To believe otherwise, is to overlook the obvious:
- Bank balance sheets are full of toxic assets, which the banks have great leeway in valuing since FASB caved to political pressure and gutted the fair value accounting rules. The real situation of the financial system is much more dire than it would appear.
- The value of $6 trillion dollars of MBS is in question now because of the MERS scandal and ongoing investigations by all 50 attorneys general
- Pension systems throughout the country are running out of money
- State governments are broke and local taxes are going up to fund school districts and basic necessities
- Health care costs continue to spiral out of control and are on track to usurp the entire GDP if something is not done. Meanwhile, Americans pay the most per capita for healthcare in the world, while our our longevity is mediocre compared to other industrialized countries.
- Unfunded liabilities of the federal government are out of control and its highly questionable whether the political will to reign them in can be found
- The so called fiscal conservatives in Washington are more interested in cutting taxes for the wealthy than they are in pursuing a fiscally responsible agenda. Ask one of those so-called fiscal conservatives to name one specific thing they would cut, and you never get an answer. Or if you do get an answer, its based on eliminating some pork barrel spending that amounts to almost nothing. The budget cannot be balanced only on the backs of the middle class without gutting the consumer economy or destroying what is left of the housing market.
- Unemployment remains high, and many people are exhausting their unemployment benefits. The long term unemployed do not contribute to the consumer economy or to the tax base
- It will take years to work through pent up foreclosures
All the above things, and many others, point to slow growth and bailouts far into the future. A great deal of money will be created, of necessity, to deal with the above problems. In an environment like this, gold can help to preserve your wealth.
Let’s look at Policy AP. Eight-years since Bernanke delivered his trademark “Helicopter” speech – his theories are being put into action. QE-1 and future QE-2 have lifted the Dow Jones Industrials above the 11,400-level, recouping all of its losses, following the default of Lehman Brothers. Likewise, the US-dollar has tumbled to below parity with the Australian and Canadian dollars and sunk to a 15-year low of 80-yen. Gold soared above $1,400 /oz, and silver hit $29.25 /oz, its highest in 30-years. While the Fed can unleash a tsunami of liquidity, it can’t always direct where the money flows.
Ron Paul, R-Texas, said on Nov 8th, the Fed will eventually destroy the US-dollar’s value around the world. “Bernanke is very clear at what he’s going to do. He’s going to create money until he gets economic growth, but there’s no evidence creating money creates economic growth.” Asked about Bernanke’s statement that he’s aiming for 2% inflation, Paul said: “When he gets to four percent, he’ll decide to go to eight, and there’s no way they can stop it. If they withdraw, it might make things worse. They think they have control. They don’t,” he warned.
“The German finance minister called the Fed’s proposals clueless. When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again, maybe it’s time for Chairman Bernanke to cease and desist!
Gold has a much Bigger Future then even I could ever dream and those who do not have any are DOOMED.
Those hostile to gold, those who are spreading fear uncertainty and doubt, have some sort of agenda that I don’t understand. Gold is good. It protects those who embrace it in challenging times.