United States Heading towards a Depression?

Check this out

A Deflationary Collapse Followed by Hyperinflation

He's coming to the same conclusion, based on the more liquid M0 and M1. MZM and M2 are apparently based on fractional reserve loans lent out by commercial banks. M0 is the cash on hand backing those loans.

This means the banks must be getting closer to fractional reserve limits, because the money that's being created is based on a shrinking reserve. F the fed this is a total mess buried in a lot of misleading technicalities.

 

Jim Rogers is a very smart investor, he's been around for ages and knows his stuff.

He also doesn't tolerate stupidity and is quick to call a spade a spade.

This is totally counter-intuitive, given that most people don't think for themselves, but there is absolutely no reason why a country has to have a central bank (FED).

A Central Bank is one of the planks of the Communist Manifesto. It is anti-free market, and fractional reserve banking creates moral hazard.

So no matter what people may say, there is no need for a Central Bank. It's merely a tool to extort the people of their prosperity over time.

 

The big issue right now i thatthe FED has basically decided to bail out the banks out the cost of trillions of dollars at the taxpayers expense.

The original Fed had a balance in that there was gold and silver money and notes. In the current situation there is nothing to stop the Fed from causing either double-digit inflation or the collapse of the dollar.

 

Yeah, but even the gold standard FED didn't work well. They still managed to cause the great depression, first by building up the bubble in the 20s, then destroying it violently in the 30s. As (Jefferson?) warned, the banks would steal our wealth through inflation, then deflation. The wealthy bought up a lot of property during the depression.

Anyways, later, Von Mises predicted that Bretton Woods wouldn't work, and sure enough it did not. Guns and Butter forced Nixon to close the gold window.

As long as you have a lender of last resort, the government will collaborate with the FED to enable deficit spending, and debasement of the currency.

That is why the FED and the 16th Amendment came in together. Income Tax is the collateral for the lender of last resort.

So why do we really have a central bank and an income tax? Because you can't conduct war or imperialism (and the war debt and profiteering that goes along with it) in a democracy if it has to be paid for by direct tax.

Sound conspiratorial? It's the truth.

 

I wonder how much the Bear Stern bailout is going to cost? The dollar fell to 99.15 Yen today. Oil is $110 a barrel. A few more bailouts and some more rate cuts and the Yen with test 90.

How are the Chinese not revauling? Add that to the equation when the Chinese revalue 20%

 

The industry needs to be regulated like in the past or let them sink or swim. The banks can't have their cake and eat it too. This is costing a bijillion dollars.

 

It's costing guys like you and me. It costs the people who work for a living.

 

Decent roundup for a Saturday morning...

What the Price of Gold Is Telling Us
http://www.lewrockwell.com/paul/paul445.html

Excerpt

...


Inflation Is a Policy that Cannot Last
http://www.mises.org/story/2901

Great graphs!

Excerpt

 

The FED is really too generous. I wonder if after all these is over, will these banks and financial institutions ever learn how to manage their investment properly. After all, if it happens again, the FED will still bailout right?

 

More importantly, will they pay us back?

 

Sure! They'll just print up some more money, and pay you back with interest!

There is a great part in that "what the price of gold is telling us" article I linked.

 

It is counterfeit. FRNs are completely worthless and quite possibly illegal.

 

I'll help you enlighten yourself.

What is a US dollar?

(A better starting place might be, "what is money?" but I assume you have some background on that).

 

Well a US dollar is defined as a fixed amount of silver. A federal Reserve note is a bank credit note, to be redeemed in lawful tender.

The Constitution defines lawful tender as gold and silver.

But we can't exchange our FRNs for gold or silver, we can only exchange them for new FRNs.

So because they are unbacked, and printed without any restriction, and cannot honor their legal promise of redemption, they are in fact counterfeit.

The only reason the system continues and perpetuates is that

(1) most people are economically stupid
(2) the government is doing the counterfeiting, and they aren't about to sue themselves to prove it.

Money is a token, but it represents something. If I print money in my home, that is counterfeit. It is printed, but doesn't have any value behind it. It wasn't acquired legally, it wasn't acquired productively. The paper is worthless, except what it cost me to print the note.

The government prints money continuously. This is counterfeit. We can all agree that it dilutes the value of the money already in circulation, causing price increases and inflation. The effect is absolutely the same.

The only difference is who is doing it.