Making Your Own Money
The old adage “money doesn’t grow on trees” doesn’t hold truth like it used to. Today, money literally does grow on trees to the extent that it’s freely printed on tree pulp by the Federal Reserve without any backing in gold or other value. In most instances, we mustn’t even grow it on a tree at all - instead conjuring wealth through tallies on computerized ledgers. Amidst all this, making your own money is practically impossible. Sure, you can go out and work and “earn” it, but that’s not the subject matter of this article. Quite literally, you cannot print or coin your own personalized money and solicit its usage to satisfy debts.
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Gold Update
Twice I have recommended purchasing gold. Today the Fed cut interest rates a half point to 3%, and hinted at future rate cuts. This has and will continue to result in the erosion of the dollar. Furthermore, the political landscape is shaping up so that another generation of borrow-and-spend politicians with no regard to the dangers of this central economic planning will be at the helm in the near future. So here’s the tip again: buy gold.
I first made this suggestion when the Fed began the unprecedented action of buying billions upon billions of mortgage securities and thereby inflating the money supply and promoting malinvestment. That was August 14, 2007. GLD (gold trust) was at $66.29.
I again made the suggestion when the Fed began cutting rates to turn the economy around. They have since cut rates .75 points in one day, .5 again today, and more to come. This again is inflationary. That suggestion was made on November 3, 2007. GLD was trading at $79.83.
Today I am again making this suggestion because the Fed is cutting interest rates with no end in sight and the House has recently approved an economic stimulus package that consists, in large part, of tax rebates funded by increase of the national debt. Also inflationary. This is January 30, 2008. GLD is at $92.06.
Perhaps it bears repeating:
If you think that the military-industrial complex, government welfarism, fiscal irresponsibility on behalf of banks backed by the federal government, or budget deficits will decrease in the foreseeable future and the Fed will thusly stop doling out money, then this is definitely a bad time to get into gold. I’m giving this advice of the persuasion that we’ll see something on the universal health care side of the spectrum, backed by that free and easy Fed monopoly money.
Robert Prechter on the Economy: Is the Worst Over?
Short answer: No. Long answer: put your money where it will retain its purchasing power, inter alia, gold.
It’s a bit disconcerting to hear that the underlying market conditions of the present far eclipse that of 1987 and 1929.
German President Putin, I Presume?
Setting the record straight, Horst Köhler is the president of Germany - though technically the position of Chancellor is Germany’s highest office.
The Definition of Insanity
Einstein once defined insanity as “doing the same thing over and over again and expecting different results” - as hackneyed as it is to cite. If it is true that this quote has grown in ubiquity without also gaining accuracy, the Fed has surely put such a criticism to rest today when it cut rates by 0.75 points in an “emergency” session. The “emergency,” outside of the recession, was that the Dow was down 464 points in early trading. As an aside, this had me revisiting the trading curbs (safety nets that protect against runs on the market). There is further indication that the Fed will again cut rates at its regular session later in the month. Anyone keeping score knows that the recession in which the U.S. presently finds itself was brought on by artificially low interest rates propagated by the Federal Reserve.
This single-day rate cut is being widely reported as the “biggest short-term cut since October 1984.” The Fed usually cuts in increments of halves or quarters, and even in 1984, the Federal Funds rate was hovering at 10 points. Today’s cut took the rate from 4.25 to 3.5. However, the New York federal reserve lists the cuts in October of 1984 as a “gradual decrease” not occurring in one day. Therefore, today’s action is the largest percentage cut in the history of the Federal Reserve, and likely the biggest one-day cut since Aug. 16, 1982 when the rate went from 11.5 to 10.5.