Gold futures tapped the $1,000-an-ounce mark in early morning trading, a level the precious metal hadn’t reached since February.
“As long as the Federal Reserve and the US government take actions that debase the dollar, the dollar price of gold will rise,” says GoldMoney.com’s James Turk. “Similarly, as long as the Bank of England and the UK government take actions that debase the pound, the Sterling price of silver will rise. It is a certainty, just like night follows day.
“Years from now we will look back at today’s action with amazement at how low the price of gold and silver were, just like I can today look back to my college years when gold was only $35 and an ounce of silver could be had for 46 pence. It is a distant memory – and those prices will never again be seen. Eventually a three-digit dollar gold price and single-digit Sterling silver will never again be seen, as long as those currencies continue to be mismanaged and continue on the path to the fiat currency graveyard.
“…the dollar and pound are being debased, and in the absence of any policy advocating sound money in the US and the UK, inevitably gold will hurdle $1,000 and silver will clear £10.”
“Frugality is the new normal,” says an Associated Press report. One study suggests that consumer will spend 14% less – even AFTER the recession is over.
Boomers are out of time. Out of money. And they’ll be out of luck unless they trim expenses and begin saving.
They’ve figured it out. Personal spending has fallen in 4 of the last 6 quarters. It hasn’t done that since 1947 – when they first began tracking it.
Consumers’ net worth has taken a big hit – down $13 trillion, from $62 trillion to $50 trillion.
And so, the simpletons think the government has to rush in where fools foundered…that is, they rush in with more money.
But where do the feds get any money? They have to borrow it…or print it. There’s a big difference between federal borrowing and private borrowing. When the private sector borrows the risk is that people won’t be able to pay back their loans. That is a risk that lenders live with. They know the risk; they factor it into their decision-making. Sometimes they’re right. Sometimes – such as when economists mislead them with a lot of gibberish numbers – they’re wrong. And when they’re wrong, borrowers default…and lenders lose money.
The feds, on the other hand, can’t default. At least, not when their debts are calibrated in money they control. But there’s the risk right there. And it is a different kind of risk. It’s the risk that the feds may choose to pay back the loan in much cheaper currency. Or merely make a mistake that results in much cheaper currency.
Imagine a private borrower who could print up a few extra bills in his basement to pay his monthly mortgage. He may not do so…perhaps his sense of honor would prevent him. Or maybe he would fear that he wouldn’t be allowed to borrow again. But if his back were to the wall, there is little doubt that he’d soon be in the print shop.
The feds are in the print shop already. They’re printing up more dollars intentionally – to try to get inflation rates up…and to finance federal borrowing. It will be a miraculous thing if their new dollars don’t eventually cause inflation. But the macroeconomists who run the print shop tell us not to worry. They’ve got it all under control. They’re already talking about when and how to withdraw the dollars they so helpfully provided during the crisis period.
The simpletons – who had no idea that the crisis would come…and then thought it could be easily contained…and then mistook it for a monetary, banking crisis…and then judged it over before it had really started…
…these same simpletons still do not understand that the problem is not a lack of money, it’s a surplus of debt…
..they now reassure us that they know just how much money to put into the system…and just when to take it out.
If you believe them…you might want to stay in stocks and US bonds. If not, you should head for cover.
The country is being run “by a gang of clueless bozos,” says Lee Iacocca, in his new book.
for The Daily Reckoning Australia