government
payroll bank their money just like those who get tax cuts will do. Getting out
of this economic mess depends on consumer and business confidence, a faith that
Obama is eroding with his looming tax increases as rapidly as he tries to
kindle it with his excessive spending.
None of this should come as any news to Obama. He likely knows all
this.
But he is determined to pass his agenda of bigger government, nationalized
healthcare and vastly greater spending even at the price of inflation and
subsequent recession. He puts ideology first and the economy a distant second.
The stock market has figured out
his priorities and is responding accordingly. One can only hope that voters
also eventually realize what is going on. (That is why all investors
are cashing in their chips now despite their staggering losses, when the market
bottoms out there will be “a buy” for all we described above, like you have
never seen. This pent up rage to invest and get in on the bottom floor has all
these types salivating and dreaming of watch their investment vehicles increase
exponentially by the hour.
But these also know that the Obama tax man waiteth
for all this activity – and that has them filled with fear as they will no
longer be capitalist entrepreneurs but slaves to feed and keep Obama’s giant socialist
machine running.