Best of the Week
Most Popular
1.Putin’s World: Why Russia’s Showdown with the West Will Worsen - John_Mauldin
2. Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable? - Nadeem_Walayat
3. Gold and Silver 2015 Trend Forecasts, Prices to Go BOOM - Austin_Galt
4.Gold Price Golden Bottom? - Toby_Connor
5.Gold Price and Miners Soar on Huge Volume - P_Radomski_CFA
6.Stock Market and the Jaws of Life or Death? - Rambus_Chartology
7.Gold Price 2015 - EWI
8.Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - Nadeem_Walayat
9.Gold, Silver, Crude and S&P Ending Wedge Patterns - DeviantInvestor
10.Is the Gold And Silver Golden Rule Broken? - Michael_Noonan
Last 5 days
The Price Of Oil Exposes The True State Of The Economy - 27th Nov 14
Brazilian Bovespa Stock Market Technical Analysis - 27th Nov 14
Gold Price Would Soar on Possible Swiss Yes Vote - 27th Nov 14
Crude Oil Asset Bubble Trouble - 27th Nov 14
Thanksgiving and Puritan Geopolitics in the Americas - 27th Nov 14
The Dow Jones Stocks Index - Beautiful Tree in the Desert - 27th Nov 14
The Digital World, The Opiate of The People - 27th Nov 14
Harry Dent's Simple Strategy for Surviving Withdrawals from Markets on Crack - 27th Nov 14
Socialist France Just Cannot Compete Against Google Freedom - 27th Nov 14
A Short Tale About the Grand Manipulation of Crude Oil Prices - 26th Nov 14
China Secret Gold Buying ... How Could It Happen? - 26th Nov 14
Gold Price Spikes to $1,467.50/oz on Computer Glitch? - 26th Nov 14
Gold - So Bad It's Good: Surviving 2014 - 26th Nov 14
TrueShopping.co.uk Real Customer Experience Review - Online Shopping Lessons - 26th Nov 14
Is There A New Global Consensus About Cheating Investors To Reboot Employment? - 26th Nov 14
EUR/USD – Currency Bulls Don’t Give Up - 26th Nov 14
Swiss Gold Referendum A Golden Opportunity for Switzerland - 25th Nov 14
Silver: What COT Analysis Tells Us - 25th Nov 14
Stock Market Big, Bold and Ugly - 25th Nov 14
U.S. Dollar Near Top? Gold and Silver Trading, Platinum Breakout Invalidation - 25th Nov 14
Buy Fear - Easily Pick Up Profits on Stock Market Dips - 25th Nov 14
The Islamic State Reshapes the Middle East - 25th Nov 14
Gold Price Forecast 2015 - 25th Nov 14
The Swiss Referendum On Gold: What’s Missing From The Debate - 25th Nov 14
Clash of Generations - Why Millennials Still Live at Home; Not Jobs, Student Debt, or Housing - 25th Nov 14
Stock Market Reminiscent of Pompeii - 25th Nov 14
Once Upon A Time There Were Philosopher Kings - 24th Nov 14
The 2014 Crude Oil Price Crash Explained - 24th Nov 14
China Stock Investing - Follow the Money! - 24th Nov 14
122 Tonnes of Gold Secretly Repatriated to Netherlands - 24th Nov 14
What Causes the U.S. Dollar to Move? - 24th Nov 14
Stock Market Indexes New Highs - Will Uptrend Extend Even Further? - 24th Nov 14
All Hail the King U.S. Dollar - Trend Forecast - 24th Nov 14
Where Is China Economy On The Map Exactly? - 24th Nov 14
Most of The World Economies Panic - Is The US Next? - 24th Nov 14
Stock Market Exhaustion Gap? - 24th Nov 14
Gold Golden Gains Come After The Pain - 24th Nov 14
Crude Oil and Stock Market Setting The Stage For The Next Recession - 23rd Nov 14
This Publicly-Owned Bank Is Outperforming Wall Street - 23rd Nov 14
Who’s Ready For $30 Crude Oil Price? - 23rd Nov 14
Strategic, Methodological and Developmental Importance of Knowledge Consumption - 23rd Nov 14
Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - 23rd Nov 14
Gold Price 2015 - 22nd Nov 14
Stock Market Medium Term Top? - 22nd Nov 14
Is the Gold And Silver Golden Rule Broken? - 22nd Nov 14
Malaysia's Subsidy and Budget Deficit Conundrum - 22nd Nov 14
Investors Hated Gold at Precisely the Wrong Time: What About Now? - 22nd Nov 14
Gold and GLD ETF Selloff - 22nd Nov 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Gold Report 2015

Back to Basics: A Planned Financial Crisis?

Stock-Markets / Credit Crisis 2012 Nov 29, 2012 - 12:05 PM GMT

By: DeviantInvestor

Stock-Markets

Franklin D. Roosevelt, the 32nd president of the United States said, “In politics, nothing happens by accident. If it happens, you can bet it was planned that way.


Facts

  • The US government spends $1 – $2 Trillion more each year than it collects in revenues, using strictly cash accounting. This is not sustainable. But the deficit is actually far worse when accrued liabilities are included – as calculated by Laurence Kotlikoff. Using his numbers, the fiscal gap is approximately $222 Trillion, up about $11 Trillion from last year. The fiscal gap (present value difference between projected future spending and revenue) increased about $11 Trillion in one year because the projected future liabilities dramatically increased compared to projected future revenues. The fiscal dilemma of the US Government is actually far worse than the official budget deficit. Clearly something must drastically change.
  • The US National Debt (official cash accounting) increases about 12% per year (last five years) while the GPD (Gross Domestic Product) is hardly changing, or decreasing, if inflation were properly calculated.
  • Current US government expenses for entitlements (Social Security, Medicare, Medicaid, Military Pensions, etc.) plus current expenses for interest on the National Debt exceed current revenues. The government would still go into debt every year, even if it cut 100% of military expenses and 100% of the remaining US government bureaucracy.
  • The Federal Reserve creates $85,000,000,000 per month of new currency from “thin air” and uses that new digital currency to bail out “Too Big To Fail” (TBTF) banks. The famous “Bernanke Helicopter Drop” is dumping billions into the politically connected banks but little onto “main street” USA. In simple terms, the wealthy are bailed out, the poor are given food stamps and welfare, and the middle class pays via taxes and inflationary confiscation of their savings and pensions.
  • All of the above are signs of financial desperation resulting from unsustainable policies.

I repeat,”In politics, nothing happens by accident. If it happens, you can bet it was planned that way.

Follow this logical thought process.

Washington D.C. and Wall Street are filled with highly intelligent people who know that:

  • Unbacked paper money always declines in value to near zero.
  • The government cannot tax businesses and individuals into wealth and prosperity.
  • The government cannot create wealth, prosperity and employment by printing money – debt monetization – QE4-Ever – Inflate or Die.
  • Deficits DO matter.
  • Massive money printing will NOT help the economy long-term, but it WILL CREATE inflation in consumer prices.
  • We cannot get something for nothing.
  • Unsustainable fiscal policies will eventually collapse or fail.

However, our “leaders” in Washington D.C. and on Wall Street pretend they believe the above nonsense about printing money to create wealth and employment, debt increasing without limit, and fiscally unsustainable policies continuing forever. Why? Perhaps there is an ulterior motive!

Implications

  • Although our supposed leaders are presumably highly intelligent, educated, and knowledgeable, they act largely “brain-dead” as they lead the United States down an unsustainable path that guarantees eventual catastrophic financial destruction. Think lemmings and a cliff. Is there an ulterior motive?
  • Bankers, the military, oil companies, military contractors, large corporations, and other special interests have purchased legislation that benefits them while creating huge government expenditures. In addition to entitlements, the result is out-of-control spending. Was this out-of-control spending caused by normal greed, or was there a larger plan – an ulterior motive?
  • I suspect that the real leaders (political and financial elite) have supported and enabled unsustainable policies and practices knowing that a crisis and collapse of some sort must inevitably occur. Why? “Never waste a crisis!” The next financial crisis, like the crisis of 2008, will transfer a massive amount of wealth from the middle class to the political and financial elite and will consolidate more power under government control. “You can bet it was planned that way.

If another crisis is imminent, then consider what the next several years will do to:

  • Your income, your expenses, and your wealth
  • Consumer prices
  • The total National Debt
  • Size of the federal government

Get back to basics! “If it happens (in politics), you can bet it was planned.” If intelligent people relentlessly pursue obviously unworkable financial policies down an unsustainable path, there must be an ulterior motive. Will you, as a middle-class American (European, Canadian) benefit from the consequences of that ulterior motive? Probably not!

Are you prepared?

Read We Have Been Warned and Something for Nothing.

Counter-party risk could be devastating in the next financial crisis. If “B” owes you money and files for bankruptcy because “A” does not pay “B”, then you have counter-party risk that could be very costly. The value of gold and silver is NOT dependent upon a government or corporation paying a debt or fulfilling their promises. Gold and silver have no counter-party risk and will survive the next crisis.

The prices for gold and silver are dependent upon the total money in circulation (more money means higher gold prices), real (nominal rate minus inflation rate) interest rates (lower rates mean higher gold prices), and confidence or lack of confidence in governments and their fiscal policies. I rate gold and silver as healthy and safe investments and the bonds of various sovereign nations as increasingly risky. Would you rather own gold or government bonds from Greece (Portugal, Spain, Italy, United Kingdom, or United States)? Do you own enough gold and silver that you would feel safe in a financial melt-down?

If not, why not?

GE Christenson
aka Deviant Investor

If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

© 2012 Copyright Deviant Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014