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alstry (35.28)

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October 28, 2010 – Comments (5)

Right now we are running a massive trade deficit AND budget defict........and unlike Japan, as a NET IMPORTER, we are exporting inflation.

As we import stuff and pay for it in dollars, the merchants in the exporting nation deposit those dollars in their banks and the countries must print up local currency to convert the dollars causing inflation in that nation......

then those countries take the dollars and go around the world buying up commodities driving up the price of commodities....which drive up the price of goods around the world

running both a trade deficit and budget deficit creates a very toxic situtation....because soon, those countries we are creating inflation in will no longer support such nasty rising prices and will demand a stop to the insanity...

bankers will start charging more for us to borrow and we will have to print even more to cover the rising interest rates......which will force us to print even more.......causing interest rates to rise even higher.......causing even higher inflation.....while salaries will collapse as few will be able to afford to pay much.....

this is where we could easily see $19,999 Gold and $300 silver.....as we will not be able to turn off the printing presses to stop the positive feedback loop of rising interest rates, increasing servicing costs, and rising commodity prices.....

is it possible....sinchy and alstry come together.....according to Mr. Gross, this is exactly where we are heading.....as we are a bunch of turkeys about to be put on the platter........

Did you really think we could just keep on borrowing and printing our way into prosperity?

5 Comments – Post Your Own

#1) On October 28, 2010 at 11:57 PM, alstry (35.28) wrote:

AS THE COST OF EVERYTING RISES....CITIES WILL HAVE TO RAISE TAXES AND SLASH WORKERS.....

The Newark City Council voted to adopt the 2010 municipal budget with 866 projected layoffs and a 16 percent tax increase in an afternoon meeting today.

While expressing deep concerns over the process by which this year's budget had been approved, the council voted 6 to 3 to adopt, saying if they delayed any longer the city could not meet its operating expenses for the remainder of the year.

"We are sitting here with our backs against the wall," said Council President Donald Payne. "We have to make sure that the workers in this town are being paid."

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#2) On October 29, 2010 at 8:03 AM, XMFSinchiruna (27.50) wrote:

And to think I'm only calling for $2,000 gold and $50 silver. :)

That being said, I have never viewed my price targets as likely tops, but rather as prudent, conservative price targets comfortably prescribed by the inevitable portion of the events already set into motion. I have always added the caveat that those prices could continue far higher, and that my targets may eventually look laughably conservative.

It's true there is a self-reinforcing negative feedback loop that we risk spiraling into under the present policies. That condition alone keeps the most frightening economic scenarios on the table.

The deleveraging can not be stopped, but as scary as the deleveraging is, it is not what concerns me most ... but rather, of course, the continual efforts to fruitlessly combat that deleveraging. In some ways, it's 1932 all over again, only way, way, way bigger in scale. The hyperinflationary component this time around will be a major structural difference between this and the previous depression.

If people are wondering why I gave up my delightful career as a yacht captain to sit here in front of a laptop every day and destroy my eyesight  ... I felt duty-bound to help investors understand the importance of exposure to silver and gold under these conditions.

I will issue new price targets for gold and silver once the $2,000 / $50 thresholds have been met (or shortly before).

P.S. Alstry ... it's Sinchi with an 'i'. :)

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#3) On October 29, 2010 at 8:43 AM, alstry (35.28) wrote:

There goes my spelling again.....

It is the combination of a trade deficit AND government budget deficit that does not permit middle ground.....combine that with massive private deficit and you have a recipie for disaster either way it goes.....

There is really no way to deflate without either hyperinflation or massive depression.......it is the only two paths we could take...and trying to inflate on one side, government.... and deflate the private sector only leads to a social disaster in our country as most of our nation functions off the private sector.

But that is changing rapidly right now as few really understand that within a few years...most of the nation will be directly dependent on the government for a check to survive......that is where our politicians and fed are leading us......

and for a nation running such a massive deficit already, that is a really big mess...

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#4) On October 29, 2010 at 8:52 AM, alstry (35.28) wrote:

U.S. on track for "fiscal train wreck": Roubini

How these guys come up with such insigtful analysis is amazing.....

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#5) On October 29, 2010 at 9:07 AM, alstry (35.28) wrote:

We have FEDERAL inflation....and private and local government deflation......which simply centralizes power to the FEDERAL government...

States, cities and schools are trimming their payrolls in a cost-cutting effort that has dramatically improved the financial condition of state and local governments.

In the past year, state and local employment has been reduced, mostly through not filling vacancies, by 258,000, or 1.3%, to 19.2 million workers, reports the Bureau of Labor Statistics. The cuts are the most since the recession of 1980-81. The federal workforce, meanwhile, grew 3.4% to 2.2 million in the past year.

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