printing money

A Self-Employed Carpenter’s Thoughts on the Future

The world is changing. Currently, as a nation, we have a large and well-trained section of our work force dedicated to residential construction. Unemployment within the construction industry now exceeds 20%. That number takes into account only workers getting unemployment compensation. There are also many self-employed individuals, ineligible for unemployment compensation, who have simply run out of customers and work. That is the bad news. Now the worse news: Not only are those jobs not coming back, but the construction industry will continue to diminish for the foreseeable future. The real estate glut is not on hold; it is over. Waiting for its return is similar to waiting for next the big surge in typewriters, 35mm cameras, and home phones. Why are the construction jobs not coming back? There are three main reasons, the first of which is inflation. Decades of credit expansion and the recent printing of money (quantitative easing) have increased the overall volume of our fiat currency: dollars. Therefore, the value of each dollar unit has been reduced, causing prices to rise. This results in increased costs in construction of new homes. Higher new construction costs make staying in and repairing older structures, or renting, more attractive. The second reason is fuel costs. Living rurally and working in urban areas is becoming very expensive. Reasons one and two will keep an increasing number of younger workers and couples living and renting closer to work. Why take the financial and mobility risks associated with homeownership? The third reason is we are broke. Who are “we”? Western civilization, comprised mainly of the U.S. and Europe. Consider this…there are gold and silver coins and bullion: actual wealth storage vehicles. There are paper dollars: temporary wealth storage vehicles. And there are also trillions of “dollars” represented as pixels on screens in accounting software programs. When I say that we are broke it is because I don’t believe those pixel dollars represent anything. All of the wealth supposedly held in those pixels does not exist. It is a classic Ponzi scheme. If you go today and convert your pixels to actual dollars, everything is just fine. But if 10% of us go today and try to convert our pixels into dollars, the banks will shut down…Why? Because the money doesn’t exist. There is no actual wealth stored in any of those pixels. Spain and Portugal may require financial bailouts in 2011. Part of the fallout from the Greek financial crisis last year was the creation of a eurozone bailout fund of $1.01 trillion. That fund could be used to assist Spain and Portugal if necessary. Where did that $1.01 trillion come from? Was it removed from another sector of Europe’s economy? Supplied in gold bullion to EU headquarters in The Hague? Removed from the savings accounts of earnest Europeans? No, none of those could supply …

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An Egyptian Firebrand Away from $400 Oil

Investors are remarkably sanguine about the events in Tunisia and Egypt… Oil actually fell yesterday to $88.27. The Dow has been on a hot streak and is up again today — as it has been for months — to 12,149. History suggests events in the Middle East go from bad to worse. According to the Democracy Index put out by The Economist , there are no “established democracies” in the region. Israel is listed as a “flawed democracy.” Lebanon and Turkey were listed as “hybrid regime,” along with Palestinian territories, Pakistan, Armenia, and Iraq (Lebanon is now run by Hezbollah). The rest are categorized as “authoritarian regimes.” The last free vote saw Hamas sweep the Palestinian elections in 2006. Hamas started as an offshoot of the Muslim Brotherhood in Egypt. On gaining power, they started lobbing rockets into Israel. In 2007, the Battle of Gaza was fought between Hamas and the Palestinian security forces. Hamas is listed as a terrorist organization in most G-20 countries. In the aftermath, Israel and a Hosni Mubarak-ruled Egypt imposed an economic blockade on Gaza that is still in effect. Population and scarcity Jack Andrew Goldstone points out in his book, Revolution and Rebellion in the Early Modern World , that all revolutions from the French to the Russian, from China to Japan, occur where there is a rising population and diminishing resources coupled with an inflexible ruling party. (Note: The population in Russian doubled between 1850 and 1913.) Today, the Arab world has the fastest growing population on earth— and the youngest. In Yemen, the average age is 17.9 years with a birth replacement rate of 2.71, which puts it at number 23 in the world. The United Arab Emirates is in fourth place with 3.56, Kuwait is fifth with 3.50, the Gaza strip is six with 3.29. Libya, Chad, Egypt, Oman, Syria, and Iraq all make the top quintile. These young people will be the next rulers of the largest oil-producing region within the next ten years — mostly because all of the current leaders are in their 80s… with the exception of Qaddafi…

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The Great American Snooze Button

The Great American Snooze Button

I’ve been known to hit the snooze button on occasion. My long-suffering editor can attest to that. Just ten more minutes, then I’ll… Imagine if each press of the snooze button made the next BEEP-BEEP-BEEP happen a little bit sooner than the last. Eventually, you wouldn’t be able to sleep at all. Time to either wake up or smash the alarm clock. America has been hitting the fiscal snooze button for the last 30 years. The alarm is getting shriller these days, and it beeps more often than it used to. So, what’s the plan? In essence: smash that stupid alarm clock to bits and worry about consequences later. Social Security, and pensions, and Medicare, oh shit my! In 2011, Social Security will pay out $130 billion more in benefits than it collects in revenue. The program’s deficit this year would have been a paltry $45b, if not for Obama’s one-year deal lowering SS payroll deductions from 6.2% to 4.2%… The CBO admits the system will be completely drained by 2037. But even their own analysts don’t buy that, as reported by the Christian Science Monitor . By the way, did America really enact a tax break that lasts one year ? Yes, we did. The social security payroll tax cut is a 12-month deal— for now. Short-sightedness is at all-time highs in D.C. Now don’t get …

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Ben Plans, Commodities Soar

Welcome to the Wealth Daily Weekend Edition— our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles. Don’t look now, but the Fed has just driven the magic bus right off of the cliff. Nowhere to run, nowhere to hide, it’s break on through to the other side. With nearly $1 trillion in new money now set to roll off the printing presses, the Fed has finalized its course. Inflation is the destination. It does so with a giant magical checkbook that creates money out of nothing. And as we know, since the 70s, it is one that is no longer tied to gold. It’s what the gold bugs mean when they denounce the dollar as being nothing more than “fiat money.” That is, it’s backed up only by the “full faith and credit of the U.S. Government.” That’s why commodity prices have been going nuts as of late, as investors place their bets against all of Big Ben’s phony new greenbacks. For instance, did you know that copper has surged 28% on stronger demand and a weaker U.S. dollar? Or that cotton and gold traded recently at all-time highs for the same reasons? They have— and along with everything else, including oil, commodities are likely headed much higher from here… In fact the dollar’s weakness, inflationary pressures, and stronger emerging-market demand, all mean that commodities are going to be very bullish over the next 12 to 18 months. Advertisement The Options Guide Your Broker Doesn’t Want You to See… Most people think profiting from options requires years of investment experience or a seasoned stock broker. That’s why people are losing thousands of dollars everyday. Our in-house options expert Ian…

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Goldman (NYSE:GS) Predicts $1,650 Gold in 12 Months

Goldman Sachs (NYSE:GS) upwardly revised its 12-month estimate for gold prices, increasing them from previous 12-month projection of $1,365 to $1,650. Gold is already closing in on the prior numbers. Also increased was the three-month and six-month gold price estimate by Goldman, which rose to $1,400 an ounce and $1,525 an ounce.Goldman said in a note to clients, “With U.S. real interest rates

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The Dollar’s Unavoidable Day of Reckoning is Here…

Filed in Debt, Gold Investing, inflation, printing money, silver by on October 9, 2010 0 Comments

The government is printing money 24/7 to paper over the bad debts of the housing crisis and Wall Street bailouts. We’re about to enter a cycle of hyper-inflation that will devalue every dollar you own… but there is a way to profit! Find out how in this free report.

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Dollar set for sharp decline, Goldman forecasts

Filed in Bank Gold, euro, gld, Gold, goldman sachs, obama, printing money, stimulus by on October 7, 2010 0 Comments

Richard Blackden London Telegraph Oct 7, 2010 The dollar will embark on a sharp decline over the next 12 months, Goldman Sachs forecast on Wednesday, as policy makers in Washington look poised to press the trigger on another round of printing money. The investment bank expects the dollar to drop to $1.79 against the pound in six months and $1.85 in 12 months. Sterling closed at $1.5891 in London yesterday. The euro won’t be spared either, with the dollar’s slump forcing it to $1.50 six months from now and $1.55 in a year’s time. Powered by President Obama’s stimulus package and a rebound in inventories, the US recovery peaked in the final three months of last year and has been slowing ever since. Full article here Having A Supply Of Healthy Foods That Last Just Makes Sense (AD)

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The Nixon Shock

The Nixon Shock

Have you looked at the market lately? The Dow is pushing 11,000. The S&P 500 has broken out above 1,150 and seems to be going to 1,220. Gold is at $1,346 per ounce, another all-time high. Silver is at prices not seen since the Hunt brothers tried to corner the market back in the 1970s. Oil is threatening to break out of its range… Aluminum, copper, tin, Molybdenum , nickel — all up! The price of cobalt has jumped from $24 to $40 per pound in the last three months. When pigs fly, pork bellies The prices of wheat, coffee, and pork bellies are going parabolic… “What’s going on?” you might ask. Could it be that investors are suddenly jazzed about tin, or think that hot dog sales will boom this Thanksgiving? No, of course not. The answer lies with our own happy Federal Reserve. Brian Sack, a senior official at the New York Fed, said this about quantitative easing in a recent speech: “Balance sheet policy can still lower longer-term borrowing costs for many households and businesses, and it adds to household wealth bykeeping asset prices higher than they otherwise would be.” Ponzi scheme In other words, the Fed is trying to prop up housing prices and the stock market (i.e. 401ks and other retirement plans) by keeping rates low, printing money, and destroying the value of the dollar. The fact that they admit this isn’t surprising… (It should be. I wish I was shocked, but I’m not.) The U.S. economy has been run like a giant Ponzi scheme since the Asian Currency Contagion of 1998. This was followed by a series of “crisis that will destroy the world economy”: Russian debt default, 9/11, Long Term Capital Management, dot-com bubble, housing collapse… Each one of these crises required the heroes at the Fed to step in and “save us” by printing money and creating the next bubble. This always reminds me of those Salvador Dali posters all the cool kids had in college: At some point, you have to pay the piper. Bills come due, and you can no longer prop up the empty corpse of the economy by adding another buttress. The flaming giraffe of debt will have his say. We wish, dear reader, that someone had the nerve to stand up in 1998 and let those who bet on LTCM take their lumps as a warning to the rest of the capitalist risk-takers. Make no mistake; the bailout of LTCM twelve years ago is directly responsible for the debt markets turning into a free-for-all five years ago. Heck, many of the same people were involved. And why not take risks? If the Fed can bail out Long Term Capital Management, they can bail out AIG. And Wall Street was correct in its assumption. Nothing has changed… No lesson has been learned. The currency war Right …

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Goldman (NYSE:GS), Quantitative Easing, and Gold Prices

Goldman Sachs’ (NYSE:GS) economist Jan Hatzius says he sees the Federal Reserve beginning a new round of quantitative easing, and it could happen as early as November, he said. Quantitative easing is the phrase the Fed hides behind for the printing of money, which our children and grandchildren will have to pay for, if they are even able to. While the ongoing weak economy, and probably a

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