Posts Tagged ‘Inflation’

Current US Financial Crisis Because

The U.S. Constitution Incorporates a Fatal Error.

That fatal error was investing the federal government with the sole power to mint money.  All of America’s Booms have been followed by painful, destructive American Depressions.  These episodes of personal and business financial destruction were a product, in every case, of the PURPOSEFUL MIS-MANAGEMEMT of the national money supply by world governments or their appointees the central banks.  Listen to what Nobel Laureate Friederich von Hayek had to say:

Hayek’s commentary starts with a quote from the Uber Economist.

“For in every country of the world, I believe, the avarice and injustice of princes and sovereign states abusing the confidence of their subjects, have by degrees diminished the real quality of the metal, which had been originally contained in their coins.”

Adam Smith, The Wealth of Nations, pg. 43

Now LISTEN to Hayek’s remedy to the government’s irresistible abuse of the money monopoly.

“In my despair about the hopelessness of finding a politically feasible solution to what is technically the simplest possible problems, namely the money inflation, I threw out in a lecture delivered about a year ago a somewhat startling suggestion,

That government should be deprived of its [always abused]

monopoly of the issue money!

the further pusuit of which has opened quite unexpected new horizons.  I could not resist pursuing the idea further, since the task of preventing inflation has always seemed tome to be of the greatest importance, not only because the harm and suffering major fluctuations cause, but also because I have long been convinced that even mild inflations ultimately produce the recurring depressions and unemployment which have been a justified grievance against the free enterprise system and must be prevented if a free society is to survive“

F. A. Hayek, Denationalisation of Money, pg. 13

I BELIEVE THIS IS THE ABSOLUTE MOST IMPORTANT ISSUE FOR EVERY HUMAN BEING TO UNDERSTAND.

AS LONG AS WE HAVE CENTRAL BANKING AND GOVERNMENT CONTROL OF MONEY WE WILL NOT HAVE A FREE AND PROSPEROUS WORLD.  ERGO IGNORE THIS TOPIC AT YOUR OWN RISK.

Please watch this video to the very end.  Hayek indicates that after an entire lifetime – he deems this his most important legacy.

Politicians should NEVER be trusted with control of the money supply!

I think the founding fathers screwed up – what do you think?

The question you should be asking is – How can I protect myself ???

Ask Us.

Dr. Copper is Bullish right now – But keep watch!

Copper has often provided an early signal as to the direction of the economy because it is a high demand base metal used in industry.  You will notice that as the US Stock Markets were hitting new lows (bullish sentiment at 8%!) earlier this year, Copper was holding well above it’s lows telling us that the bottom was in (short term).

Copper price action was one of the prime indicators (including elliot waves, momentum, sentiment & other indicators) that lead us to conclude that there would be an Obama Bail Out Mini Rally.  Now, besides watching for an upcoming high in this Bear Market Rally in stocks, Dr. Copper may also provide a clue as to when Deflation has returned.  Watching Dr. Copper doesn’t provide certainty, but it will provide that very necessary edge when looked at in conjunction with other indicators.

I am fairly certain Dr. Copper will have a critical diagnoses to share with us about the economy and the stock market before the end of the summer – stay tuned!

What Are All Those XXXX’s and OOOO’s on the Charts?

( No Dear Reader They Don’t Represent Hugs n Kisses! )

Several readers have indicated that they are not familiar with the point and figure charts that I use for illustration purposes in the blog.  John Murphy (world class technical analyst) provides an excellent overview of Point and Figure charting on his web site StockCharts.com.  If anyone is interested in why I use these “old fashioned” P and F charts drop a comment requesting additional information.

Do not get the idea that you can trade or make investment decisions from my blog entries.  These are an introduction to my services and do not constitute investment advice.

Along With Maintaining Our Money, 401Ks, Homes & Jobs

We Need To Maitain Our Sense Of Humor 

AND Thank Your Lucky Stars

That You Weren’t a Hedge Fund Manager Last Year !

Flash – The Gold Silver ratio Broke Down ! The Scales Tip Towards the Inflation Camp.

Vide !

Given this Breach in the Gold Silver ratio, I will be looking closely at the COT (Commitment Of Traders) report this weekend and next (unfortunately the info is for trading only through tuesday).

Frankly dear reader I am skeptical.  Let’s look at the Silver ETF SLV action.

A price Break Out in SLV that prints an X at $14.50 would force this ole poker player to exchange some of his greenbacks for silver bars.  One of Jesse Livermore’s rules was never be afraid to buy strength.  Not every poker hand is a winner but you learn to play every hand unemotionally.  Remember its not about the hand its about the game.  That is where good money management (proper asset allocation, stops, Optimal F, etc…) comes into play.  If you don’t have good money management rules – before the game ends YOU WILL LOSE.  If you make money along the way without employing good money management, you were lucky and luck runs out.

As Paul Harvey always says – Stay Tuned For News.

The Inflation vs Deflation debate rages all over the Web – So who is right ?

Last years deflationary collapse was revealed by a break out of a 2 year consolidation of the Gold/Silver ratio.  After burning itself out temporarily and yielding to the current mini bail out bubble the Gold/Silver ratio has once again entered a consolidation formation.  The breakout should indicate which tide will overwhelm the markets over the next 9 to 18 months.  My guess is that you will not find this insight anywhere else on the web.

Vide !

How does this work?  Silver was demonetized a century or so ago and now a large part of its demand comes from the industrial/jewelry sector (although the monetary demand is growing again).  Therefore it is more sensitive to a deflationary collapse.  Although the central banks and governments of the world have worked tirelessly to demonetize gold, it still is part of the monetary base of most central banks.  In spite of blatant manipulation by central banks and governments it still is less sensitive to deflation.  If the Bernanke/Obama bail out/stimulus printing presses overwhelm the collapse of toxic debt and we head into another inflationary/hyper-inflationary period, gold and silver will both break out to new highs but silver will run faster.  As the price of silver outpaces gold on a relative basis, the Gold/Silver ratio will decline.

Why should you care dear reader?

The next tide of either Inflation or Deflation will have a massive impact on your investments and wealth.  Knowing which one will dominate should dramatically alter the composition of your investments and impact your financial decisions.

The Gold/Silver ratio is one of the key indicators that I watch.

We don’t have to guess or predict the outcome of the Deflation / Inflation tug-of-war.  We just have to be alert to what the markets are telling us and reallocate our portfolios accordingly.

You saw it here first.  So, Stay Tuned ! ! !

Grok This First!

Don’t Invest Without Understanding This

Investment Wisdom Begins With…..

Understanding that we live in world dominated by one overwhelming investment reality – the entire world went on a FIAT Money Standard in 1971. Fiat money, besides being a tool of virtually invisible confiscation, inherently creates systemic risk and distorts our perception of what is happening in the world. This core reality informs all the asset allocation decisions that we will recommend to our clients and subscribers. Again, I beg that you read the prophetic words of the most eminent economist of the 20th century.

Read Very Carefully What Keynes is Telling Us

” Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they do not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. the sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their just deserts and even beyond their expectations or desires, become “profiteers,” who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

John Maynard Keynes, C.B., The Economic Consequences of the Peace page 235.

How could this happen to us ???

With the drafting of the US Constitution, our founding fathers attempted to protect us from the devastating results of “rag money”. But unfortunately after decades of manipulation and disinformation, powerful banking and finanical interests won out. For one of the best explanations of HOW we lost sound money and what the founding fathers originally intended for us, read a short monetary history of the dollar by one of the most brilliant scholars I have ever had the pleasure of reading. Edwin Vieria, Jr., please take the stand. If you can ever get a copy of his magnum opus on the dollar “Pieces of Eight” lock it up. It is eighteen hundred pages of U.S. monetary scholarship that is breathtaking in it content.

Are you outraged now ? You should be ! ! !

Fiat money and the havoc it wrecks upon the investment world is the first and most important reality on our investment map. We will show you how deal with it.

The volatility created by a fiat monetary system can be protected against and used to accumulate wealth.

For a free initial half hour consultation email me at: michael@fibonaccifinancial.com