People are frightened, and they are ready to believe that a catastrophe lies just around the corner. They are pulling their hair out trying to find some way of creating income. In their frantic search for income, people are ready to believe any hare-brained scheme that promises them profits and income. Out of all this comes the concept of income inequality. Income inequality has been with us forever. Remember John D. Rockefeller and JP Morgan? Now Mayor Bill De Blassio of NYC thinks he can solve the inequality problem by taxing the hell out of the rich. Hes scaring wealthy New Yorkers half to death, and many are leaving the city. But the problem is not with the rich. The problem is with the collapse of the middle class into the lower class. The thinking is to tax the rich or raise the workers salaries to end inequality. Now we see an effort to raise the minimum wage of fast-food workers to $15 an hour. And this effort has gone international. Workers in fast food outlets all over the world are pushing for wages of $15 an hour. Of course this wont work unless we see burgers at $20 a pop and Cokes at $10 a cup. But the movement is indicative. People in the US and all over the world need income and a living wage. People believe that if a CEO receives payment 300 times larger than his average workers pay, then something is terribly wrong and the situation must change. When it changes, everything, at least theoretically, will be hunky dory. Meanwhile the government has a growing problem with debt. To service that debt, the government needs cash, and a lot of it. I think, coming up, the US government will not confiscate gold, but will confiscate cash through higher taxes, a so-called wealth tax. A government will do whatever it has to -- to stay in power. What Im afraid of is that we will see blood in the streets as middle class and lower class Americans revolt as they confront rising food prices. The whole mess started when central bankers (the Fed) thought they could do a better job of running the economy than the natural supply and demand system. The Fed thought they could smooth out the occasional bumps that occur in the economy, thereby giving us perpetual and smooth prosperity. To do this, the Fed needed the ability to create money when occasional recessions appeared. Without the backing of Gold, the Fed can create any amount of fiat currency it wants with the flick of a computer keyboard. Gold has been manipulated downward by the Fed, as the Fed seeks to smother the messenger. In its frantic attempt to smooth out the economic bumps, the Fed may be setting off a revolution in the middle and lower classes. I expect the Feds machinations to rattle the stock market, and the wealthy 1% will be blamed. In the end, the Federal Reserve will take the blame, and I believe in time the Fed will take the fall. . . . and from an editorial by Robert J. Samuelson on the Issues & Insights page of Investors Business Daily on May 20th: The long boom beginning in 1982 and lasting until 2007 -- a quarter-century interrupted by only modest and temporary setbacks -- convinced bankers, business leaders, economists and households that economic risk was waning. Practices once thought to be dangerous were less so. This is the central lesson of the crisis. Success at stabilizing and stimulating the economy in the short run can destabilize it in the long run. This also happened in the 1960s, when the belief that economists could control the business cycle led to inflation and instability in the 1970s and early 1980s. But the lesson is not acknowledged because its implications are unpopular (an obsession with short-term stability may backfire) and its ignored -- or even denied -- by the post-crisis narratives . . . . . . and from Paul Gilkes, in an Insights article posted on the CoinWorld website on May 21st: Sales by the United States Mint of American Eagle silver bullion coins are well on their way toward setting a record. Sales during the record calendar year of 2013 reached 42,675,000 coins. With just five months gone in calendar year 2014, sales through May 20 already reached 21.01 million coins. The 2014 American Eagle silver bullion coins went on sale to its authorized purchasers Jan. 13. March is the strongest sales month thus far during 2014, with 5,354,000 coins recorded sold. . . . and from Frank Holmes, in an interview with Myra P. Saefong posted on the MarketWatch website on May 23rd: I think that the mining strikes in South Africa and the situation in Russia are equally significant global events that have driven the price of palladium and platinum up this year. South Africa supplies around 37% of the worlds palladium, and Russia supplies close to 40% of the worlds palladium, so fear around those political landscapes are helping to push prices higher and higher. The situation in South Africa has become a lengthy standoff, even with talks of negotiations, and the situation in Russia and Ukraine doesnt seem to be getting any better either. I believe both of these issues have the potential to continue on for quite some time, though I dont know if the seriousness of the issues will be improved or worsened as we move forward. Over the next three years, I think palladium and platinum will remain attractive. In addition, the key factor to see gold do well is going to be rising GDP per capita, along with negative real interest rates. . . . and from Peter Morici, in a posting on the Fox News website on May 23rd: Consumer price inflation, less food and energy, or the so called core rate, exceeded 2.5 percent in March and April, and wholesale prices are moving up even faster. If the Fed does not want inflation to get out of control, it best start tightening monetary policy soon. The Fed is on track to end its purchases of long term Treasury and mortgage backed securities by the end of the year, and the minutes of its policymaking committee indicate the focus is now on how and when to raise interest rates in 2015. Once out of control -- as it was during the Ford and Carter years -- inflation becomes very tough to contain. Chairman Yellen: Regarding inflation, its later than you think.
Posted on: Sat, 24 May 2014 03:16:00 +0000