The President criminalizes capitalism...

The President criminalizes capitalism... Evil speculators beware... Why we're all quitting our jobs next week (assuming we can find replacements)... The real numbers behind our budget crisis... A currency crisis, socialism, and politicians in denial...

Says the Associated Press: "The Justice Department will try to 'root out' cases of fraud or manipulation in oil markets." The timing is perfect. The government, like a lazy hound dog, knows when to show up at the kitchen door. It's feeding time, gents.

But do you think the Justice Department will announce a thorough investigation into the activities of the Federal Reserve? Nope. Do you think they will bother to explain to the American people how the Federal government used all its powers and trillions of dollars in new money to save Wall Street's biggest banks, to bail out highly leveraged insurance companies, and to prop up our country's automakers? No, no, and no. Do you think anyone will explain how, by creating trillions in new money and credit, the government gave commodity speculators a risk-free one-way bet – practically forcing them to build up massive speculative positions? Absolutely not.

Instead, the boys (and girls) at Justice will round up the usual suspects – small-time oil traders and market makers. It's all their fault, don't you know?

You have far better things to do with your time than parse the comments of our august chairman of the Federal Reserve Board, Ben Bernanke. As such, you might not recall that last summer, on August 27, at a private meeting of central bankers in Jackson Hole, Wyoming, he announced the Federal Reserve would resume buying U.S. Treasury bonds in large amounts – amounts equal to roughly 70% of all U.S. Treasury issuance. This has allowed the Federal government to fund nearly all its deficit spending and the growing costs of financing its enormous debts, with its own paper currency.

In not so many words, our Federal Reserve chairman was telling our creditors: Go pound sand. We will never pay you back in sound money, you stupid, pitiful fools...

The following table makes the point... Total return since August 27, 2010 Global Asset 140.4% Silver 92.5% Blackstone – Wall Street Casino 75.1% Corn 56.9% Las Vegas Sands – Nevada Casino 39.0% Crude Oil 38.2% Russell 2000 Index (Broad Stock Market) 36.3% CRB Commodities Index ... -2.2% Investment Grade Corporate Bond Fund -2.6% 10-Year U.S. Treasury Bond Total Return -10.6% U.S. Dollar Index

Within 10 percentage points of the change in crude oil, you'll find almost all commodities (the CRB index), almost all stocks, almost all U.S. energy (coal), almost all food (soybeans), and the world's most ubiquitous industrial metal: copper.

"Why not order the Justice Department to investigate these markets, too?" we ask (with sarcasm intended). By the way, you may wonder about our inclusion of the world's largest casinos in a table clearly intended to show the impact of our dishonest and decrepit monetary policies. Casinos typically boom during periods of rapid inflation, as money becomes impossible to save and speculating (gambling) becomes widely embraced by the general public. That's a little-understood fact... and it may become very important to investors as this hyperinflation becomes more and more intense.

Hyperinflation...? Yes, that's right. It's underway already, and it's going to get worse and worse.

Look at the table above. What has done the best since the Fed turned on the money spigot? The one form of sound money most sensitive to a monetary crisis – silver. As early as May 2006, I explained to my subscribers why silver would boom – because of the silver ratio – as the dollar collapsed. That's exactly what's happening today.

Meanwhile... look at the bottom of the table. There lies the world's legacy fiat paper reserve currency – the U.S. dollar. As I've explained time and time again in my various reports on the "End of America," the current inflation spells the end of the U.S. dollar standard around the world. That's not a prediction anymore: It is happening right now, as you read this.

This table is clear and scary enough... but then there are the President's comments yesterday about these matters, which, to me, were simply surreal. In reference to the soaring price of gasoline, OBAMA! told a group of supporters in Reno, Nevada: "We are going to make sure that no one is taking advantage of the American people for their own short-term gain."

I'm assuming this line was delivered with a straight face... and to a cheering crowd.

But... maybe not. Did anyone in the crowd understand the irony of the President's position? OBAMA! just explained the essence of capitalism – the factor that makes it work – but used it to define criminal activity. Even a 10th-grade economics student understands capitalism works because, through the miracle of free exchange, private vices (short-term gains) are converted into public virtues – goods and services people want.

It's surreal to watch the President of the United States say things like this... things that could have been lifted from the speeches of Hugo Chavez.

Forget everything else you know about the budget problems and focus on these facts...

It doesn't matter that you've paid into Social Security and Medicare. That's like investors arguing Bernie Madoff owes them money. It may very well be true – but it's totally irrelevant. Likewise, it doesn't matter that "income inequality" is supposedly at a new high. It's not, but why argue? It doesn't matter – taxes won't solve that problem.

What does matter...? Consider this: Even if you collected 100% of the income of all the people who make more than $250,000 a year, the U.S. government would have still run a deficit last year. Even if you doubled the entire amount of income taxes collected, the Federal government would have run a deficit last year. There is no way to balance our budget, no way to prevent the literal bankruptcy of our country and the runaway hyperinflation that would result, unless we dramatically cut the government's budget. We have no choice, as you'll see.

The U.S. government has never succeeded in collecting more than about 20% of GDP in taxes. Yes, that's true. The higher the marginal rates of income taxes (the more you ask the rich to pay), the more inefficient the tax system will become and the greater the burden on GDP growth, which is the main driver of all tax revenue. There is no free lunch. To collect 20% of GDP in taxes isn't easy. It will require a broad-based, flatter income tax or something akin to it. Collecting more than 20% of GDP has, so far, been impossible. I wouldn't plan on it.

Our GDP is roughly $14 trillion today. So no matter how you organize the tax base, you end up with $2.8 trillion to spend. And you can't spend that much, because you've got interest payments and (gasp!) debt repayments to make.

Yes, that's right, America: You borrowed all this money, and our creditors actually expect to be repaid. Interest payments and principal reductions of our debt will have to come first and should total around $500 billion each year. If interest rates go up, we'll have to spend more than this. Sorry. That's the price we have to pay if we expect to maintain control of our economy and not allow our children to end up as house-boys and maids in Shanghai. That leaves us with roughly $2 trillion to spend.

Here are our current expenses: Medicare and Social Security are now spending $1.5 trillion and, if left alone, will quickly grow to far more than the entire tax base. The military spends over $700 billion (that we know of) each year. Domestic social programs (food stamps, Department of Education, etc.) cost $500 billion. Federal pensions cost more than $200 billion a year. So... we've got $2 trillion to spend... but our bills are running to $3 trillion per year, and they're scheduled to increase, substantially.

Thus, we will have to cut at least $1 trillion from the budget – immediately – and be prepared to continue cutting on discretionary spending and the military for at least the next decade. That will mean cutting about one out of every three dollars the government spends today. Unless we balance this budget, there's no longer any doubt our currency will be destroyed, our savings lost, and the assets of our country stripped by foreign creditors.

So... what's more important to you? The lies you've been promised, or trying your best to restore this country to its founding principles? That's what we've got to decide.

“But do you think the Justice Department will announce a thorough investigation into the activities of the Federal Reserve? Nope. Do you think they will bother to explain to the American people how the Federal government used all its powers and trillions of dollars in new money to save Wall Street’s biggest banks, to bail out highly leveraged insurance companies, and to prop up our country’s automakers? No, no, and no. Do you think anyone will explain how, by creating trillions in new money and credit, the government gave commodity speculators a risk-free one-way bet – practically forcing them to build up massive speculative positions? Absolutely not.”

From the Title I expected the same old crap of protecting wall street. But it was refreshing to see the actual cause of the speculation being mentioned. Who is doing it, and the fact that they are using our money.

I am however against allowing speculation in the Oil Markets unless such speculator takes possession of his purchase.

Pretty much along the lines of one of my rants just a day or 2 ago.

Commies hate Capitalism, so 0bama is going to make it “his” Boogie Man when he runs his reelection with a Campaign of Class Warfare.

If he keeps at it, he’ll take this country down the Salvador Allende Turnpike.

A Commie has to do what a Commie has to do.

Wha..??

The president of the United States isn't a capitalist?

He won't get my vote in the next election now that I know that!

Who voted for him in the first place for crying out loud, communists?

Conservatives need to get along with them to make sure that Republicans can keep some power and not let our whole country fall under communist rule!

Soon, if we give enough money to Republicans we can keep communism at bay in our country and feel good about being American.

As long as we don't get crazy and make freedom a battle or anything stupid like that we will be fine.

Do you think they will bother to explain to the American people how the Federal government used all its powers and trillions of dollars in new money to save Wall Street’s biggest banks, to bail out highly leveraged insurance companies,
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I don’t care how much some bankers scream ,, the FED must be abolished , they have taken ABSURDLY BAD , CORRUPT losses from it’s members and turned those bets into a debt my family wil be repaying for at lease 2 generations ...

In fact we must write off the debt we took on and put it back on the banks ,, LET THEM FAIL so that the republic may survive...

Well we don’t need those kind of investors. They serve no purpose excerpt to get rich off from the backs of all of us. You do not need to sell oil 1000 times before it gets to the consumer. And we both know that there will never be any such thing as NO DEMAND for oil.

The biggest of the so called “Investors” in this scheme are the likes of GS, and JPM. And they are using our money via the Fed, to do it.

Capitalism is great. It encourages people to create and achieve. But it will always fail without reasonable rules and regulations. The reason is because of human nature. Most People will do anything to make a buck. They don’t care if what they are doing is ethical. They don’t care who they are hurting. All they care about is the bottom line for themselves(Such as the Mortgage fraud). Ultimately with no laws they would even murder to achieve it. And in this day and age we have a society that is more and more loaded with people like that. People who will steal the money can from girl scouts selling cookies. Yup that just happened. But hey it was capitalism in a lawless world. If we had no laws.

The sad thing about wall street is that so many people profit today who contributed nothing at all. It is not like in the old days when you invested in stock and watched a company grow. It is not simply a risk. It is a giant gambling casino. Actually investing in a company is not how most of them make money. And those players contributed nothing to process of creativity. They simply skimmed off the top...Multiple times. The cost being passed on to the consumer. Everyone can sit at home with a PC and be a banker now.

We now live in a FAKE world my friend. A massive part of the economy is fake. Much of it borrowed from the future. The truth being much different from what we are supposed to see. This is destroying us..Not helping us.

We demanded to much to fast. We were not willing to take the bad times with the good. Always coming up with another fraudulent scheme to avoid letting things take a slower natural path with all its ups and downs. But at least one that would be real and with out massive swings. One that might not put us at the top of Everest, but also one that would not take us to the bottomless pit, where we are now headed very soon.

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