Thursday, September 13, 2012

13 Sept 2012

Is it different this time?
Is it different this time?

I really don't know what will happen to stocks, but they are overbought right now.  The Fed is clearly desperate, and I don't see what upside in the future they can surprise with except announcing a larger amount.

Yes, the Fed is unleashing money supply hyperinflation.  But they need to.  3% money supply growth relies on more and more dollars to create constant growth that money supply must go exponential.  Considering all the money lent/created by the banks at interest that was created from essentially 1982 until now must be paid back with something, you always need an ever growing money supply to pay it back otherwise the banks go bankrupt as students, deadbeat car owners renters, and deadbeat homeowners renters are forced to default because they make minimum wage.

Instead of banks having to take losses, Bernanke simply prints up new digits to cover their bets gone wrong. Guess what?  They got to make all the money from those loans during the bubble years.  There is no risk left.  Which also means there are no rewards.  No risk also means moral hazard.  Profits were privatized.  Losses socialized.  This represents the worst of socialism, fascism and capitalism.  Only in America where people have been overdrugged and overentertained to the point of where real life has become boring could this happen.

This also allows the government to get unlimited money at low interest rates.  This facilitates using the police and military to keep people in order if feces hits the fan.

In summary, it is a perpetual government and bank bailout.  And investors celebrate the feeling of security.  Trade freedom for security, you will get neither.

Yes, this is robbing savers of purchasing power as it gets eroded by inflation.  Yes, this is theft.  Yes, it is counterfeiting.  Yes, it is illegal for private citizens to do this.  However, it is not illegal for our central bank and their private member banks - see the primary dealers list.

Needless to say, this bothers me, and I might be more sad than I am angry.  How did we get here?  The land of the free, the home of the brave?

I wish you the best of luck.  I hope you heeded my advice and bought some gold and silver the past few years.  I recommend at least 10% of your liquid assets be in physical gold and silver.

"To combat depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection or production, we want to create further misdirection- a procedure which can only lead to a much more severe crisis as soon as the credit expansion comes to an end."
Fredrich Hayek

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