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topsecret09 (36.21)

Inflation Is being taken too lightly

Recs

7

September 25, 2009 – Comments (16)

"It's unbelievable how Federal Reserve Chairman Ben Bernanke said that the U.S. recession is "very likely over", but once again this week the Federal Reserve has left interest rates at a record low of 0%. If the economy was truly rebounding, wouldn't you think now is the time for Bernanke to raise interest rates to 1% or possibly even 2%? He refuses to do so because he knows without the free money that is flooding the system, our financial markets would once again collapse to new nominal lows. While that would be the politically unpopular move, at least it would ensure the survival of our country. By giving in to political pressure and keeping interest rates at 0%, soon the flood of dollars will break the dam and collapse the U.S. financial system.

 

We as Americans must stand up now and express our outrage with the Federal Reserve's destruction of our nation.. Americans don't seem to understand that inflation is a tax,and the TAX MAN COMETH....

 

Most of today's youth in America learned at an early age from their parents that back in the 1950's, it cost $0.50 for a movie ticket, $0.16 for a box of Corn Flakes, and $0.05 for a candy bar. A kid's first reaction after learning this normally is, "Wow, I wish I was alive back then when everything was so cheap! I would be able to go to the movie theater every day and eat candy all day long!" Kids were taught that prices have gone up and to be jealous of their parents. They were never taught that prices have gone up only because of the dollar going down. Instead of being taught to envy their parents for being so lucky to buy things cheap, they should've been taught to be furious at the Federal Reserve for stealing their parent's wealth through inflation.

 

It took 25 years for our national debt to double from $257 billion in 1950 to over $533 billion in 1975. Most recently, our national debt has more than doubled from $5.8 trillion in 2001 to its current level of $11.8 trillion in just eight years. Our national debt is now growing three times faster that it did decades ago, which means we should expect a very minimum of three times faster inflation. Therefore, if it took 60 years for a movie ticket price to rise from $0.50 to $7.50, it will most certainly rise to at least $112.50 within the next 20 years.

 

The U.S. government is now estimating its budget deficit over the next ten years to be $9 trillion. We all know they are trying to downplay the potential deficit and be as optimistic as possible. It wouldn't surprise me If the government defecit reaches 9 trillion In the next three to four years. This will lead to more money printing and further precipitate a downward spiral in the dollar.

 

We are at the point where our national debt simply cannot be paid back and once inflation spirals out of control in the form of rising prices, interest rates will likely rise to over 20% once again. Most of our national debt today is made up of short-term t-bills and when we reach a point where the Federal Reserve must print trillions of dollars per year just to make interest payments on our national debt, that is when the financial system will truly collapse, and only those with physical gold and silver will be able to survive. The current standard of living and way of life in America is unsustainable and may be coming to an end. Those who thought we could continue on with increasing our budget deficits and national debt forever without ever paying for it, will feel very foolish when the smoke clears,and the mirrors are cracked and broken.... TS

16 Comments – Post Your Own

#1) On September 25, 2009 at 6:02 PM, davejh23 (< 20) wrote:

"It wouldn't surprise me If the government defecit reaches 9 trillion In the next three to four years."

This is pretty much guaranteed.  $2 trillion in deficit spending has plugged a gaping hole in our economy.  There is no way that consumer spending will fill that hole again within the next decade.  If gov't continues to spend money it doesn't have to make it look like we have a growing $14+ trillion GDP, we will very likely add $9 trillion to the national debt in the next 4 years. 

If it gets to a point where foreign buyers of long-term treasuries are non-existant, and the Fed continues to buy treasuries to support our deficit spending, true hyperinflation will follow.  Who knows if it will get to that point?  As it is, the only budget items larger than interest payments on our debt are defense spending and SS and Medicare...SS and Medicare are flawed and will surely not continue to exist in their current form.  Interest payments could easily become the largest budget item within a decade...a proof positive sign of bankruptcy.  Will we default on our debt, destroy the dollar, or both? 

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#2) On September 25, 2009 at 6:06 PM, ChannelDunlap (< 20) wrote:

Here what I can never quite wrap my head around.  if we assume the doom&gl- I'm sorry.  If we assume that our financial system "will truly collapse", this obviously will lead to extreme social unrest, riots, looting, theft, etc. etc.

How are gold & silver going to help people to survive?

If I have food, or ammo, or shelter, or gasoline - whatever people may commonly be after in such a situation - would I give it up for a shiny coin?  Hell no.  I'd give it up for something I could actually use, but not for a coin, I don't care what it's made out of.  

Maybe you can help me understand this.

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#3) On September 25, 2009 at 6:09 PM, Chromantix (97.61) wrote:

+1 rec for you.  Let the nay-sayers refute (please?)

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#4) On September 25, 2009 at 6:13 PM, Dannysea (< 20) wrote:

Reminds me of a interview I heard, "Our country can grow a deficit to over 200 Trillion."  There was no real quantification and viewed quite Calais.

Well that would explain a lot about our government.

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#5) On September 25, 2009 at 6:48 PM, topsecret09 (36.21) wrote:

#2) On September 25, 2009 at 6:06 PM, ChannelDunlap (< 20) wrote:How are gold & silver going to help people to survive?    If our currency collapses,which IS ENTIRELY POSSIBLE,paper money Is WORTHLESS. Gold and silver as well as other precious metals will AWAYS HAVE INTRINSIC VALUE,weather or not there are actual goods or services that would be available to buy.....   In actuality paper money has ALWAYS BEEN WORTHLESS,but the United States was never considered a CREDIT RISK up until the past 5 years or so. If China or Japan suddenly stopped buying U.S DEBT,our whole economy could collapse....  TS

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#6) On September 25, 2009 at 6:49 PM, whereaminow (20.95) wrote:

ChannelDunlap,

I am actually in agreement with you, as I mentioned here and then discussed with TMFSinchiruna later in the comments. Gold only provides an economic function when it has a purpose, and government has destroyed that purpose - to facilitate exchange among private citizens. Saying that people will return to metal in response to a fiat collapse is not supported by historical record.

David in Qatar 

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#7) On September 25, 2009 at 6:55 PM, RonChapmanJr (91.04) wrote:

Gold and silver won't help people.  I agree with Dunlap which is why I recommend that people do buy things that will actually help them continue on with their lives.  Guns, ammo, food and the knowledge to obtain and utilize them will be of utmost importance.

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#8) On September 25, 2009 at 7:08 PM, topsecret09 (36.21) wrote:

    Obviously If  a complete panic occurs you cannot EAT or DRINK gold or silver....   CONCEPTUAL METAPHOR defined...     A metaphor (or figurative comparison) in which one idea (or conceptual domain) is understood in terms of another. In cognitive linguistics, the conceptual domain from which we draw metaphorical expressions to understand another conceptual domain is known as the source domain. The conceptual domain that is understood in this way is the target domain. Thus the source domain of the journey is commonly used to explain the target domain of life.       TS

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#9) On September 25, 2009 at 7:11 PM, topsecret09 (36.21) wrote:

 And by the way... This week was next week,last week...  :)  LOL !!!!

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#10) On September 25, 2009 at 7:12 PM, Sozurmama (22.31) wrote:

ChannelDunlap

I completely agree with you. Saying "only those with physical gold and silver will survive" is incredibly ignorant, and im sure it was a mistake. We only use currencies (precious metals included) because trading goods is inconvenient at the present time.

If our financial system collapses, only those who can get enough food and water will survive....though physical gold and silver may be used to beat in the heads of those who have food and water.

 

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#11) On September 25, 2009 at 7:21 PM, topsecret09 (36.21) wrote:

#10) On September 25, 2009 at 7:12 PM, Sozurmama (71.57) wrote:

ChannelDunlap

I completely agree with you. Saying "only those with physical gold and silver will survive" is incredibly ignorant, and im sure it was a mistake...       Obviously If  a complete panic occurs you cannot EAT or DRINK gold or silver....   CONCEPTUAL METAPHOR defined...     A metaphor (or figurative comparison) in which one idea (or conceptual domain) is understood in terms of another. In cognitive linguistics, the conceptual domain from which we draw metaphorical expressions to understand another conceptual domain is known as the source domain. The conceptual domain that is understood in this way is the target domain. Thus the source domain of the journey is commonly used to explain the target domain of life.       TS

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#12) On September 25, 2009 at 7:50 PM, Sozurmama (22.31) wrote:

TS//REL TO FOOLS

wow. are you saying if gold an silver were food, that only those with physical gold and silver would survive?

i guess i cant argue with that....

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#13) On September 25, 2009 at 8:21 PM, ajpa75 (57.15) wrote:

Very well said. I sure hope there are some people that take action.Wright your congress man the Pres anyone who will listen. Stand up and be counted

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#14) On September 25, 2009 at 8:30 PM, AvianFlu (36.82) wrote:

I agree. Mysteriously, there has not been a lot of concern or talk about inflation lately...but soon there will be no shortage of discussion. Well, as I often say, "preparation...not perspiration".

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#15) On September 25, 2009 at 9:06 PM, topsecret09 (36.21) wrote:

#12) On September 25, 2009 at 7:50 PM, Sozurmama (71.57) wrote:

TS//REL TO FOOLS

wow. are you saying if gold an silver were food, that only those with physical gold and silver would survive?

i guess i cant argue with that....     LOL !!!!!!!!!!!

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#16) On September 25, 2009 at 9:27 PM, topsecret09 (36.21) wrote:

 Heres a relevant post from "SINCH" In a different blog that most should appreciate....    #10) On September 21, 2009 at 12:59 AM, TMFSinchiruna (95.22) wrote:

whereaminow

You know I have deep respect for your mind and your contributions to this site, but I find this post disappointing on several points.

Third, gold is easy.  It's an easy play. You don't have to think or do research.

If you truly believe this, then it's just as well that you not invest in gold or silver. It is NOT an appropriate investment for anyone who does not conduct the necessary research on the myriad factors affecting their prices ... from inflationary drivers to global mining activity ... from investment demand to industrial demand ... from manipulation by bullion banks through leveraged short positions to the algorithmic trading of hedge funds on technical moves ... all of these factors must be keenly understood by any investor looking to follow the central tenet: "invest in what you know". This has to be a miscommunication of sorts ... I know you don't really think it's easy to understand the precious metals market. It's a continuous research process .... and after countless thousands of hours dedicated to the task, I remain in a disadvantaged position relative to the bullion banks and the brokerages in their incessant games. There is nothing easy about gold and silver as investments, and had you been exposed to the 2008 correction and the 50-90% decline in mining equities, you'd agree. :)

I used to say that gold is money.  I was wrong.

With all due respect ... you had it right the first time. Like the advice they give to test-takers ... stick with your first answer. :)  Greenspan just finished reiterating his position from several years ago that gold remains the ultimate form of payment in the world. Greenspan stated at a conference in NY earlier this month: "What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment". That should end the exhausting debate on the topic. Gold is money ... period. It is not "easy" to come to this conclusion, though ... it requires research to understand the nature of gold in our modern global currency system just as it requires research to invest successfully in the sector.

If we suffer from some massive currency calamity ...Gold will have little usefulness.

That is some contention, David. If the USD deteriorates to a point where the exchange economy seizes and localities adopt scrip currencies like the Worgl experiment you cite ... the price of gold would have already skyrocketed beyond $3,500 on the way towards any such dire scenario. Since I encourage investors to constantly hone carefully formulated target prices and a strategy for converting back into exposure to other currencies as conditions warrant, then for them gold would have already proven a most excellent investment. I hope you're not suggesting that central banks will exchange self-devaluing scrip between each other as a medium of international trade.

I always appreciate the discussion, but I hope you understand I couldn't let some of those points go unchallenged. Scholarship on gold and silver has, for better or worse, become the central focus of my professional life for the past several years. Readers can draw their own personal conclusions, but I believe I have established a solid case through my collective writings that gold is money, that successful pm investing requires a significant amount of research, and that gold will increase in price commensurate with the scale of any collapse in major fiat currencies ... especially the USD.

""In the absence of the gold standard, there is no way to protect
savings from confiscation through inflation. ... This is the shabby
secret of the welfare statists' tirades against gold. Deficit spending
is simply a scheme for the confiscation of wealth. Gold stands in the
way of this insidious process. It stands as a protector of property
rights. If one grasps this, one has no difficulty in understanding the
statists' antagonism toward the gold standard."

 - Alan Greenspan, from the book "Capitalism, the Unknown Ideal" by Ayn Rand with additional articles by Alan Greenspan - 1967

"Gold still represents the ultimate form of payment in the world."

 - Alan Greenspan - Testimony before US House Banking Committee, May 1999

"What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment"

 - Alan Greenspan, 2009

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