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alstry (35.36)

Why The Gold Bugs Aren't Thinking

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April 21, 2011 – Comments (16)

In the end, it is the SYSTEM that is key.  We depend on it for Food, Water, and Security.

Gold only functions in a SYSTEM of TRADE.  In order for the system to function, people must be able to trade.  Relatively few people hold gold today.  So if gold is money, relatively few will be able to buy anything and relatively few will be able to produce.

What good is gold in Detroit where there is little valuble production to spend it on?

The key to any SYSTEM of trade is the capability to trade...the more that can trade, the more that can be produced......and just like in a system of currency where the top 1% hoard all the currency, if the same is true for gold, there will really be no system and gold and currency will be worthless.

Buffett understands the principal well as it applies to both currency and gold and why he advocates high tax rates to give the money back to the masses.  He knows that without the masses spending, there is no system.

If the TRADE system doesn't function for the masses...their only choice for FOOD and FUEL is the FORCE system....and this is the SYSTEM currently replacing the TRADE system all over the world as currency is being cut off from the masses and losing its value simultaneously....otherwise known as Zombulation.

In an envrironment of FORCE...neither gold or currency serve much value to the man with a gun....he prefers the production itself and not the derivative of production.

Right now the bankers are cutting off the private sector from currency and we are beginning to cut off the public sector as well....fewer and fewer Americans will be able to trade in this environment as Food and Fuel keep rising........expect FORCE to become the more common form of Money as this trend continues.

You NEVER want to concentrate money in the hands of ONLY a few in a specialized Industrial system....unless you are prepared to use FORCE yourself.

So for those of you watching the ticker or thinking about gold....you may want to focus on FORCE soon as fewer and fewer can trade.

AT&T - 5,900 Job Cuts in First Quarter

16 Comments – Post Your Own

#1) On April 21, 2011 at 3:07 PM, buffalonate (94.37) wrote:

Did you forget to take your medication again?  The economy is growing and unemployment has been going down for months so quit your apocalyptic ranting.  You sound like you have been listening to too much Glenn Beck.  It sounds like you are telling people to buy a gun and not gold. 

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#2) On April 21, 2011 at 3:17 PM, chk999 (99.97) wrote:

GE posted an 80% rise in profits this quarter.

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#3) On April 21, 2011 at 3:31 PM, catoismymotor (36.16) wrote:

What good is gold in Detroit where there is little valuble production to spend it on?

Let's see you set up a table along 8 Mile, stack it with gold coins and bullion. Stand aside with a stop watch and time how long it takes for it to evaporate.

In an envrironment of FORCE...neither gold or currency serve much value to the man with a gun....he prefers the production itself and not the derivative of production.

Pardon me for borrowing a quote that I think may help express my thinkin on this:

A lawyer with his briefcase can steal more than a hundred men with guns. - Mario Puzo

To use the law as your muscle lends legitimacy to a forceful take over. The people are less likely to become concerned, causing the hostile party trouble.




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#4) On April 21, 2011 at 5:09 PM, alstry (35.36) wrote:

buffalo,

Actually, the unemployment RATE is going down, employment is dropping as well.

chk,

Most of GE's sales is to government, or government benefitted entities, in case you havn't noticed government is borrowing about twice its tax receipts to function.....let's see how long that can last.  Homeowners thought it could last forever....and so did the Fed.

cato,

As an attorney, I resemble that joke.  Government can govern only with the consent of the people, otherwise the people will withdraw their consent.  Around the globe, you are seeing humanity rejecting corrupt governments....it will possibly will come here if we don't reform soon.  WATCH Inside Job.

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#5) On April 21, 2011 at 5:31 PM, chk999 (99.97) wrote:

Most of GE's sales is to government, or government benefitted entities, in case you havn't noticed government is borrowing about twice its tax receipts to function.....let's see how long that can last.  Homeowners thought it could last forever....and so did the Fed.

Your source for this factoid is? 

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#6) On April 21, 2011 at 5:39 PM, alstry (35.36) wrote:

GE sells to health care.....70%+ of health care spend is government related.

GE sells to defense....guess where that spend comes from?

and for the rest, take a look at its 10K and see where the revenues are derived....and almost all of GEs revenues are directly or indirectly related to government spend.

And as long as Government can borrow and spend like homeowners did....GE will be fine, but when it can't.....well, we have been there before, havn't we?

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#7) On April 21, 2011 at 5:55 PM, buffalonate (94.37) wrote:

GE does very little business with government.  Most of its profit comes from commercial finance and its oil and gas business.  It also makes train engines, appliances, and imaging equipment and wind turbines.  The only thing they make that the government buys is jet engines.  You don't even bother to know what you are talking about. 

Employment is going up.  If you don't trust the government source then even the paycheck servicers also put out numbers showing that employment is going up. 

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#8) On April 21, 2011 at 6:11 PM, chk999 (99.97) wrote:

GE sells to health care.....70%+ of health care spend is government related. 

 

"In 2004, private insurance paid for 36% of personal health expenditures, private out-of-pocket 15%, federal government 34%, state and local governments 11%, and other private funds 4%." - this is a quote from Wikipedia. It looks like the various governments cover about 45%. That's really a lot less than 70%+. I'll assume the rest of your numbers are of similar accuracy. 

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#9) On April 21, 2011 at 6:15 PM, alstry (35.36) wrote:

wind tubines is financed with government subsidized loans....my buddy is an executive for one of the largest wind turbine manfucturers in the world and I know the business well.

Much of its commerical finance business is subsidized by government guranantees and businesses that sell to the government.

GE's medical business is sold into an industry that the vast majority of revenues comes from medicare and medicaid and government health insurance.

Train engines are sold to train companies that carry government subsidized grain and other govenrment subsidized agricultural products.  My brother in law makes an excellent income growing government subsidized crops which are sold to a nation where 60,000,000 people receive government social security checks, 50,000,000 people recieve government food supplement checks, 30,000,000 people who get government paychecks/grants/contracts, and 20,000,000 people who get government unemployment checks....plus all their dependents of the above.

And all of the above is dependent on a government deficit now exeeding $1.6 trillion dollars PER YEAR...and growing rapidly.

Next time you skate on the ice, look up.

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#10) On April 21, 2011 at 6:16 PM, ChrisGraley (29.72) wrote:

Gold can be melted down into bullets.

Just make sure you retreive them after your target is eliminated. 

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#11) On April 21, 2011 at 6:22 PM, alstry (35.36) wrote:

From Wikipedia:

Public spending accounts for between 45% and 56.1% of U.S. health care spending.

This does NOT include the payments from the health insurance of the 30,000,000 government workers, grant recipients, and contractors and their dependents.

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#12) On April 21, 2011 at 7:01 PM, UKIAHED (36.15) wrote:

Most of GE's sales is to government, or government benefitted entities

and for the rest, take a look at its 10K and see where the revenues are derived....and almost all of GEs revenues are directly or indirectly related to government spend.

From GE 10-K 2010

 Total Revenue $150.2B

US derived revenue $70.5B

 

From GE 1Q11 webcast:

 •International growth accelerating … Brazil +80%, Australia +78%, China +12%, India +33%

 

OK Al – I will skate on the ice.  Your statement that “almost all of GEs revenues are directly or indirectly related to government spend”  just does not make sense in light of the 10-K.  With only 47% of GE revenue from the US and shrinking – it would make more sense to state that a fairly small % of GE revenue comes from government spend…  at least to the extent that your comments seem to relate to US government spend…

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#13) On April 21, 2011 at 7:25 PM, buffalonate (94.37) wrote:

GE's revenue for 2010 was 140 billion of which 6 billion was wind turbines.  Much of that was from sales overseas.  Your argument doesn't make sense. 

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#14) On April 21, 2011 at 7:36 PM, alstry (35.36) wrote:

Excellent UKI....we are learning about money.  You get an A for thinking.

And of the foreign revenues, what percentage of those come from nations running government deficits?

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#15) On April 21, 2011 at 8:23 PM, UKIAHED (36.15) wrote:

And of the foreign revenues, what percentage of those come from nations running government deficits?

Not sure I agree completely with the question – to me the question should be sustainable deficits vs current US style unsustainable deficits…

But to answer your question:

From GE 1Q11 webcast:

 •International growth accelerating … Brazil +80%, Australia +78%, China +12%, India +33%

 

Per county results for deficit spending – all of which I believe are sustainable:

Brazil:

Net debt should drop to 30 percent of gross domestic product by 2014, and the country will likely narrow the nominal budget deficit to zero in the next administration, Bernardo told O Globo.

Australia:

·  A 2011-12 deficit of $44.5 billion - 3.4% of GDP;

·  A 2012-13 deficit of $28.2 billion - 2% of GDP and;

·  A return to surplus in 2015-16.[5]

 

China:

BEIJING - China budgets 1.05 trillion yuan ($154.4 billion) of fiscal deficit this year to support economic growth as government revenue will fall significantly short of expenditures, says a government work report to be delivered by Premier Wen Jiabao at the parliament's annual session Friday.

 

India:

In 2010/11 the government expects its fiscal deficit to be at 5.1 per cent (of GDP) compared with its earlier budget estimate of 5.5 per cent thanks to windfall gains from telecom spectrum auction.

 

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#16) On April 21, 2011 at 9:36 PM, alstry (35.36) wrote:

You failed to include unsustainable Europe, which makes up a large part of GE's revenues.....and those third world countries, but for U.S. aid, would not be able to purchase from GE......which makes up another material amount

just factoring the above, we get well beyond most......

you failed to identify what % of GE's revenues come from the BRICs....which receive a large part of their revenues from the unsustainable deficit running Americans and Europeans.

Welcome to the Alstrynomic Theory of Collective Interdependence....the systemic relationships between nations in a globalized economy.

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