Tuesday, January 29, 2008

Why I Think The Economy Is In Trouble Of Historic Proportion Or Why You Should Think About Buying A Little Gold And Silver

Our economy is obviously in trouble. Here are the four reasons why I think our economy is in trouble of historic proportions:

1) We live in a country that is addicted to consumption. We, as a people, no longer save our money to invest and hope for a return. Instead we spend every dime we earn and then spend more in the form of credit cards and home equity loans. In 2005, the Personal Savings Rate dropped into negative territory for the first time in U.S. History. We are not taking personal responsibility for the current state of our economy by moderating our consumption, fostering contentment with our possessions, and fighting against the greed that is so often present in a capitalistic society

2) The global unrest that currently exists is of historic proportion and the U.S.A. seems be fostering this through its apparent need to "extend the empire". You probably have heard that "war is good for the economy". I believe that our current administration will move to invade Iran before the next election. My opinion is based on the fact that the U.S. Senate passed legislation in September of 2007 labeling an arm of the Iranian military as a "terrorist organization". This, in effect, gives President Bush de facto authority to declare war on Iran. Given the fact that President Mahmoud Ahmadinejad has declared that Israel should "be wiped from the face of the earth", hinting at his hatred for Israel, it is probably a decent bet that we will invade Iran soon. This may help or hinder our economy.

3) The Federal Reserve continues its Ponzi scheme by printing paper money that has no inherent value save what the Fed declares it to be. This is also unprecedented in our country, albeit occurring for the last 100 years. I believe it is only a matter of time before the whole house of paper dollars collapses, much like the peso did in 1982 when Mexico defaulted on all its debt. The U.S.A. continues to borrow $1.43 Billion dollars (that's 1,430 million) A DAY to prop up its economy. This has been going on since September of 2006! How can we sustain this? Or national debt is now $9,204,986,412,717.18!!! Ha, ha, ha, ha! $0.18 cents!!! Ha!!! They actually record it to the 18th cent....

4) In a word, Gold. Gold has been artifically depressed in value by the central banks of the world. Gold peaked in value in 1980 at a rate of 850$ oz. That was January 21, 1980. For 20 years gold was around 300$ oz. Then in 2003, only 5 years ago, it began to move. It has progressed upward for the last 5 years to its current price of $930 oz! This breaks the record set in 1980. But wait! Does it really? What about the inflationary rate for the last 23 years? The price of gold in 1980, $850 oz, adjusted for inflation, is between $2,115 and $2,200! Still a deal, if you ask me. But you didn't! What I infer from this rise in Gold is a subtle yet growing lack of "faith" in the dollar/economy/Fed/etc.

UPDATE! 01/31/08

5) Panic had been evident at the FED. Never before has it lowered the rate by 125 basis points in one week. This is historic in precedent. Obviously the FED thinks something is wrong with the economy!

No comments: