A friend will help you move...
But a real friend will help you move a body. That's the message that today's booting of Treasury Secretary John Snow revealed. The Bush administration no longer trusts Mr. Snow to be its Spokes-liar. Oh, John was making the rounds, lying through his horse teeth and pumping the propaganda all right, but he wasn't a very convincing liar. He never really drank the Kool-Aid and always had that big toothy smile that says to our sub conscience; Liar!
Snows replacement, Henry Paulson, is a big-three Wall St. cannon that is well connected and has been a big Republican funder as would be expected. Remember, He who controls the money controls the country. Elected representatives are powerless next to those that control the nations money, the Federal reserve and the big 3 Wall Street firms, Morgan Stanley, Citibank and Goldman Sachs. Now Wall street bankers not only control the Fed, but the Treasury as well.
Bush needs to move a body. The body of an out of control public debt, ballooning trade imbalances and a depreciating US Dollar. Its a big fat body and it will take the biggest guns of Wall street and a piano case to disguise it from the public until after the midterm elections. If Joe Six-pack gets wind of the screwing he's getting by the double confiscation of his money by inflation and devaluation, the administration and their minions will be out on their collective asses in November.
Alas poor Sawbuck, I knew him well
Inflation up, housing down, employment weak, dollar diving, gold zooming. So what. It doesn't amount to a hill of beans when it comes to weather the Fed will raise interest rates again. They will because they have to.
All the usual suspects are being paraded out for the media like always, except this time these are not really the things that the fed will be evaluating. I'm sure Helicopter Ben Bernanke would like the luxury, but the world's currencies are in big trouble and the only way the US treasury can finance its ballooning debt is to make the US securities it sells to foreign investors in Asia and Europe more attractive than other countries debt. US treasuries already pay a few percent more than other government's bonds but other countries are raising their rates, and so the Fed has to keep raising to stay ahead.
The old one - two punch
This is a dangerous game. Not only is the USD diving related to other world currencies, but those other currencies are weak themselves, multiplying the damage. Add to this the disgorging of US dollar reserves by China, the European Central Bank, Russia and the rest of the central banks. That money is being used to buy gold, other hard assets and commodities driving their prices up. The damage caused to the confidence of foreign debt holders when the Dubai Port deal was served up as the issue it never was but the political opportunity it became was perhaps the tipping point. Dollars loaned outside the country ultimately have to come back home. If they are rejected by their home country, they become worthless. The world's investors have not missed this point as the Americans have. The Fed will have to raise interest rates at an accelerating rate if they hope to keep the dollar from complete destruction. Its probably a hopeless case, but that's unlikely to keep them from trying.
The foreign central banks are finally loosing their faith in the US dollar as the world's reserve currency. Its no surprise, lots of smart people have been writing about this for years. Iran has stated their intention to sell oil in Euros and now Vlad Putin has announced that the Russians will switch to selling their oil and gas from the dollar to the Rouble. Russia is one of the largest producers of oil and gas in the world. This means buyers, including the US will have to buy Roubles first in order to buy Russian hydrocarbons. Putin said in his annual state of the nation address: "The Rouble must become a more widespread means of international transactions. To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for in Roubles,".
Take your shit and get out
Add to this mess, all the countries nationalizing their natural resources. Russia, Indonesia, Venezuela, Bolivia, Nigeria, countries all over the world are kicking out international mining, oil and other resource companies and taking over the production for themselves. What the hell took them so long? What nation in their right mind lets outsiders take their resources and receive a pittance for them while their citizens live in poverty? Puppet governments propped up by the former empires of Europe and the US, that's who. As the empires loose their grip of rule and their currency fails, there is little left in the way of corrupt influence, and we're watching it happen right now.
What's a body to do?
If you have any adjustable rate debt, be it a mortgage or credit cards, do whatever you can now to either pay it off or refinance it to a fixed rate or you will be road kill. Rates are going up. They have to.
If you have any assets denominated in US dollars, or even other world fiat currencies, sell them into any market rally and buy gold and silver, they are the only way to preserve the wealth you have managed to accumulate so far.
If you think this piece is rough, and you've got the balls, read what Chris Laird over at PrudentSquirrel has to say.
What the Bling Said, or The Gold Whisperer
Throughout recorded history and probably long before that, people have been attracted to and understood the inherent value of the soft yellow metal. Gold has always been man's store of wealth because its rare, its identifiable, portable, and its dividable. Gold is the one thing on earth that satisfies all the requirements necessary to be the ultimate medium of exchange.
And gold can speak to you. Not in some mystical or magical way, nor literally, but gold tells its story. Quietly, subtly, and only if you are listening closely.
The shiny metal doesn't boast or talk about itself much, no, its too modest, too humble, but it speaks in soft tones about many other things. Gold has confidence because it has always been the standard by which all other money or currencies have been measured. Gold is, er... the gold standard.
US dollars, Euros, and all the world's other currencies are poor excuses for storing value because they can just be printed up by the billions on fifty year old printing presses. Nothing special. Paper money and metal coins (not worth their face value) issued by the world's governments are a fantastic resource for these free spending, empire building governments because they can create all they want for practically no cost. That, is its strength, and also its weakness. Like Paris Hilton, they have no limits, no understanding of value and no morals. Gold just sits back and quietly watches from the back of the room, biding its time to be noticed again.
If the issuers of these fiat currencies could just keep their pants on and carefully increase the money supply in proportion to the growth in their economies, today gold would be just a pretty material which makes nice jewelry. But like people, governments get carried away, think they know everything and get in trouble. And that's where the world's fiat currencies are today. In trouble. I know this because the gold told me.
The price of gold is going up against all the world's currencies. But gold is really worth the same as it was a thousand years ago. I had a tough time in school with algebra, but it seems to me that if gold stays the same and it is now worth more dollars, or euros or francs, the value of those currencies have decreased. By a lot. Click this CHART if you want to see what Gold has been talking about recently. Remember its not that gold is worth more. Its that your money is spiraling down a rat hole.
Coins with gold or silver content are no longer in circulation in the US and most other countries simply because the value of the precious metal in the coin is worth more than the face value of the coin. Remember 90% silver coins before 1964? Once a coin's content is worth more than the face value they are hoarded out of circulation. Even the lowly penny, made of zinc and copper are now worth about 85% of their face value. Once they cross the 100% level all is lost. Every other denomination will be traded for pennies, melted down and sold for scrap.
I have a feeling that gold has more to say. Are you listening?
New! Core Rate Diet, Loose Weight Fast!
A new and amazing weight loss system has been developed based on official government research! Loose all the weight, yes that's right, all your weight! Its the new Core Rate diet based on the wildly successful government Core Rate of inflation measurement. How does cooked government measurement of the economy relate to a weight loss system? Lets begin with the basics.
Inflation is the increase in the supply of money created by the banking system, in the USA, that's the Federal Reserve. Most people think inflation is the rise in prices of things or services, but that's like blaming rain on wet streets. When more money is created than the growth in the economy, that excess money has to go somewhere. Somewhere like assets and items. Stocks, real estate, food, oil, and all the things we buy to sustain ourselves and our lifestyles. In an honest system, heh heh, once a month or so we would add up all the costs of a standard basket of items we are likely to buy and compare the total to the same basket bought last month. if it cost 2% more this month we would say that inflation is up 2% per month, and multiply by 12 months to get the annual rate. If it cost 2% less we would say that inflation fell by 2%. But wait, the government never does anything in a simple and honest way so lets see how they play some games with the methodology to skew the numbers to make the economy look better than it really is, this manipulation also enables them to cheat people on fixed incomes out of their money since their income is tied to the government published inflation rate.
One dirty trick they use is the substitution of items. If for instance the price of beef rises too much this month, they assume that people who would normally buy beef will instead buy less of it or perhaps buy cheaper chicken so they substitute the price of chicken for the price of beef. The result is that the inflation rate will be falsely skewed downward. Its not a comparison of real prices at all. Its a lousy trick, but those kind soles that would generously give the government the benefit of the doubt might be able to see some logic in this. Personally, I don't buy it.
The really criminal part is the so called Core Rate. In this travesty, they start with the already twisted inflation rate we were just discussing, but they take out food and energy. They tell the unwashed masses this is because food and energy prices are "volatile". If you're talking about Taco Bell and gasoline I would tend to agree, man are they volatile. But that's not what they mean. They mean the prices move up and down too quickly and would produce an unrealistic picture. In reality it shows the accurate picture that they don't want you to see. If this month they reported the inflation rate was 22% because gasoline shot up (sound familiar?) We'd all be running around with rifles and Fed governors would be hanging from trees like christmas tree ornaments.
All right already you say, what about the diet? Is this some kind of bait and switch scam? How can I use this information to loose those 40 pounds of old cheeseburgers I've been carrying around my midsection?
Introducing the Core Rate Diet (tm)! Its so simple too, just do what the government does to the inflation numbers, only in this instance we're dealing with another kind of inflation. Body inflation. Here it is in two easy steps:
1. Eliminate food from your diet. That's it, just follow the Core Rate methodology and take food out of your life! Simple!
2. Now remove energy from your lifestyle. Don't buy any gas for your car and just walk or ride your bike everywhere, and have your electricity turned off by the power company. Without fuel to power your car think of all the extra exercise you will be getting, and add the shivering in the winter at home and all the sweating in the summer!
Subtract all the calories you're not eating and subtract all the calories you're burning from all the exercise and shivering and pretty soon your weight will drop like a 16 ton anvil! That's right, all your weight will completely fucking disappear! Problem solved, no more "fatty" you! Brilliant!
If you want to read more about all the ways the government cooks the "official" numbers click on over to John Williams' enlightening web site and read the Primer On Government Economic Reports.
