Posted on 02/03/2005 8:40:47 AM PST by Paul Ross
Thursday, February 3, 2005
Gates, Buffett, China Posted: February 3, 2005 1:00 a.m. Eastern
© 2005 WorldNetDaily.com Decisions by the world's two wealthiest men to bet on a further weakening of the U.S. dollar, coupled with China's lack of confidence in American currency should grab the attention of every working person, says Craig Smith, CEO of Swiss America Trading.
Microsoft Chairman Bill Gates is following the example of Berkshire Hathaway Chairman Warren Buffett, who made a pretax gain of $412 million in the fourth quarter of 2004 by buying foreign currencies. Citing widening U.S. trade and budget deficits and a federal debt of $7.62 trillion, Gates said in a TV interview at the World Economic Forum in Switzerland last weekend he expects the dollar to extend its three-year decline. "I'm short the dollar," Gates said, according to Bloomberg News. "The ol' dollar, it's gonna go down."
Smith, whose company specializes in tangible assets, told WorldNetDaily he can't believe this news is not the big headline across the nation. "When I saw this quote, literally I had to catch my breath," Smith said. "This is a clear-cut signal that the people who know money are running -- they are not walking -- in my opinion, they are running from the dollar." Smith said the actions of Buffett, worth more than $42.9 billion, and Gates, $46.6 billion, are significant in light of the lack of confidence recently expressed by leaders of the world's fastest growing economy, China, which has its currency pegged to the dollar. Fan Gang, director of the National Economic Research Institute in Beijing, said last week at the World Economic Forum that "the U.S. dollar is no longer -- in our opinion -- a stable currency and is devaluing all the time." Chinese Central Bank adviser Yu Yongding also has chastised U.S. policy makers, saying, "The U.S. should take the lead in putting its own house in order."
Hedging your bet Since the beginning of 2002, the dollar has dropped 26 percent against a basket of six major currencies, and the trade deficit grew to a record $609 billion. In addition, the Bush administration expects the budget deficit this year to hit an all-time high of $427 billion.
Smith notes that big investors such as Buffett, Gates and the Bank of China can hedge their portfolios by shorting the dollar -- making a profit off of its decline -- but the average person must turn to tangible assets such as gold. "That's why this [news] is music to our business," he said. Dollar-denominated investments such as retirement, 401K, college and savings accounts are in jeopardy with the currency's slide, Smith said. "An average American has to ask himself this question, 'If the two richest men in the world are abandoning the dollar, why should I stay in it?'" Stephen Moore, senior fellow in economics at the Cato Institute in Washington, told WorldNetDaily, he still believes it's anybody's guess which way the dollar will head. "These guys have been famously wrong in the past," Moore said, referring to Gates and Buffett, who are partners in investment deals. "I don't think there are any gurus who know what is going to happen." Moore says he has faith in the Bush administration and Federal Reserve Chairman Alan Greenspan, whose announcement today of a quarter-percent interest-rate hike led to a rise in the dollar. "I think the dollar has fallen about as much as it should," Moore said, "and the fact that the White House and Greenspan have made it clear that the dollar's decline is not good for the consumer makes it more likely it will be addressed." Smith points out, however, that when the dollar began sliding in 2000, then-Treasury Secretary John O'Neill said the Bush administration would maintain a strong dollar policy. When O'Neill was replaced with John Snow, the new secretary said the same thing. "It still kept falling," Smith said. "We can't depend on the dollar, with the debt, the twin deficits and the trade gap." Smith points out the silver lining that usually accompanies a drop in the dollar -- an increase in exports because U.S. products become cheaper for foreigners -- has not materialized. In fact, the November report was predicted to show a trade deficit of some $50 billion, but instead turned out to be $60.3 billion. Losing our place? Greenspan has expressed concern that the deficits poses the risk that investors may stop buying U.S. assets, propelling the dollar even lower. In that situation, Smith said, interest rates will have to rise in order to encourage people to hold on to the dollar. But consequently, he warns, the "stock market goes in the toilet." Smith said his big concern is that ultimately the U.S. may lose its place as the reserve currency of the world. He speculates that this possibility may be behind the investment strategies of Gates and Buffet. "We are first world reserve currency issued by a debtor nation," Smith said. "How long will the rest of the world accept that?"
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Didn't happen in the Great Depression, which the coming collapse will likely eclipse. There was no money for the prices to be pushed higher, because the middle class was virtually wiped out...and the rich have only a limited appetite for the hard goods you apparently so treasure. And the foreigners will be able to outbid the U.S. citizens for their own property. Little Child.
says Craig Smith, CEO of Swiss America Trading
Craig Smith? The guy who sells little gold coins on the premise that America is coming to an end? This article is being written as if he's some kind of expert WorldNetDaily ran across. But it's nothing more than Smith spouting his same old lines mixed in with new stuff scabbed off other real stories which are used to infer they might be direct quotes for this bogus "article".
Smith is pushed by WoldNetDaily as a speaker and talk show guest. while at the same time they are "interviewing" him. Or is he interviewing himself since at the top of this thread the author is indicated as Smith himself but WordNetDaily does not name who wrote this if you follow the link.
WorldNetDaily is also selling Smith's books.
Give me a break. This is nothing more than advertising so Smith can sell little gold coins. WorldNetDaily is showing a bit of incest here.
Smith is an expert all right. An expert at selling little gold coins.
Jim Robinson ought to get paid for this advertisement.
I personally am putting mine into U.S. oil and gas reserves. Best bet in the coming crash that doesn't actually precipitate it, like these currency traders do.
That's because you had DEflation during the DEpression, not INflation.
...Sheesh!
We can't, and I'm living proof.
I died in 1980 from those exact causes.
The Federal Reserve has complete control of the number of dollars in existence. If the Federal Reserve mopped up all the dollars in the world except $1, that $1 would be pretty valuable. If the Federal Reserve left the presses on overnight and increased the number of dollars a hundredfold, the value of a dollar would decrease to 1/100th of its previous value.
Since the Federal Reserve has complete control of the money supply, the demand for money (economic activity) is mere noise.
"No, Dear Child. The very definition of "inflation" is that things cost more...that means that things have a higher price...things like your home, guns, stocks, and cattle."
Things do not have a higher 'value', they have a higher "price" because dollars have a lower 'value'. If you think it is fair to pay taxes upon the sale of assets that have not increased in "value" but only in "price", you are a sucker.
China: Home of the greatest number of internet connected computers. Also home of the greatest number of virus infected machines, with 85%+ infection rate. Reason: Nearly all PCs use pirated software for their OS, leaving little incentive for purchasing anti-virus software. Small percentage of Linux users. Most Western sites off limits to the average Chinese PC user.
I honestly think you young pups know nothing about the Great Depression...and just how possible it would be to repeat today.....
You forgot that the Japanese will own most of America. Remember that one?
Actually, again, no. They can't mop up anything. All they can do is print more.
BTTT
The fair is something that comes to town once a year...for children.
As for Dollars having a lower "value," you'd only know it if you were buying things *outside* the U.S.
And yes, such foreign assets cost more today.
But you haven't seen groceries here in the U.S. rise 30% since 2002...even though compared to foreign currencies, the Dollar has dropped that much.
You seem to not understand monetary policy. You might want to search on "open market operations" and see how it works.
Gates and Buffet are using their wealth and fame to manipulate the U.S. currency markets. If the two riches people in a American get together and short the dollar, then hit the media with the doom and gloom, its a one two punch that will force the dollar down. Soros did the same thing in the 90's to Russia, now he can't go back or he will go to jail.
It's illegal and both should be investigated by the SEC for security fraud.
Holtz
JeffersonRepublic.com
That's right!
I was working in Clearwater at the time the Japanese were buying up some big resort places.
Gee ... what happened? ;)
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