Americans in the past fifty years have come to believe in a “something for nothing” economy. As little children we were raised to the crooning of Jiminy Cricket singing, “When you wish upon a star your dreams come true.” While it is true that America has been the land of great possibilities, there are limits that we have failed to acknowledge. FULL ARTICLE

Systemic risk is mitigated when individual firms mitigate their own risks. It is not mitigated when those risks are centralized in a few large firms with a government backup. That creates systemic risk. Decentralization and risk-avoidance mitigate systemic risk. Both of those are encouraged in money, capital, and banking markets not controlled and regulated by the federal government and the FED. FULL ARTICLE

Make no mistake, the economy will not turn around soon. When the recovery fails to materialize, look for governments around the world, and especially in the U.S., to send another massive wave of liquidity downriver. When it does, the value of nearly everything, except for gold , will diminish. Don’t be intimidated by the recent spike in gold. Buy now while you still can. FULL ARTICLE

As we learned in “The Significance of Gold Backwardation Explained”, backwardation is a sign of a very tight market, and a market that will be tight for sometime into the future either 1) current supply is very tight, 2) future supply is projected to be very tight, or 3) there is a severe distrust in counterparties that the short positions can deliver the goods on time per the contract, or vice versa that the long positions will not have the cash. FULL ARTICLE

The Gold Anti-Trust Action Committee was organized in January 1999 to advocate and undertake litigation against illegal collusion to control the price and supply of gold and related financial securities.  GATA opposes collusion against a free market in gold, other precious metals, currencies, and related securities.  Their main theories center around demonstrating that governments, central banks, bullion banks, and even some major miners have colluded to suppress the price of gold.  By doing so, they make their own fiat currencies appear stronger. FULL ARTICLE

To improve the situation, you must first have a solid grasp of how we got here.  Government policies and central planning created the housing bubble, now going bust.  About a decade ago the government made expanded homeownership and affordable housing a public goal.  Through Fannie Mae, Freddie Mac and the secondary mortgage market the government incentivized creative, low down-payment, more widely available mortgage products, and discouraged the market-proven lending standards of the past. FULL ARTICLE

If gold does trade in backwardation against US dollar for a protracted period…, it will mean that a collapse of the dollar has begun. Think about it. How could gold go into backwardation for any prolonged period? If it does, it would mean that no one is willing to take the risk of selling their hoard and instead hold US dollars. It would mean that no one is willing to accept the risks that come with holding dollars while waiting until they can be used at a future date to exchange back into gold.  FULL ARTICLE

It appears to be a perfect storm shaping up, although it not yet outside the grasp of short-term government manipulation, especially if there is the hint of a panic, or “gold fever” developing. The price of gold and silver are both up as both metals are in (temporary for now) backwardation, but the price does not have a high degree of relevance. All eyes are on the gold basis will probably drive the price which you can learn about by reading the below mini-series. FULL ARTICLE

As the recession deepens, it will become apparent to all that the Fed has no will to fight inflation. Worse still, it will likely be seen that the U.S. Administration is diverting its vast resources away from restructuring and infrastructure spending towards the potentially inflationary, socialist-style prevention of restructuring through the subsidization of clinically dead companies, like the U.S. auto industry.  FULL ARTICLE

In the aftermath of the harsh and bruising 2008 election, there are calls for “bipartisanship”. Literally the word means, “Having members from, or representing two parties”. However, current political usage implies an era of good feeling during which opposing parties cooperate for the common good.

Is such a coalition approach to government healthy for democracy? Will the submerging of differences lead to the greatest good for the greatest number? Does it bring us closer to one-party rule? Continue reading →