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If you want to know why things are the way they are...

Sunday, November 29, 2009

Regulating the Fed

“A number of the legislative proposals being circulated would
significantly reduce the capacity of the Federal Reserve to
perform its core functions,” the Fed chairman said in a
commentary in today’s Washington Post. The measures
“would seriously impair the prospects for economic and
financial stability in the U.S.”

Is this a joke of some kind? The dollar has lost over 95%
of its purchasing power since the Fed took over in 1913 and
that somehow shows stability? Bernanke is a kook or liar of
the first class.
This little excerpt from the Market Oracle's Robert Bradshaw's exposé
will help understand why so many want the Fed abolished.
"In theory, the Fed was established to stabilize the economy,
smooth out the business cycle, manage a healthy, sustainable
growth rate, and maintain stable prices. In fact, it failed
dismally. It contributed to 19 US recessions (including the
Great Depression) and significantly to the following equity
market declines that accompanied them as measured by the
Dow or S & P 500 average; - 40.1% (Dow) from 1916 - 1917;
- 46.6% (Dow) from 1919 - 1921; the 1929 (Dow) crash in two
stages - 47.9% in 1929 followed by a strong, temporary rebound and
then - 86%; -89% peak to trough total from October 1929 to July 1932;
- 49.1% (Dow) from 1937 - 1938; - 40.4% (Dow) from 1939 - 1942;
- 25.3% (S & P) from 1946 - 1947; - 19.8% (S & P) in 1957;
- 26.8% (S & P) from 1961 - 1962; - 19.3% (S & P) in 1966;
- 32.7% (S & P) from 1968 - 1970; - 45.1% (S & P) from 1973 - 1974;
- 20.2% (S & P) from 1980 - 1982; - 32.9% (S & P) in 1987;
- 19.2% (S & P) in 1990; - 18.8% (S & P) in 1998;
- 49.1% (S & P) from 2000 - 2002; and - about 50% (S & P)
and counting (excluding a bear market rebound) from October 2007."
Read his entire, very excellent article on the website at
http://www.marketoracle.co.uk/Article8909.html which I strongly
recommmend you do soon before the article disappears.
Remember all the support for a Federal Reserve Systems resulted
from market "panics" that "had to be controlled". Later, the
powers that be decided that the word "panic" was too strong so
they substituted the word "depression". The idea was to keep
the public from "panic". Later, the same public policy makers
decided that the word "depression" was now too strong so it was
time to use a less offensive word and they chose "recession".
That's rich isn't it? What it really means is the conditions
of "recession" we now have used to be called a "panic".

The only thing controlling the Fed would impair is the banksters
ability to earn interest on money they create from thin air.

Time to end the Fed and print currency without debt.
Say, "No!" to interest on circulating currency.

Saturday, November 28, 2009

Gold has the dollar on the ropes

Are you watching gold? If not, you should be. It appears to
be reflecting the fantastic flood of dollars created by our
Federal Reserve. Normally, people would say it was created
by our empty suit President, but, to be fair, none of our
Presidents have had any control over the Federal Reserve...ever.
That means that we cannot fairly blame them for rotten monetary
policy. None of our Presidents (including Reagan and possibly
excluding JFK) have even attempted to control our central bank.
As long as the government borrows money into existence, there
is no hope of paying the National Debt; mainly because the money
for interest isn't created and thus, the debt is perpetual.
Of course, we could print United States Notes, without borrowing
them (JFK did but didn't live to enjoy the benefits of that move)
and pay them to the Federal Reserve System to retire their Federal
Reserve Notes. We could use the US Notes to pay the interest and
end the debt cycle. The problem with that is that the inflation tax
on us would no longer be hidden and politicians are nothing if not
sneaky about how they take money from us. Overt taxation for all
the stupid stuff our government would be so unpopular that "We the
People" would vote all the bums out. We probably should anyway
just to be safe. No matter what we do as a country, it appears that
sometime the market will reflect the diminishing value of the dollar.
In that case, if you have gold and silver, the price will go up and you
will be able to pay off debt in cheaper dollars (after paying taxes on
your GAIN(?)) and you may benefit somewhat in that scenario.
BUT...what will happen if we experience a credit contraction?
VISA made an announcement some time ago that they may have to
write off almost $ 1 trillion to bad debt. WOW! Since our currency is
backed by debt (seems silly doesn't it?) that means a LOT of money
will disappear!! That means DEFLATIONARY(!) pressure. Does
that mean I'm EXPECTING deflation? Actually, no. I think it's possible
as long as currencies are manipulated but when you look at the
overspending ALL governments are doing, it seems much more likely
that we are in for a round of incredible inflation. Hang on to any
assetsyou have that are not denominated in dollars (bonds are
probablythe absolute worst). Gold is still a monetary metal despite
what thecentral banks the world over have tried to do to demonetize it.
Silver is a close second and actually may increase at a faster rate
than gold. In 1687, the silver to gold ratio was 14.94 ounces of silver
to one ounce of gold. It gradually rose all the way up to 16.25 ounces
of silver to one of gold in 1813 and fell back to 15.92 by 1873.
This is from history of the London Mint. Gold was demonetized in
England in 1874 and the ratio went to 23.72 to one by 1892.
However, history shows us that the ratio is generally around
15.5 silver to one of gold. Right now the ratio is 64.27 ounces of
silver to one ounce of gold!! Let's be daring and say it will get
to 25 to 1. That means we're looking at a price of silver of over
$46 per ounce. Either gold is overpriced (NOT!) or silver is
underpriced (YEP!). Either way, silver is the way to go for now,
unless you have so much money that the amount of silver you
will purchase will be hard to store and/or transport. Then move to gold.