The key is to understand why real median household incomes continue to decline and then how to correct it. It all comes back to financial policies that incentivize investors to avoid economy-boosting investments and toward financial investments that have no economic benefit. The result is a narrowing of income distribution exasperating the down spiral, while inflating wealth to the already wealthy. As long as these policies remain intact the American quality of life will continue to spiral downward while the wealth at the top continues to accelerate until one day when the top pops off and all that wealth goes abroad. And that Mr. Liesman is what we call economics.
Germans can’t get their gold reserves. Do how did the Dutch get their 122 tonnes of gold?
Is Germany being prevented from holding gold to prevent independent foreign policy action?
Economic forecasting is a dangerous job. As Mark Twain put it in his novel Pudd’nhead Wilson, “October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.” Every wrong prediction could doom a career, or a bank account. Prudence and humility are the only sound tools for building one’s reputation. The talking heads on CNBC appear to know neither. They pledge allegiance to the flag of the tinkering bureaucracy. It explains the loss of ratings, and loss of confidence in the ability of “experts” to see what’s coming down the tracks. Refusing to learn from mistakes will lead to future blunders. Pundits that don’t heed this message are doomed to fail.
Greenspan told the CFR that "gold is a good place to put money these days given it's value as a currency outside of the policies conducted by governments." "Gold has always been accepted without reference to any other guarantee." When asked where the price of gold was headed in the next five years he said “higher --- measurably" ...
Ahead of tomorrow's decision by the FOMC, Peter Schiff ventured on to CNBC to discuss the economy, the fed, and gold... among other things. Schiff rightly fears that while the Fed may well stop QE3 tomorrow, QE4 will not be too long behind it as he notes, rather eloquently, that "an economy that lives by QE, will die by QE" as the Fed's total lack of willingness to allow stocks to fall (see Bullard 2 weeks ago) or a 'cleansing' recession leaves the nation's economy in far worse shape than it was before the Fed's intervention. Schiff calmly replies to the anchor's questions (as she proclaims "I am not on the side of the Fed but..."), gently explains his view on gold when challenged about his 'wrongness', but when a guest starts hounding him for being dangerous to CNBC viewers wealth... Schiff (rightly) loses it - must watch!
"Remember, the Fed has injected into the market nearly 4 Trillion dollars. That’s $4,000,000,000,000.00. To put this into perspective... the equivalent in dollar amounts to have purchased 510 B-2 Stealth Bombers, 72 Nimitz Class Air Craft Carriers, 120 Ohio Class Submarines. and still have Two TRILLION or so left in my pocket left to spend." As far as what we have to show for all this spending at the end of QE this month? Who knows, but I do know – we didn’t even get a lousy T-shirt.
"Markets are slowly coming to grips with reality is not going to be as easy as everybody thought," Peter Schiff tells CNBC's Rick Santelli, noting the pick up in volatility across asset classes recently. What The Fed clearly does not understand, Schiff blasts, is that "you cannot end quantitative easing without plunging the US into a severe recession." Because of the Fed's extreme monetary policy and the mal-investment that flows from it, Schiff says, "The US economy is more screwed up now than it's ever been in history." Most prophetically, we suspect, Santelli agrees that "a messy exit is a given," and Schiff believes they know that and that is why QE4 is coming simply "because it hasn't worked and they can't admit it's been a dismal failure."
Nobody in the economic intelligentsia is implying that the IMF is staffed by paranoid cranks. They continue to ignore and belittle the Austrian school. This pompous and undeserved behavior will go on until it’s too late. In the process, the ivory tower disciples of Keynes will only further prove their intellectual bankruptcy. The average person never trusted them to begin with. And things certainly won’t change now.
Back in the 1980s, Irwin Schiff, anti-tax activist, political prisoner, and father of free-market pundit Peter Schiff, wrote a marvelous comic book titled How an Economy Grows and Why It Doesn’t, which teaches economic principles through a light-hearted story.
The comic starts with three islanders - Able, Baker, and Charlie...
The most commonly used introduction in any Forex business for the past 3 years: "US or Non-US"
"...the numbers that they crank out to make everybody feel good are almost as phony as the numbers that the Argentine government cranks out... I would say that inflation is realistically in the 8-10% range here in the US—and it’s going much higher. The growth is all a fantasy. It’s all a result of the assumption that there is no inflation, when there really is because what we have is inflation masquerading as economic growth. But the bottom line is the economy is really contracting, that’s why the labor force is shrinking, that’s why we’re using less energy, that’s why the people’s standard of living is going down, and real incomes are falling and job opportunities are disappearing. It’s because we’re in a recession and no one wants to admit it."
Having provided his clarifying perspective on why the markets are extremely fragile and due for a 20-30% correction, Marc Faber was assaulted by CNBC's Scott Wapner reading off a litany of recent calls that have not worked out as planned. His response was notable: "I started to work in 1970, and over that career, somehow, somewhere, I must have made some right calls; otherwise I wouldn't be in business." What CNBC then edited out of the transcript was Faber pointing out his 22% annualized return in his publicly-viewable funds since then and asking - sounding somewhat frustrated at the anchor's mockery (and background snickers) - "I wonder what the CNBC portfolio would look like since 1999?" The response: silence.
"First they ignore you, then they ridicule you, then they fight you, and then you win." Mahatma Gandhi
"It is no crime to be ignorant of economics... but it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance." - Murray Rothbard
The American financial establishment has an incredible ability to celebrate the inconsequential while ignoring the vital. Last week, while the Wall Street Journal pondered how the Fed may set interest rates three to four years in the future (an exercise that David Stockman rightly compared to debating how many angels could dance on the head of a pin), the media almost completely ignored one of the most chilling pieces of financial news that I have ever seen. According to a small story in the Financial Times, some Fed officials would like to require retail owners of bond mutual funds to pay an "exit fee" to liquidate their positions. Come again? That such a policy would even be considered tells us much about the current fragility of our bond market and the collective insanity of layers of unnecessary regulation.
As increasingly more conspiracy 'theories' become conspiracy 'facts', The History Channel discusses "The Gold Conspiracy" in this brief documentary. Gold is one of the most precious metals in the world. A glittering commodity so rare that people will go to great lengths to obtain it. But who sets the price? And what are the secret methods to control its value? History uncovers the clandestine world surrounding the highly prized precious metal. How much gold does the United States really have – and where is it locked away? Is the American government overstating the amount of gold in its reserves to create the mystique of financial superiority?