Posted on 10/15/2010 9:54:44 PM PDT by FromLori
John Williams utters his most ruthless words of condemnation not only toward the Fed, but to everyone who is stupid enough to be chasing returns in the face of what is a hyperinflationary collaspe.
Euphoric Inflation Insanity. Buying U.S. stocks because the Fed says it will proactively debase the U.S. dollar is like sitting on the beach in order to get a great view of an incoming tsunami. Any pleasure so derived should be short-lived, when the terror of underlying reality quickly takes hold.
If one were to view movement in the price of gold as a surrogate for anticipated inflation, for example, the issues begin to come into focus. Consider that last night's (October 14th) respective S&P 500, Dow Jones Industrial Average and NASDAQ Composite closing levels were up by 7.5%, 10.8%, 12.1% from a year ago, but the price of gold was up by 29.6% in the same period. Relative to gold, which tends to hold its purchasing power over time -- albeit sometimes in an anticipatory manner -- the S&P 500, Dow Jones Industrial Average and NASDAQ Composite have declined respectively by 22.1%, 18.8% and 17.5% year-to-year. This is against the prospective inflation environment being discounted by the gold market.
(Excerpt) Read more at zerohedge.com ...
IF things ever went to hell in a handbasket, your gold is going to be worthless than a bag of nickels or whatever the agreed to currency becomes. Or the Fed will just confiscate it like they did in the 30’s. It’s not going to the gold bugs handing out little bags of gold to each other for services and goods. This is a mania and you are going to get burned. Badly.
After 50 years the Fed figured there's no need to be the cleanest and biggest financier in the world, just the biggest since there's no other game in town which comes close.
Investing in the market is the practical thing to do to stay ahead of inflation from QE. Yes, gold works too, as does real estate, bullets, cigarettes, alcohol, etc. In fact I saw someone coming out of Sams Club yesterday with a flatcar full of cigarette cartons. However, I find stocks and mutual funds easier to trade.
Argentina suffered a sharp one-time currency devaluation in 2002. This is a forerunner of what America will suffer within the next 18 months, albeit for different reasons.
When the peso devalued, people who had gold and other hard assets were fine. Everybody else got wiped out.
This is what happened. It’s recent history. There’s nothing arcane or mysterious about this: Gold maintains its buying power - but people only notice this when the fiat currency gets wiped out.
If the Feds try to confiscate your Gold (and I agree it is likely that they will try) then you have several options.
* Don’t tell them you own any.
* Don’t tell them where it is.
* When they come for it, shoot them in the head.
* Move to Arizona and secede.
Coal is good.........it’s just difficult to store in quantities. I stored some in back yard, but the neighbors complained.
This may be FDR, Nixon and Carter are rolled into one big pile of stink. Only a handful of people are old enough to remember FDR.
Mike
“I’d keep it in FDIC bank CDs, no more than $100,000 each bank. And I’d keep her out of it as long as possible, until interest rates go up. But I’m overly cautious.”
The insurance limit is $250,000, but I tend to agree with the insured-accounts advice. I would keep the CDs very short (no more than a year) and look at credit unions for a slightly-oh so slightly-greater yield. Obama as president adds too much risk to stocks to make them attractive (they may do great, but the risk is just too high). Commodoties are for professionals only. 1% yields are near criminal (in essence, the government is imposing a 100% tax on savers by holding rates down), but plus 1% beats a loss.
Thanks for the ping, Candor7.
For the time being, I’m under water in FAZ (3X short financials) because of the fake market “euphoria.”
A couple of days ago on CNBC, a trader laughingly said something like “an unknown or invisible force is buying stocks to prop the market.” Everybody laughed in acknowledgement.
I believe it’s the feds because Soros and the like sold their stocks and went into gold.
I’m thinking to double up on FAZ because the financials are wilting and the foreclosure problem is mounting with much more foreclosures coming.
I know it’s dangerous but, what the heck.
bump
Been working on restocking the pantry. I wanted to pick-up some ground meat the other day. It was nearly $5 per Lb. I didn't buy and thought...been a while since I've needed it...when did those prices jump like that? Lots of stuff is being reduced in size one serving at a time. Inflation is already here, it is just hidden in the packaging.
You left out the most precious of all, unobtainium. I have 1 million ounces of it at a reasonable price for those interested.
Up until about five years ago, I used to make a few thousand dollars a year by researching small companies and evaluating information, trends, and ratios pretty well. Then, it got so things that happened seemed to have no connection to what the numbers told me, and good information became hard to come by. Part of it is that it's so tough for small businesses to grow. Another part is there seems to be manipulation where some people must know ahead of time what's going to happen.
I've accumulated some money in a Roth IRA CD, and wouldn't mind taking the interest off it to balance the budget, but it won't balance the budget if interest rates are less than 4%.
It isn't rocket science. There are a lot of young-at-heart, active, over 60 year olds. That interest rate goes to 4% and we'll all pretty much be spending the whole thing, much of it in local stores, movie theaters and restaurants. I suspect Obama's team is too stupid to realize that the low interest rates on savings are part of the problem.
Great post. Thanks.
Thanks had a lot going on the hubby retired but then had to have surgery so he was on crutches, still has a cast on etc. so you know who had to do all the things he normally does me :) and I’m getting old too lol so I haven’t had much time to do other things.
saw something I have never seen before in a classified ad hear in Texas. A car listed as “for sale” with a price of $11,000 or 9 gold ounce coins. Just odd. Have never seen that.
If you have a joint account it is more than the $250,000.
2 Recognize that individual deposits are limited to $250,000.00 per depositor in each FDIC insured bank through December of 2009. This limit includes all checking, savings and Certificate of Deposit (CD) accounts at any one insured bank. For example, if an individual has $10,000.00 in checking, $40,000.00 in savings and a CD of $150,000.00, the total deposits equal $250,000. All the deposits are guaranteed. If two or more individuals hold joint accounts, the limit is $500,000 for each joint holder of the accounts.
Have you considered hunting? I took about 1000 lb. of meat last year. Got 3 deer (two were given to me) and 6 feral hogs.
My maple-mesquite smoke-low fat sausage is a family favorite.
I invested in a good meat grinder and a good grain mill. Now I make my own multi-grain bread flour for about $.50/lb. I like Walton Feed for supplies and buy a pallet at a time to save on shipping.
Buy Altria (MO), Reynolds America (RAI), Windstream (WIN), BHP Billiton (BHP), Apple (AAPL), and Bristol Myers Squibb (BMY). Good current dividend return (4-5%) with expectations of dividend increases through the years, sound finances for most, some inflation protection, some premier growth with risk.
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