“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput






Thursday, January 26, 2012

The Party Continues

The binge continues unabated in today's session as both gold and silver bulls are giddy with delight over the FOMC statement from yesterday while bears are still trying to locate what is left of their trading accounts. Both metals are pressing higher as the US Dollar continues to plummet now that the Fed has basically given it the kiss of death once again.

Lost in this stupid euphoria over zero interest rates for the next TWO YEARS is the pathetic fact that the Fed has just consigned the savings accounts of all of our retired citizens and the elderly to the wastelands. How in the hell are they supposed to live off the fruit of their labors and enjoy their retirement SAFELY and without concerns when the monetary masters have just laid them on the altar and sacrificed them to the hedge fund gods?

This is the price we supposedly have to pay in order to watch the stock market rally - namely turning our entire generation of senior citizens into a band of wild-eyed speculators if they are to hope to obtain more than a pitiful 1% on their one year Certificate of Deposits in their local banks.

I wish that some one of these Republican presidential candidates besides Ron Paul would actually begin to deal with this madness head on. After all, we are talking about a primary in Florida, a state loaded with senior citizens and other retirees who were hoping to live off the interest yields on their savings and other CONSERVATVE investments. My view is that what the Fed is doing is downright criminal in the sense that it is plundering the wealth of those who have saved in order to prop up the rotten house of Dagon.

As a trader I have to deal with what the market gives me and what that is at the moment is a veritable orgy of risk asset buying by hedge fund managers. As a private citizen however I have to shake my head in dismay that this is now what passes for sound monetary policy and is conducive to lasting prosperity. Have we lost our collective minds?

As I stated yesterday, the end result of this FOMC green light to the speculative community is to borrow all the "free money" you can get your hands on, leverage that up at least 10:1, and plow it into commodities and other risk assets and have at it. Bring back that carry trade and let's get this party going as we are in an election year and we cannot have a sagging stock market or actually deal with the real problems associated with $16 trillion in debt.

Quo vadis America?

12 comments:

  1. Where are we going indeed? To someplace in a handbasket I think...

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  2. Dan, you said in your post above: "I wish that some one of these Republican presidential candidates besides Ron Paul would actually begin to deal with this madness head on." It will never happen because none of the status quo candidates understand or even know what Austrian Economics (real economics) is like Ron Paul does so all they know how to do is react to news and suggest more destructive statist policies to fix problems that were caused by statist policies in the first place. They are clueless and light years behind Ron Paul.

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  3. Next time you ask why a bag of potato chips is $6, a head of iceberg lettuce $4, or a jug of orange juice that gives you 20% less at a 30% higher price... Just thank the Government and Uncle Ben. But there is no inflation right? LOL.

    Class warfare due to inflation, bailouts to big bankers, unfair inequalities and other baggage associated with this loose monitary policy enabled by fiat will eventually be it's undoing.

    In the meantime, gold is right smack dab in the middle of it's 20% leg up before consolidation at 1850. You heard it here first (well second maybe after Dan.lol).

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  4. Great post, Dan.

    This is madness. And it's not just the seniors who'll suffer - it's the youth as well, as they spend their lives either paying back the debts incurred by decades of mismanagement or living with the consequences of currency devaluation to wipe out those debts. Either way, they're screwed.

    And the point about forcing otherwise conservative investors into speculation is well made. Which of course will perpetuate the madness.

    Depressing stuff, but very well said.

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  5. Dan,

    Thank you for being an American Citizen. I too, am an American Citizen. Just an ordinary guy, who has a degree in Finance and Economics. A guy who has watched from the inside a complete and utter failure of our political and economic process. A guy who will survive and appreciates my father, a PHD in Economics, whom we discuss complete disregard for market economics. I am sickened by the utter disregard of MSM(main street media, the political process, and the Fed reserve, combined with the large banks. What will it take? I am working two jobs, have over 20 years of experience, but am out of people who actually understand our delimena? Dan, thank you. I am grateful for your web site, your opinio, your understanding of our problem. I actually met a recent college grad who understands, and thanked him the other nite. The outer limits continues.....GodSpeed us thru this process.

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  6. Sorry Dan,
    But there is no solution, never was a solution, and never will be a solution other than a complete collapse of the entire system and starting all over again from scratch. No politician, no human being can fix this, not Ron Paul, not a million Ron Paul's unless you allow the whole thing to disintegrate, and that means a lot, and I do mean a lot of pain for everyone. That is the solution and the only solution. Getting off any drug involves short term suffering and the greater the addiction the greater the payment required to set things right again. Fiat has to be the greatest and most deadly addiction of all. We are going to find out and soon !!!

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  7. Dan, I hear your pain about our senior citizens, two which are my parents. While we are having a party watching the metals go up, their real money goes negative. The Fed has no clue what to do, I am convinced. Any politician doesn't either, why should they, they are getting kickbacks for THEMSELVES, that is what all that matters, tis a shame.

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  8. Regarding Ron Paul, anyone here LIVE IN IDAHO? Attend the caucus in March! You can register Republican that day.

    This is THE WAY to make Ron Paul's view heard. Can you take a couple hours that evening to help our country?
    http://idgop.org/presidential-caucus-faq

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  9. White Wolf - thanks much for the comments

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