INTERVIEW WITH DR. KURT RICHEBACHER -- Weekly Commentary

Investment Rarities ^ | 12/24/02 | DR. KURT RICHEBACHER

[arete]

Drastic weakness of the U.S. economy is the great shock waiting to happen for the world. A slumping dollar will turn it into a nightmare.

Nothing like sitting around waiting for the other shoe to fall. The credit bubble is so enormous, that it cannot even be rationally imagined.

Richard W.

[arete]

FYI

Comments and opinions welcome.

Richard W.

[krodriguesdc]

I have always felt this to be true...

HMMMM...

slick willy and the boys did a number on this country...

[sarcasm]

In order to avoid the worst, the Fed may be forced to drastically raise interest rates?

Increasing interest rates will result in the crash of residential real estate and what's left of consumer demand.

[arete]

In order to avoid the worst

The key word here are "worst". I think that the FED is cornered in a no win situation of their own making. Hitting the consumer and the housing market with a 2x4 may be necessary if the dollar gets flushed. I don't think that there is an easy way out of this.

Richard W.

[dalereed]

I've been saying this for quite awhile.

When it crashes it's going to make the depression look like childs play.

My biggest fear is that when real estate crashes that the forclosures will be taken over by HUD and not resold but will become government housing just about ending the private ownership of property making us slaves to the state.

As firmly convinced that the last depression was planned and perpetrated to steal the industrial wealth of this nation the next one has been planned all along to steal the real property but place it in government hands where everyone will be renters from the government and therefore good little obediant slaves to their socialist state.

[sarcasm]

Gold's Rally May Extend Into Early Next Year, Traders Predict

Dollar May Fall; N. Korea, Iraq Tensions Seen Crimping Recovery

[arete]

I see gold going up as long as the dollar declines. If it catches on as an alternate to paper assets (stocks and bonds) which continue to decline along with the dollar, then it may finally gain some additional pricing traction.

Iraq and North Korea are wildcards. Everyone expects a quick eary victory in Iraq but that is nonsense. They're still shooting at us in Afganistan and I don't expect things to be any different in Iraq. No way would we ever challenge North Korea. We'll yell alot but in the end they will do whatever they want.

All the war talk and military action will be blamed for the weakening economy which will let the FED and the politicians off the hook.

Richard W.

[sarcasm]

All the war talk and military action will be blamed for the weakening economy which will let the FED and the politicians off the hook

Bush I believed this too - look at what happened to him.

[arete]

look at what happened to him.

Bush #1 was so far out of touch with the American people that he didn't have enought common sense to get out of his stupid power boat in a recession. I remember all those pictures of him cuising and waving to the cameras as people were losing their jobs. What a nitwit.

Richard W.

[sarcasm]

Apples don't fall far from the tree.

[David]

"I see gold going up as long as the dollar declines."

Dollar 'declines' in terms of what? As the dollar declines against the larger market foreign currencies such as the Euro and the Yen? Sure--thats easy. However if the dollar remains flat against the Euro and the Yen, does the price of gold go down against the dollar? I think not necessarily.

The dollar may well continue to 'decline' against gold, even if the dollar does not 'decline' against the Euro or the Yen. Because all of the fiat currencies are losing credibility as stores of value. In light of hindsight, it may well appear that the drop in central bank controlled interest rates may well turn out to have been the cause of their loss of control of the fiat money system. When your return on T-Bills was 5%, even if inflation was running at 2 or 2 1/2, you were still earning a rate of return on your stored liquidity. But when your T rate drops to 1%, the dollar ceases to be an attractive or safe appearing place to store liquidity.

[free from tyranny]

Thank you to Mr.'s Clinton and Rubin for designing and implementing the "last supper". Actually, we citizens of the U.S.A. deserve what we are about to experience. In as much as we let it happen to us. We have truely lost our sense of direction.Just as the children of Moses did when Moses went to the retrieve the Ten Commandments from Mt. Sinai.

[uncbob]

I was wondering how long it was going to take the instant gratification buy now and max out all your credit card stupidity to finally blow up
This generation has no conception of saving for the future or waiting to be able to afford to purchase what they want rather than throwing plastic around

Looks like a hard lesson is going to be learned

[rohry]

"It’s not productivity that creates wealth. It’s investment spending alone and not consumer spending that propels economic growth. The wealth effects of free enterprise have always accrued through the building of factories, not through the stock market or reckless consumer borrowing and spending."

Great post! I've printed this out for my family to read. There are more good quotes here than I've seen in any 10 financial articles posted here.

[arete]

There are more good quotes here than I've seen in any 10 financial articles posted here

Yeah, I thought that you might like this interview. He's one of them Austraian guys. :-)

Richard W.

[hinckley buzzard]

Right now the Euro is edging toward a price of $1.03 (It was around 89 cents a year ago). Gold is up again, 346.30 bid, 347.30 asked.

Although Euro-land is sucking wind economically, as is Japan, they also are net positive in their current accounts and balance of payments with the US. That means their currencies are relatively
safer than the dollar, and as the dollar continues its slide, this advantage will accelerate.

The real danger is a precipitous drop in the dollar, with a corresponding flood of foreign money out of US equities (foreigners currently own 24% of the US Stock markets as well as a high percentage of US government and corporate bonds.) That's where the return to high nterest rates would come into play, as well as the collapse of the stock mrket. A collapse of the real estate market would quickly follow.

I'm planning to move more assets into Euros or other currencies, foreign bonds, gold and gold shares, and hopefully profit nicely in the coming year.

[David]

"Right now the Euro is edging toward a price of $1.03 (It was around 89 cents a year ago)."

Most of that happened early last summer when the Euro went from .88 to 1.01; it then backed off to .987 and traded in a range in that area until the last couple of weeks--no denying that the move out of the range up to the 1.0293 area looks like a resumption of the trend.

Balance of payments and current accounts have been strongly against the US and in favor of Euro and Japan throughout the period--so it is difficult to see that as the driving force. Further, I can still see significant overseas transactions where the overseas profit in US dollars is promptly repatriated to the US in some form--much of it into the US stock market.

At this moment, gold is clearly in a strong uptrend--and it is in uptrend against the Euro and Yen also. So we tend to expect gold to continue up whatever happens to the dollar exchange rate. Point is that except for gold shares, it is difficult to find an easy trouble free way to do this. But wish you the best of luck. Because I do think the gold is going to continue to move up for some time.

[meenie]

I've given up on the Japanese model of a fifteen year depression. The Japanese have a real savings rate but most of it is laying under the mattress. We are looking at a situation near the Argentina model. They had a 30% inflation rate due to their printing press.

When the peso converted to the American dollar, this eliminated any confidence in the value of their peso. We face a similar problem when the dollar run starts with our foreign debt holders.

The last one out the door will realize his dollar is worthless. We don't have the saving, our manufacturing base is destroyed, we are not self sufficient, we will be similar to the Argentinians where no one will trade with them because their currency is worthless. We had savings during the Great Depression and a value to our coinage.

Today the savers can put their money under the mattress and it will be destroyed in the depreciation that is coming. I think that hard assets such as gold and silver will be the only thing that will stand the test.

[imawit]

Doesn't anyone realize that those in power and their intellect about the economy is what got us where we are and, guess what...they are the ones still in power that we be leading us out of this mess.

What kind of cruel insanity is this that no one is recognizing. All they are going to do is see that they can step aside and dodge the bullet.