The Merger of Fiscal Policies with Federal Banking – Part 4

Nebuchadnezzar and the Tower of Babel

Nebuchadnezzar and the Tower of Babel

From a small deserted island economy to today’s complex world order takes years of mismanagement and dishonesty. For our civilization, it started in Babylon. Babylonian Emperor and Warlord, Nebuchadnezzar understood the power of banking and he and his fellow-dictators discovered that war was the best way to gain and maintain control over a nation’s people and the most profitable way to make money.

War as a technology is highly efficient, because it totally uses up most of the goods (munitions, armaments) and services (men and women in military forces) it involves. With many technologies for example, the manufacture of goods, machinery and tools are not completely used up. They merely depreciate over time. War materiel is destroyed, requiring a constant re-supply, necessitating a “military industrial complex” to furnish the objects and personnel involved.

Beginning with old Nebu (perhaps even before) the ruler or rulers of a state decreed what the official policy would be as to money and finances. In most centuries and in most countries, this has meant that only the rulers of a state are allowed to issue money and everyone in that state–and economically related states–must use the money created.

The power to issue currency and coins and to set a nation’s fiscal policy resides either in a monarch, the elected officials of a state, or a private group of financiers. In 1666, the profligate King Charles II and a corrupt Parliament sold the British fiscal powers to the East India Company (a group of financiers), pretty much in the same way as President Woodrow Wilson gave the fiscal control away to the privately operated Federal Reserve in 1913. The East India Company established the policy that goods could only be purchased by the colonies, including America, by goods of exchange (tobacco, timber, fish, furs, rum) or coins.

As the American colonies moved out of barter into a more complex economy, they had a dire need for currency, “bills of exchange.” The colonists had very little in the way of coins, since most of their exports were traded for goods, not coins. So with the encouragement of men such as Benjamin Franklin, the colonies began to issue their own currencies to facilitate domestic and foreign trade.

The importance of American domestic currencies is not often emphasized in American history books and we are not made aware that one of the major reasons for the revolt of the American colonists against the British is that the English Parliament in 1751 and 1763 made it illegal for the American colonies to issue currency. Had Americans accepted this British mandate, domestic trade would have ground to a halt and the colonists reduced to barter, a very inefficient method of exchange.

After the United States was established, a national bank was chartered in 1791: the Bank of the United States. Only about twenty percent of the national bank was actually owned by the government, the rest by foreign investors. It soon became clear that the Bank was being operated for the benefit of foreign investors, so Congress did not renew the Bank’s 20-year charter in 1811.

A second national bank was given a federal charter in 1816, but like the first one, it too was largely controlled by foreign investors through such front men as John Jacob Astor, Stephen Girard, and David Parish, a New York agent for the Vienna branch of the Rothschild money interest. This second national bank was controlled by Nicholas Biddle who administered it according to the aims of its foreign owners and contrary to the welfare of Americans.

In 1836, President Andrew Jackson vetoed the bill, which would have renewed the national bank’s charter, which expired that year. In his veto message, President Jackson said:¬† “The bold efforts the present bank has made to control the government, the distress it has wantonly caused, are but premonitions of the fate which awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it.”

Americans were well rid of the foreign-dominated second national bank. But they were left in the vulnerable position of having no national bank to further their interests for the next 80 years, a time period which the foreign financiers, especially such moneyed groups as the Rothschilds, saw their opportunity and soon sent their agents to America to begin setting up state banks.
The Rothschild’s primary agent in America was August Belmont, who established a large bank in New York City, but also a large number of state banks in the south. The Rotshchilds and other European financiers loaned money to state banks at high rates of interest and controlled loan decisions.
By the time the 20th century came around they had virtually all the power and means to control the politics.

Many of these state banks were also supported by state bonds. The state of Mississippi, for example, sold $5 million in bonds with which to subscribe a third of the $15 million capital of the Union Bank. The promoters of the Union Bank made ill-advised loans and within a short time the bank failed. The state officials in Mississippi realized that the foreign financiers had hoped to reap windfall profits and had been largely responsible for the failure of the Union Bank, so these officials refused to repay the money owed the foreign vultures.

The European financiers bought up “repudiated” southern state bonds and then began to use their financial power to have the United States federal government compel the southern states to pay off the disputed claims. The Rothschilds and the other foreign financier groups also thought they might be able to use their money power to force the U.S. federal government to assume the debts of the southern state banks as federal obligations. At its inception, the newly formed United States had assumed the debts of the colonies; so the foreign vultures thought they might be able to force the federal government to pay off the southern states’ debts. The issue of “states’ rights” versus a “strong central authority” became a national crisis point and the American civil war was the result.

When reviewing the technology of war above, we saw that this is a very profitable stratagem for rulers. The Rothschilds and other European financiers had exacerbated the discord and hostility between the North and the South. Knowing full well that war was their best means of reaping huge profits, these vultures did everything in their power to instigate an American civil war. They worked both sides of the street, as usual.

The Union commissioned Jay Cooke to act as selling agent for its bond issues and Cooke arranged with August Belmont, the New York agent of the Rothschilds, to sell Union bonds in Europe. In 1861 the Confederacy sent James M. Mason to England and John Slidell to France to borrow money. Slidell was a nephew of Belmont’s wife. In Paris, John Slidell entered into negotiations with the Erlanger Company, confidential representatives of the Rothschilds. Slidell’s daughter married Erlanger’s son. Even though most investors in confederate bonds lost their shirt, the Erlangers reaped huge profits.

The American Civil War cost the Union about $3.2 billion and the Confederacy close to $2 billion, all money loaned on interest. August Belmont, the Democratic National Chairman, sabotaged the Democratic presidential candidate, Horatio Seymour, through derogatory statements made in his New York World newspaper, assuring the election of the Republican candidate, General Ulysses S. Grant.

The so-called Credit Strengthening Act of March 18, 1869 was passed immediately upon the assembling of the new Congress elected in the 1868 election. It was the first act passed by that body and signed by the new President Grant. The passage of that Act was equivalent to the payment to the Rothschilds and their banker satellites in America and abroad of at least $275 million over and above the amount they otherwise would have received in the form of interest and principal for the bonds they owned or controlled.

At least since the American presidential election of 1868, the financiers who rule the USA have made sure that they have handpicked presidential candidates in both the Democratic and Republican parties. Whichever party wins, they have their puppet in power.

“The structure of financial controls created by the tycoons of ‘Big Banking’ and “Big Business’ in the period 1880-1993 was of extraordinary complexity, one business fief being built on another, both being allied with semi-independent associates, the whole rearing upward into two pinnacles of economic and financial power, of which one, centered in New York, was headed by J. P. Morgan and Company, and the other in Ohio, was headed by the Rockefeller family. When these two cooperated, as they generally did, they could influence the economic life of the country to a very large degree and could almost control its political life, at least on the Federal level.”

Where the Republic turned Empire

Where the Republic turned Empire

After almost 80 years of Wild West Banking and building absolute control points in the financial systems, the bankers elite designed a Federal Reserve Act that on December 23, 1913 was signed into Law by President Woodrow Wilson, effectively creating the Federal Reserve, a private banking organization that controls the fiscal policies of the United States.

Noted economist John Maynard Keynes said in 1920: ‚ÄúBy a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.¬† By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some … The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.‚Äù

Sadly, that is very true.  Keynes is one of the two original architects of our present monetary system.  Most citizens will never know what hit them as the current monetary and economic crisis plays out.  There will be plenty of finger pointing and scapegoating in years to come, but only the most discerning citizens will understand exactly when and where we went wrong.
As people of the United States of America we were never supposed to understand.

Another famous quote is from Thomas Jefferson: ”Banking establishments are more dangerous than standing armies.”  He, and a majority of our Founding Fathers knew well the dangers of submitting the Republic to “central bankers.”  Still, Jefferson could have never conceived what a witches’ brew our current banking hierarchy has brought upon us.

1913 was an ominous year.  That’s when both the Federal Reserve and the income tax laws were thrust upon the U.S.  This dynamic duo has wrought nearly a century of damage upon us and the rest of the world.  They are nothing more than financial predators.

Our current status of debts, desperation, dishonest money, bailouts, extreme institutional greed, and weird finance took root in 1913.  In hindsight, the present quagmire is the inevitable consequence of straying from the natural disciplines of honest money, but it’s all we’ve known in our collective lifetimes. The US government has yielded control of both money creation and economy to elitist insiders with no consideration for anything but themselves.

In closing, and I’m not saying this lightly, nor do I pretend to know it all or project my self as an alarmist, but

The global monetary system, with the U.S. dollar as its “reserve currency,” is crumbling.  The dollar has been abused so much by this Elite, that the rest of the world is no longer oblivious to its fundamentals.  A major form of change is on the horizon.

What we now recognize as “money” will enter the history books, even if only because it has been tainted to the point where it has lost the confidence it once had.  It’s reasonable to expect the coming monetary order to, once again, be backed by tangible substances.  Gold is the frontrunner and the U.S. will go along … kicking and screaming, threatening and bullying.
Until then we are in uncharted territory.

In the context of this foregoing you may want to spend some extra time understanding my fellow contributor The Market Man’s take on silver today in the story The “Silver Bullet”. It could give you the opportunity to make some real money.

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Riding The Silver Bullet

A Bullet Proof Vest Against Recession

A Bullet Proof Vest Against Recession

Precious metals have proven themselves as a phenomenal investment when stocks are getting hit the hardest. As a result, investors have been grabbing up shares of gold stocks and the metal itself at an amazing rate. But despite the success of the goldbugs, 99% of investors are overlooking the most lucrative precious metal.

Better than gold and platinum and even exotics like palladium the main precious metal that you need to own right now is silver. That may come as some surprise given the rally that gold has had this year, and given the analyst sentiment that has pushed the SPDR Gold Trust ETF (NYSE: GLD) to the world’s sixth-largest holder of gold bullion, ahead of Switzerland and China.

But from a valuation standpoint, there is no question that silver is the best metal to buy right now. The Silver Bullet.

Making a value case for a commodity like gold, silver, or oil, isn’t quite as simple as it is with a stock. That’s because while stocks have easily defined assets, the value of a commodity is simply whatever people are willing to pay for it. It all comes down to scarcity, or how much of a given commodity is available.

In the case of precious metals like gold or silver, the metal is worth something because there isn’t a lot out there. Likewise, nonrenewable energy sources like oil are valuable because it’s in limited supply.

Traditionally, investors have looked at the relationship between gold and silver’s prices to determine whether one of the metals presented a good value play. At present, the gold-to-silver price ratio sits at approximately 59:1, which while high is nothing compared to its peak of 98:1 back in 1991.

But the fact of the matter is that the gold-to-silver price ratio is a worthless measure of the two metals’ value. To get a more meaningful indicator, let’s take a look at each metal’s market capitalization‚ the value of all of above ground‚ gold or silver multiplied by its price.

The results are startling

Unlike gold, which has limited industrial uses, silver is used in a number of manufacturing processes. Some of these processes, known as non-recoverable industrial consumption (NRIC), result in the destruction of the metal and lower the amount of above ground silver. According to silver analyst Theodore Butler, in the last six decades NRIC has resulted in more silver being consumed than mined ‘from 10 billion ounces above ground in 1950 to just 1 billion today’.

Compare that to gold, which has seen its above ground supply increase 150% to 5 billion ounces during that period.

As recently as 1975, the value of the world’s gold was 23 times higher than silver’s. Today, with depletion taken into account, gold is currently priced 250 times higher than silver. That is a shocking difference.

And it is one that suggests silver is grossly undervalued as an investment right now. It looks like it’s time to ride the Silver Bullet.

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You Can’t Win if You Don’t Play

Silicon Valley, the Epicenter of Internet Technology

Silicon Valley, the Epicenter of Internet Technology

The world is full of expressions to describe success as a combination of being both lucky and good. Being at the right place at the right time and having the means and opportunity to join into something big requires a lot of luck first and foremost. California’s Silicon Valley, with towns, cities and neighborhoods like Mountain View, Sunnyvale, Menlo Park and Cupertino, was the absolute place to be if you were looking at a chance to become an Internet Mogol. While reading an article in the New Yorker I noted that Jeff Bezos was one of the early investors in Google. Definitely a case of all the criteria for success being pinpointed.

Jeff Bezos, founder of Amazon.com in 1994 and #33 on last year’s Forbes 400 with a net worth of over $8.7 billion was one of Google’s early investors. Even though he was originally from Texas, studied in Florida and New York, he crossed to the westcoast to start Amazon in Seattle. His choice was based on Microsoft’s homebase. In 1998, when Larry Page’s and Sergey Brin’s Google offices were a Menlo Park, California garage – Bezos invested $250,000 of personal funds into the fledgling search engine.

Six years later when Google went public in 2004, that $250,000 investment translated into 3.3 million shares of Google stock. At Google’s IPO of $85 per share, that represented a $280 million stock share position! Not too shabby even if it took almost 6 years.

While Bezos does not disclose how many of those shares he still holds, at the current price of Google stock that represents an investment position worth over $1.5 billion. Why did Bezos invest in Google? His words are prophetic especially knowing how much of a micro manager he is, “…There was no business plan…They had a vision. It was a customer-focused point of view.” And more tellingly he adds, “I just fell in love with Larry and Sergey.”

In addition to being a good tale to which the normal reaction is to just say “wow,”¬†¬† Jeff Bezos’ Google investment offers a number of important lessons for aspiring, private company investors. Bezos was attracted to Page and Brin as people, as technologists, as leaders. And obviously their customer-centric focus really tracked the way that Bezos looks at the world and is embodied in the Amazon customer service experience. So while a business opportunity in its abstract is great, evaluating the people pioneering a business is FAR MORE RELEVANT:

1.¬†¬† He Thought Long Term and probably expected nothing. Even though Google has been the fastest rocket ship growth company in the history of the world, it was still SIX YEARS from Bezo’s investment in the company to liquidity. Private equity overnight successes simply do not exist.

2.   He Got In Early, lucky man who trusted his instincts. Sure, it would have been great to get into Google at its IPO price of $85/share, especially as the shares are up over 535% since then. But Bezos got in, after adjusting for stock splits, at EIGHT CENTS PER SHARE! Talk about leverage. That translates into an 112,000 percent increase from investment to IPO, and then if he held onto the shares to another 535% on top of that.

3.¬†¬† He Invested in People whose idea was solid and lend his expertise to build on. At the time of Bezo’s investment, there were a large number of very well-funded and far more successful search engines already on the market. Remember this was 1998 not 1994. Yahoo. Alta Vista. Lycos. Excite. Looksmart. Webcrawler. Infoseek. Inktomi and GoTo to name just a few. AOL, MSN and even Ask Jeeves were pioneering on the search concept.

4.¬† He Took a Shot when others sat back. For every Jeff Bezos who invested in Google, there are dozens of investors that were presented with the opportunity and did not. This of course does not always mean that the probability of any early stage private company investor having a Google-like success in their portfolio is anything but very low, but it does mean that it is far greater than the ZERO percent likelihood of success of those who did not invest. As they say, you can’t win if you don’t play.

5.    He Got Lucky that in spite of the ensuing dot.com bust these guys were the real thing. As hard as it is for many to accept, luck is a key, and sometimes the key, variable in successful investing.

Today there are a good number of localized search engines leading the way to a more accessible locally profitable internet presence. It is pretty agreed that on the micro and local/regional level, search will expand more rapidly than nationl or global. As opposed to fighting or getting philosophical re this reality, a far better question for today’s investors to ask is “How can I improve my likelihood of getting lucky?”

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An Interview about How to Buy Gold and Silver

Buying gold

Buying gold

Our contributing writer ‘The Market Man’ has been writing and spreading tips about getting into precious metals for quite a while now. He claims that for investors, as well as just for savings purposes, buying gold and silver are the best options available today. The fears of a rapid decline in the value of the dollar as well as the projected massive inflation due to the enormous budget deficits is getting people’s attention. Hundreds of readers have been writing to us wondering how to go about buying gold and silver, so we turned to our expert and asked him some questions.

Here are some of his answers.

Question: You have been very convincing and effective in finally turning people’s opinions away from the TV Spin Doctors and Wall Street “experts” and we are ready to secure our finances and wealth through the acquisition of some gold and silver, but first is there anything else you can recommend in that line up?

Answer: Gold and silver absolutely shore up your buying power and¬†preserve/increase your wealth. If you want to round out an investment portfolio, water, farm land and oil are great additions. Paper wealth is subject to liar’s figures and those figures lie. Commodities have actual true value.

Question: Okay, let’s stick with gold and silver for now. ¬†I have $2,500 to buy gold and silver, where do I start? Obviously not with bullion, so what are my best options?

Answer: One ounce Silver Eagles, which are actually bullion and true money, and they are perfect for that level of commitment. Silver is increasing in value at a much larger multiple than gold, but gold is great. If you specifically want gold, $2300 will get 2 one ounce gold maple leafs or gold eagles.

Question: So how do I go about that? Where can I actually plop $2,500 on the counter and get the value equivalent in gold?

Answer: My personal preference in dealers is one of the world’s most stable and valued… Kitco of Montreal, Canada. Go to Kitco.com to check out all of your options. They ship world wide.

Question: Okay now I have a couple of gold and silver coins, but I cannot walk into Best Buy and buy a stereo or a computer with it, so essentially I’m just investing in gold or putting my savings into gold in the hope that the $1,043 ¬†per ounce of gold or $17 per ounce of silver goes up further in the near future. Correct?

Answer: Yes, correct. My research is showing that you might expect gold to reach the $2,000 per oz range within the next 18-24 months. Silver is going into a shortage situation in the very near future. I envision a price range of $130-150 per oz in the next 2 years.

Question: Obviously I just bought gold and silver as an investment and not as a monetary means of transaction. What are the laws on using gold and silver in regular everyday purchases?

Answer: You certainly may try using the metals in that manner as there are no laws against it, but, at this moment in history it’s just not practical. Banks around the world buy, sell, and deal in gold and silver for their customers, but not here in the U.S. We are extremely backward in that respect.

Question: I heard there are substantial transactional cost involved in purchasing gold. What are we typically looking at with coins and bullion?

Answer: You should expect a commission rate between 1 1/2% – 3% at the best dealers. I have an Everbank.com 401k precious metals account that charges 1.5%

Question: So now I have physically taken possession of some gold. What do you suggest I do with it? Put it in a bank vault outside of the country? Can I insure it?

Answer: Insurance is available for “collectible” coins and jewelry, but not normally on standard coins and bullion. Off shore vaults are a good option but I recommend taking personal possion of the metal and hide it securely where you have access to it. Be sure to have one other person that you trust know its where abouts.

Question: People that are buying gold are mostly buying it for investment purposes or secured savings, do you foresee any situation where gold and silver will actually turn into a transactional currency?

Answer: The Middle East is thinking about requiring the U.S. to¬†pay for oil in gold VS dollars, but for traditional currency use there just isn’t enough of the metals available. However I do forsee some currencies being backed by gold and silver.

Closing: Well thanks for clarifying the issues surrounding gold and silver a bit. Anything you would like to add?

I hope your readers are starting to think about the metals. Now that China is asking their citizens to put their savings in gold and silver, our U.S. citizens can benefit and prosper from the dramatically increased demand for the wonderful metals. There is no ceiling as to where the prices will reach. The metals are the one hedge against erosion of your wealth that you can depend on.

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Lost Jobs Are Not Coming Back

Lost Jobs that won't come back

Lost Jobs that won't come back

“Many lost jobs in US will never come back…” says The Wall Street Journal.‚Ä®They’re not lost, waiting to be rediscovered. They’re not missing in action, to return after the fighting stops. Instead, they’re dead, gone forever.‚Ä®‚Ä®There have been 7.2 million jobs lost since the recession began. Many of these jobs were Bubble Age jobs. Millions of people, for example, earned their money in housing. They were putting up houses in the sand states… or building granite countertops… or selling, flipping, or financing the houses. Those jobs are gone forever.

Never again in our lifetimes are we likely to see such an explosion in the housing industry. Sure, people will still build houses and do all the other work involved in the traditional housing industry, but it will be only a fraction of the industry it was in the 2002-2007 period.‚Ä®‚Ä®There were also all the jobs involved in selling things to people who didn’t need them and couldn’t afford them. Labor was needed at every step of the way – manufacturing (perhaps in China), shipping, stocking, retailing, fixing, and financing the stuff.‚Ä®‚Ä®And don’t forget all that mall space… and all the trucks… and all the other things that supported the over-consumption of the Bubble Age.

Now the Bubble Age is over. It will not come back, no matter how much cash and credit the feds pump into the system. (Not that they can’t make things worse… in a BIGGER bubble… but that is not yet in sight.)‚Ä®‚Ä®In The Wall Street Journal yesterday there was an item about Las Vegas. The casinos are folding up their expansion plans, says the WSJ. ‚Ä®‚Ä®But the big news yesterday was that the service industries are growing again… at least that’s what the latest figures show. This news so delighted investors that they bid up Dow stocks 112 points. Oil rose above $70.

Don’t get too excited about the rise in the service sector. Everything bounces… even dead jobs. Dead jobs bounce; they still don’t get up. After months of decline, it may be true that the service industries have had a rebound, but don’t expect them to begin recovering the stamina and strength of the bubble years. A few more people may have gotten jobs serving drinks in Detroit’s bars last month, but it is not likely to turn into a durable recovery of the job market

In the 1990s, the US economy added 2.15 million new jobs every year. It needed to add at least 1.5 million or so just to remain at full employment – that is, with about 5% of the workforce unemployed at any time.‚Ä®‚Ä®To put that number in perspective, this year the economy as LOST 2.5 million jobs, just in the last six months. Those jobs aren’t coming back. ¬†This is a depression. It is a major correction, in which the economy needs to find new jobs… because it can’t continue to do what it has been doing. ‚Ä®‚Ä®New jobs are typically created by new businesses – small businesses that are growing. Big businesses already have all the market share they’re going to get. They also typically have all the employees they need.

When hard times come, they discover that they don’t need all that they have, so they cut back.‚Ä®Job cuts from large businesses is what you expect in a recession, but this time it is different. This time, big businesses have let people go by the million. Small business has not been hiring them either, so not only is unemployment growing… the trend shows no signs of coming to an end.

The economy needs, say, 1.5 million new jobs per year. Instead, over the last two years, it lost 7.5 million. Now, it has to stop losing jobs… let’s just say that happens a year from now. By then, the total of jobs lost may be near 10 million. Plus, there are the new jobs it needed – but never got – over that 3 year period. That’s another 4.5 million. So, the total will be about 14.5 million jobs down. Then, ¬†say that the economy then begins creating jobs again… at the rate it did during the ’90s. After five years, that still leaves the economy more than 10 million jobs short, doesn’t it?‚Ä®‚Ä®In order to get back to full employment, the economy has to surprise on the upside. ¬†Not merely to return to the growth levels of the ’90s… it has to surpass them. It needs to grow so fast it creates 3 million jobs per year. Even then, it would take nearly 10 years to get back to full employment.‚Ä®‚Ä®Pretty grim, huh?‚Ä®‚Ä®Well, don’t worry about it. It won’t be like that. It will be worse.

In a ‘normal’ recession, jobs reappear because the economy continues in the same direction. In a depression, and we are in one, it changes course. Debts are paid off. Spending goes down, more or less permanently. The economy actually contracts… until consumer debt is once again down at an acceptable level… or a new model for growth can be found.

Now we don’t need all those people building houses, stocking the shelves and selling things. We don’t need such a big financial industry either. People now want to get rid of credit, not get more and the businesses that were goosed up in the credit bubble are now deflating fast. They’re not just taking a break. They’re lining up the jobs and shooting them in the back of the head. Those jobs are gone. *

*General thoughts taken from Bill Bonner’s “On the Losing Side of a Credit Battle”

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The Invention of the Technology of Banking – Part 3

The Bank's Share of the Coconut

The Bank's Share of the Coconut

As we saw, Sunday, our desert island Troubadour, performed only the first of the services of banking, keeping custody of the money or means of exchange: fish, game, fibers, rope, tools, etc. Let’s take a look at how “full-service” banking was invented and by whom.

In 604 B.C.E, the Babylonian ruler Nebuchadnezzar decreed that gold would be the medium of exchange in his empire.

You hear that people! That’s 2613 years ago that Gold was already used as the reserve currency.

The Babylonian temples contained strong rooms where people brought their gold and other precious items for safekeeping by the temple priests. The customers were given small clay tablets as receipts for their valuables.

The priest-bankers demanded that the people pay twenty percent interest for guarding their valuables–not a bad racket. Some Swiss banks today charge interest for securing deposits, but most modern banks pay depositors interest on the money they keep in their accounts.

The Babylonian priests, never letting the grass grow under their feet, discovered that most of the people depositing valuables for safekeeping seldom came to reclaim their gold and other precious items. Instead, the people began using the clay receipt tablets as a means of exchange–money.

Now, thought the priests, the people believe that the clay tablets are backed by gold and other valuables, yet the deposits are seldom if ever claimed. We can issue ten times as many clay tablets as are backed by gold and grow rich. The priest-bankers issued clay tablets unredeemable by gold, loaned out the clay tablets at interest and were soon living the life of luxury. Greed had found another outlet.

The crafty Babylonian priests had invented all the features of modern full-service banking:

• Custody of money: gold and other precious objects in safekeeping in the temple vaults
• The issuing of currency (something in circulation as a means of exchange): clay tablets
‚Ä¢ The charging of interest: money charged by banks for securing a depositor’s money or money charged for a loan
• The loaning of money: loaning of clay tablets at interest
• The issue of fiat money: money not convertible into a commodity (such as gold or silver) of equivalent value-unsecured clay tablets

Old Neb gave us two other important stratagems which have lasted through the centuries to clutter our lives:
– The technology of war
– State fiscal policy

More about that in Part 4

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People Live Longer when the Economy Goes South

Who could figure?

Who could figure?

According to a pair of researchers from the University of Michigan, a depression does more for longevity than diet or exercise. Life expectancy during the worst years of the Great Depression increased from 57.1 years in 1929 to 63.3 years in 1933, says the report by Jose A. Tapia Granados and Ana Diez Roux.

It didn’t matter whether you were a man or a woman, black or white. It didn’t matter if you were in the US during the Great Depression or in Spain, Japan or Sweden during their economic downturns. The results were the same.

By contrast, life expectancy declined during the boom years. For most age groups, “mortality tended to peak during years of strong economic expansion (such as 1923, 1926, 1929 and 1936-1937),” they wrote in the “Proceedings of the National Academy of Sciences.”

Conventional wisdom holds that recessions are times of stress. People do not eat as well. They skip medical check-ups. They should drop dead earlier. Instead, they live longer. Perhaps it is because the economy slows down, allowing people to live at a more comfortable pace. Maybe the unemployed get more sleep. I don’t know. But if you want to live an extra six years, nothing works like a slump. When it comes to economic health too, nothing beats a depression.

Americans are saving again. They are rebuilding their balance sheets and eventually, their economies. They can even look forward to living longer… and with a little more bad luck, maybe their moron economists will wise up too.

Guess what living on an island like Amelia, we all may soon turn into Blue Zone www.bluezones.com centenarians.

Americans were once damned by good fortune, they are now blessed by bad luck.

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Politics Arrive on the Scene of the Deserted Island-Part 2

Drinking from the Coconut

Drinking from the Coconut

As we learned yesterday, politics is the art or science of winning and holding control over a group or nation, either through influence or force. In our simple desert island society, direction and control of group actions could take place in one or more of these ways:

1. Our 7 cast-a-ways could simply let things take their course, electing to have no formal government, setting up a form of anarchy.
2. One could assert that he or she was the ruler, thereby establishing a monarchy–a form of rulership whereby a queen or king, empress or emperor holds absolute or limited power, usually inherited over time, like the Dutch House of Orange or the British House of Windsor.
3. The seven could agree that they would vote on all activities, thus creating a commonwealth, government by the people for the benefit of the people.
4. Or let’s say one of them could take power by force, either psychological force or violently, thus establishing a dictatorship.
5. And if one of them came to have a larger share of the money and use wealth to take control of the desert island society, that would constitute a plutocracy. But let’s be clear:

No matter which direction they choose, over time the island will be facing a much more complex society.

As the population of the desert island expands, the economic and political situation becomes more complex. When the population reaches a certain size, the inhabitants of the island decide to set up an executive group, individuals elected to direct and control activities on the island.

They decide that they need a written statement of the policies which the government and the citizens will follow: a constitution and a body of laws. The islanders then elect representatives to create new laws and regulations as they are needed, setting up a legislature, and they elect individuals to administer the laws, establishing a judiciary.

It’s just a matter of time before they will choose to establish some form of law enforcement or police force to establish and maintain law and order on the island. Secondly, they will find the need to set up a military force to protect their island from outside forces. And since now there is a much smaller percentage of the people involved in the actual production of goods (money) and more and more people are in the services field (bartering time and expertise for a piece of the pie), the decision that each islander will have to pay to support the activities of these government agencies is at hand, and taxation now becomes a fact …and that’s how we finally arrive at the doorstep of a Modern Society

Our simplified island society over time contained all of the features of a more complex society:
• A government: composed of the executive, legislative, and judicial branches
• Taxation: required payments of citizens to support their government
• Police and military forces: to maintain domestic order and provide protection from foreign invasion
• Economy: a system in which goods and services are exchanged
• Goods and services: products or acts of labor
• Labor: the expenditure of physical or mental effort
‚Ä¢ Money: any agreed means of exchange–including salt, cattle, pigs, goats, tobacco, gold, iron, paper currency, metal coins, bank debt and of course the latest “inventions” such as packaged credit default swaps.
• Storekeeping: the accumulating, organizing, and distributing of supplies
• Banking: the custody, exchange, loan, or issue of money
• Capitalism: each individual owning his own means of production
• Commonwealth: all of the individuals owning the means of production in common

We’re ready to roll. Tomorrow in Part 3 I will touch on The Invention of the Technology of Banking.

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The Decline of The U.S. Dollar Brand

The Dollar Brand

The Dollar Brand

The US dollar is a sort of monetary or currency brand, and like any other brand, it can fall out of favor. Even iconic brands can lose their ‘must-have’ standing. Remember the Members Only jackets from the 1980s?”

So it is with the U.S. dollar, a brand making lows in the financial markets. It is a brand past its apex and a replacement waits in the wings. This line of thought comes from James Grant, who presented the idea of the dollar as a flagging brand at Grant’s Fall Investment Conference in Manhattan.

Grant dug up the example of the Deutsche Mark, or DM. ‚ÄúThe DM was a hallowed monetary brand, a source of stability and a symbol of Teutonic fiscal restraint. As recently as the end of 1991, the DM made up 18% of world currency reserves. It was the quintessential strong currency.” At that point, according to historian David Marsh, the DM held sway ‚Äòacross a larger area of Europe than any other German Reich in history. Today, the DM does not exist. Look at the status of the once Almighty British Pound. Not even a glimmer of its former power and influence.

Is the dollar next?”

With this backdrop, it is not hard to imagine the U.S. dollar losing its dominance. It is especially not hard to imagine when you consider the poor stewardship of the U.S. government. The government seems as intent on creating dollars as bunnies are on creating other bunnies.

Tuesday‚Äôs sudden loss of confidence in the U.S. dollar sparked a fire in about every other asset class. Gold was the most notable, soaring to a new record high of $1,043 an ounce — though you‚Äôd be hard-pressed to find an ounce of gold anywhere that cheap. The spot price climbed up to just below $1,050 early Wednesday morning.

Silver’s been off to the races this week too. Up a buck since Monday, the spot price is at about $17.40 today. In percentage terms, that’s about 6%, actually outperforming gold’s 4% rise this week. In addition the gold-to-silver ratio remains around 60, the same level as last month. Silver looked like a bargain then, and still $4 bucks below its credit crisis high, it still does today.

“The ‘poor man’s gold’ has come under fire in recent years that it just doesn’t deserve ‘precious metal’ status. 50% of the metal that’s mined every year goes into industrial uses, which leads many to think it should be considered a base metal. This week’s $1 pop absolutely shows it as a dollar hedge. I recommend that you hedge your dollar holdings with silver at your earliest convenience. The dollar’s ruling days are numbered.

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Spending wisely in tougher times

Money you can save over time

Money you can save over time

Cash is certainly king these days.  With all the financial pain each of us is feeling and with fewer funds left over at the end of the month, spending those dollars wisely is something each of us should be considering.  I recently had a conversation with a good friend whom I’ve known my entire life living here on the island.  This individual has worked in the private sector his entire life and owns his own business.  He is viewed by many to have a very comfortable existence and appears to want for nothing, which is , I might say, very much the case.

In our talk I learned that he earns about the same as any professional with one huge difference, he actually has money left over at the end of the month and lots of it.¬† I asked him what his secret was to being able to save? I had to ask,¬†do you just not go out or starve your family of things they want and desire, what’s your secret?¬† He assured me that if someone really wanted to get ahead of the game just follow these 5 simple rules:

1.¬† Cars.¬† Buy a car that‚Äôs practical for you and your needs; one that gets good fuel economy and high marks for being dependable.¬†¬†Keep it and drive it for at least 10 years if not longer, as this will give you a minimum of 5 years without a car payment. One point here to be made, when your car’s paid off and your driving it for ‚Äúfree‚Äù essentially, continue to take out that same monthly amount as you were¬†but now placing it in savings so it will not become a part of the ‚Äúgeneral‚Äù bank account.

2.  Eating out.  It’s ok to eat out, just do so smartly.  Eat at times when happy hour is taking place and value food quality over expensive ambiance.  Choose water over a soft drink or tea as this will save $6.00 right off the top for a family of 4 and never get dessert.  They are way over priced and never as good as they look on the menu.

3.  Eating in.  Not only is this the most economical way to eat but amplified if you plan to cook enough for leftovers for several days.  This method will also allow you to save additional money to do something else with at a future date.

4.  Clothes.  Having nice clothes is a good thing, purchase them during the off season and never purchase unless they are on sale.  Go for high quality not high price and avoid trendy garments that have a short life span.

5.  Make this a lifestyle that your whole family gets in on.  If you have everyone working in the same direction for the same common goal, you’re sure to get there much faster than doing this on your own.

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Wall Street Journal…Clueless About Gold

Wall Street Journal Gold Proof?

Wall Street Journal Gold Proof?

As much as I like the Wall Street Journal, I have to say the paper is completely “gold ignorant.” Totally clueless about gold. (silver too). For proof dear Fernandina Beach citizens have a read of their latest bear piece on gold. The article paints gold bulls as paranoid lunatics worried about runaway inflation, civil unrest, and a dollar collapse. It claims gold is a lousy investment. What their journalist doesn’t understand is that gold isn’t really an investment. It’s money. Real money. The journalist also doesn’t understand gold is rising because smart investors are buying it as a sort of “third currency.” An anti-paper currency that governments cannot debase on a socialist whim. I enjoy reading articles like this. The more ignorant the public is of a bull market, the longer it has to run. And I’m long.

“Gold is a Lousy Investment” by Dave Kansas‚
Gold, like other commodities, is a notoriously volatile and fickle investment. It has enjoyed periods of very high interest from investors, followed by long bouts of absolute indifference. Today, it is having one of the former, shining brightly in an otherwise tumultuous investment environment.
The question for investors: Will gold remain bright or not? More long term, what role should gold play in an investor’s portfolio? The answer to both questions might disappoint the growing golden horde.
Gold has had a terrific run. Since 2005, its price has essentially doubled — something few other assets can claim. But the surge in gold prices masks some underlying realities. Gold’s long-term track record isn’t great and the metal has a penchant for huge, long swings that can burn investors. That’s a reason to be cautious about gold’s current clarion call.

Peak in the Early 1980s
During the late 1970s, not long after the U.S. went off any semblance of a gold standard to back its currency, gold skyrocketed, eventually reaching about $850 an ounce in 1980.

The thinking at the time seemed straightforward. An unrelenting and expensive Cold War, untameable inflation and soaring oil prices would place huge pressure on the dollar, stocks and bonds, making gold one of the few investments that would hold its value.
The argument had some merit. The Soviets had just invaded Afghanistan, oil prices were racing toward $100 a barrel and the stagflation days of the 1970s were fresh in the mind.
But what happened? Gold prices plunged.
Gold skidded from $800 an ounce over the next few years and didn’t see that level again for nearly three decades — and on inflation-adjusted terms we remain well off that mark even today. Gold investing became a fool’s game, a land of dead money. Instead of the world unfolding as gold bugs expected, the Federal Reserve tamed inflation, the Cold War petered out and oil prices dropped into the $10-a-barrel range.
In other words, investing in gold may sound simple, but history tells us it’s anything but.

What drives gold prices? It’s an alchemist’s mixture of fundamentals and fantasy. Gold certainly has industrial uses and it’s a hot item for purchasers of jewelry, especially in India.
But fundamentals don’t support the soaring gold picture of late. As Carl Weinberg, chief economist at High Frequency Economics, a Valhalla, N.Y., research firm, notes: “Industrial demand for gold surely is depressed — along with demand for other industrial materials — and jewelry demand must be hard-hit by global recession.”
Adding to the fundamental doubts about gold’s surge is the performance of other commodities. Wheat, corn, nickel, copper and stainless-steel prices have all declined from highs reached ahead of the global financial crisis.

Gold, however, has simply marched higher with barely a pause, smashing through $1,000 an ounce early in September before a recent retreat.
That brings us to the fantasy half of the equation, which seems to be the main driver of gold today. Gold is the asset class of choice for those who fear grim tidings ahead. A collapse in the dollar. Runaway inflation. Civic upheaval. Some gold bugs talk of stockpiling seeds, bullets and canned goods. It can get a little Area 51.

As with many fantasies, there’s a whiff of possibility to some of these fears. The dollar is under pressure for many reasons — soaring deficits, the lingering effects of the financial crisis — and some countries have called for a new reserve currency.

Inflationary fear also has some merit. Central banks have dropped short-term rates to near zero, the financial system is being flooded with money and governments are spending with abandon. Surely this all adds up to inflation? Well, probably not anytime soon. The enormous amounts of idle capacity — from factories to workers — make the elements of inflation tough to cobble together.
Don’t Expect Civil Disorder
Civic upheaval? Despite the acoustic device battles with protestors in Pittsburgh during the G-20 meetings, the notion of collapsing civic order seems increasingly far-fetched.
The interest in gold does stem from some fundamental issues, namely inflation and concerns about the dollar.
For inflation, investors would be better served investing in Treasury inflation-protected securities, or TIPS. The risk of TIPS declining dramatically and becoming dead money for decades is exceedingly remote. Moreover, even if inflation doesn’t surge, TIPS can still be a good store of wealth, while gold could do just the opposite.
As for real pressure on the dollar, a more prudent strategy would be to invest in companies based overseas through an international or emerging-markets mutual fund or exchange-traded fund.
A weaker greenback would make the stock-market performance of foreign companies stronger when those gains are translated back into the U.S. currency.

Please write to Dave Kansas at dave.kansas@wsj.com and let him know he’s clueless.

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We Are Not Supposed to Understand the Global Financial Quagmire

Coconut Meat is a commodity

Coconut Meat is a commodity

A little over 2 years ago Newsweek and Washington Post economic columnist Robert Samuelson made it clear that the world financial structure was not meant to be understood by common folks. In an article entitled “Is the Global Economic Boom in Peril?” Samuelson made this interesting statement,
“Anyone claiming to understand today’s world financial system is either delusional or dishonest.”

This is an interesting statement to make in the context of an article pretending to explain certain aspects of the world financial system. What he intended to convey was a warning that the common person could not hope to understand the non-Federal Reserve System, the Wall Street crap shoot, or their accompanying scams. It’s not intended that the non-privileged investor understands what he’s doing, he’s just supposed to put his money into the jaws of Big Money swindle and keep his mouth shut.

In the beginning it was all simple and straightforward. The essence of political and economic ideas and practices, were so simple and direct that it was easy to understand them.
Politics, simply defined, is the art or science of winning and holding control over a group or nation, either through influence or force.
– Economics is the description and analysis of the production, distribution, and consumption of Goods (fish, cooked meals, ships, fire-starting bow, etc.) and Services (carpentry, fishing, cooking, etc.).

To show you how simple early economics was, let me introduce you to the total shipwrecked population of a deserted island (as Amelia Island was at one time) and their expert contributions to their small society.

Sunday, 37 years old, is an expert woodworker with knowledge how to build houses and boats.
Monday, 28 years old is an expert hunter and spear fisherman
Tuesday, 31, is a skilled cook and she also knows how to start a fire
Wednesday, 22 has great athletic abilities, can climb trees like a monkey and climb mountains like a clip goat; he’s also very adept at making tools and small arms like bow and arrow or daggers.
Thursday, 39, is a farmer whose expertise includes planting and harvesting as well as raising cattle
Friday, 19, is a skilled nurse, knows how to disinfect wounds and oh, she’s gorgeous,
Saturday 44, is the elder of the cast-a-ways, who knows how to play string instruments, has a beautiful voice and is a great story teller

After the initial shock of ending up on a deserted island they are starting to form a society. The Seven find that they can exchange goods and services to their mutual benefit, thus creating their own desert island economy. Between the seven of them they are now exchanging goods (boats, huts, fish, meat, cooked meals, fruits and vegetables) and services (boat building, fishing, cooking, entertainment, medical services, protection), so the services become a means of barter and the goods become a means of exchange–money.

Money is simply any object used in the exchange of goods and services. Over the centuries, many objects have been used as money: cattle, beads, gold, silver, paper currency, and entries in financial records. All members of its economy must see a medium of exchange as possessing value. For example, if Thursday would find some old currency while plowing the land, it would still have no value to him unless everyone agreed to use it as a means to value each and everyone’s contribution to their society.

Goods and services are the products or activities of labor – the expenditure of physical or mental effort.

The next dilemma for this budging island economy is deciding how to work the means of production and who owns them. The means of production or the tools (axe, hammer, bow, fire-starting bow, string instrument, pots and pans etc.) needed to produce each individuals contribution to their economy can be owned in several ways:

1. Each individual owns his own tools which we would call capitalism.
2. All of the individuals own the combined sets of tools, which would be socialism or commonwealth.
3. They could all decide that some tools are for the common good and others are for personal advancement.

As you can see the first signs of politics and ideology already make an early entrance into the young economy. As this desert island economy begins, it is fairly simple. All the start up tools came from the shipwreck, so the seven members feel that they own and use things in common. But their simple economy soon begins to expand.

• Sunday finds lumber, and a wild field of sugar cane. First he sets out to build a rowboat that can take them around the island and to relax from the hard work he now he can make sugar and rum and molasses to be used as cement. He also went back to the wreck and found a saw, a gun with cartridges, and a telescope; he can now build simple traps to catch rabbits and squirrels for meat and drinks for happy hour
• Monday takes the saw and starts making an arsenal of traps and cages and hand weapons from wood. He gives the cages to Thursday who immediately starts domesticating some of the large wild birds and creatures that look like wild rabbits.
‚Ä¢ Tuesday learns how to abstract salt from the ocean’s water so she can now pickle meats and fish for longer storage. She also masters the process of smoking meats and fish for storage, after all there will be a rainy season some time so it will be good to have provisions.
• Wednesday gets the telescope and is put in charge of security. He also has learns how to make slippers from fibres and cork. From a deck piece of the shipwreck metal he makes a machete so he can cut open coconuts. The milk added to the rum calls for many pleasant evenings. He also finds a nearby stream from where he gets fresh water that he transports in coconuts to the settlement.
* Thursday in the meantime has taken an inventory of all the edible species of plants and fruits on the island, cleaned of a flat area of land and sowed the first seeds for harvesting. While nature is doing its thing growing a harvest, he helps Sunday build storage sheds.
‚Ä¢ Nature is doing a whole different thing on beautiful Friday as she gets pregnant and starts hanging out with and helping Tuesday in the kitchen. She also learns to make ropes from rough leaf fibers while still nursing their little society’s wounds and cuts.
• Saturday continues to entertain in the evenings, but since everyone else has a full daytime schedule they all agree that Saturday will serve as the person in charge of organizing and maintaining the store of goods in the sheds. Saturday has become a storekeeper and performs one of the services of a banker: keeping custody of the means of exchange (money). A storekeeper is simply one who is in charge of accumulating, organizing, and distributing goods; in more complex economies, that distribution is carried out through exchange of money. In simple economies it used to be barter.

A banker is a person who is in charge of the custody, exchange, loan, or issue of money and Saturday is now receiving some of the goods and services of the others for performing the services of storekeeper and banker.

As the population of the island increases through trade with other islands, political structures to organize and control the inter-island commerce become a requirement. As politics are essentially the “art or science” of winning and holding control over a group or nation, either through influence or force, our simple desert island society is now on the verge of becoming complex and entangled.

Tomorrow-Part II: The marriage of politics and bankers

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Go Long at Your Own Peril

Sorry I Stole Your Money

Sorry I Stole Your Money

For those still in equities, I believe Tyler Durdern at Zero Hedge said it best, “Go long here at your peril.”

After a massive upswing in US stocks over the last six months, the recent rally may finally be coming to an end. It seems that the trend of rising stocks on bad or better than expected news may be in a reversal, as evidenced by market participants caution over the last couple of weeks. For those that follow contrarian investors like Marc Faber, Jim Rogers, Gerald Celente and Harry Dent, this should come as no surprise.

Marc Faber, publisher of the Gloom Boom & Doom Report, advised his subscribers and followers to take positions in US tech stocks, the banking sector and hard assets at the bottom of the markets in early March of 2006. However, he did provide a word of caution on March 16, 2009, making it known that while he was a short-term bull on stocks, that eventually, the economic fundamentals would catch up: “Probably a total collapse in the second half of the year when it becomes clear that the economy is a total disaster.”

Gerald Celente, Trends Research forecaster and contrarian thinker, advised listeners of the Jeff Rense show on September 23rd to look out below, calling it the Christmas Crash. He believes that the next collapse will come quickly, sometime this Fall, but as late as January or February of 2010:  “It’s going to be a really ugly scene. We are encouraging people to take pro-active measures and prepare for the worst. Don’t spend an extra dime.”

Jim Rogers, who is well known for making millions during the recession and commodities boom of the 1970’s, is also hesitant about acquiring more equities. He is an avid US Dollar bear, but in an interview on September 30th, he turned bullish on the dollar in the short term. His advice?  “I’m not buying any shares anywhere in the world as we speak.”

Finally, we have economist and cyclical analyst Harry Dent Jr., who some may know for having called the real estate Bubble-Boom, and subsequent crash, years before it happened in his book The Next Great Bubble Boom. Dent was also bullish on the Dow, calling for it to reach between 9450 and 10,500 after the March lows of 2009. Like Faber, Dent also cautioned investors to stay vigilant once the 9000 mark was breached. In a recent Economic Forecast Alert to subscribers, Dent indicated that the tide was changing: “The markets are very overstretched here and we think it is very likely that we are seeing a top just above 9,800 on the Dow today. This is the best intermediate term play we have seen in a long time. Shorting the stock market (for example, ETF symbol SH) could yield 50% to 60%+ gains over the next year with a 5% to 15% downside if the markets keep edging up for awhile, even to extremes.”

Though we continue to see most mainstream analysts talk the bull market talk, it looks as if the bull may be in trouble, especially if individual investors realize what all of the big boys talking their books already know – that the economic fundamentals are simply horrific and the markets are already pricing in GDP growth of over 5% for the next 4 quarters. Considering that GDP grew at 0.7% in the 2nd quarter, that seems highly unlikely. Some estimates also suggest the P/E of the S&P 500 right now is at unprecedented levels of over 100!

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A Shortage of Silver is on the Horizon

Silver Shortage in our Future

Silver Shortage in our Future

Biblically, silver was implied as a cheap sellout for Judas, but looking at the current supply and demand situation of silver, it’s only a question of time when a silver shortage will arrive and prices will go through the roof. Nobody can predict exactly when this is going to happen, but there are more and more signs that those who control the price of silver, the Bullion Banks, are sweating to balance the supply. They have held silvers price artificially low for decades by holding illegal short positions without limits. I will keep our readers here on Amelia Island up-to-date on the developments.
Right now the Commodity Futures Trade Commission, CFTC, seems to want to force all the manipulators to get in line by making them obey new rules of position limits, but I feel that the banks who are the big shorts will be exempt. Only a true shortage in silver will bring the right price.¬† Silver specialists and experts are prepared for that to happen.¬† How much will silver be worth in a shortage situation? It’s tricky¬†to calculate, because a real shortage has never happened in silver history. But it is how you must think. Many thoughts go back to what some things cost during and after World War II in Europe. When there is not enough of something is when you see real crazy prices.

So I will give you the expert’s calculation. It will be a gradual explosion of prices and slowly the users and¬†the new investors will eat up the world visible silver, which today is around 500 million ounces.¬† In their calculation the first 100 million ounces of visible silver will disappear at a price of $60 to $100 an ounce. The second¬†100 million ounces will disappear by $250, and the third 100 million ounces will disappear between $250 and the price of gold ounce for ounce.

We will be left with 200 million ounces of silver which the owners will be not taking profits on at any price. The bullion in private hands will be the first to take profits, but Silver Eagle holders will hold for the long run. Most likely Silver Eagles will do the best investment-wise and don’t surprised that at one point the Eagle price will trade much higher than the price of silver in a bubble mania.

Ted Butler, the world’s foremost silver expert and industry adviser, spoke the truth in a recent speech; “The supply/demand set up in silver, which has evolved over an incredibly long period of time, has been one continuous process promising to culminate in an explosion in price at some point.  Quite simply, we are rapidly approaching that defining moment when there just won’t be enough physical material to go around at anything but rapidly escalating prices.  Those escalating prices will encourage and drive others, including industrial consumers, to enter what should become a buying frenzy.  Superimpose upon that the sudden destruction of a decades-old downward price manipulation and you have all the necessary ingredients for a price event that will be referred to forever.”

So folks there you have it. I feel it is time for all to consider buying a little silver to stick under the mattress for the rainy days ahead…. that our government has now assured will come.

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Where are the shovel ready jobs we were promised?

Shovel Ready What? Where?

Shovel Ready What? Where?

OK, what happened to things getting better and shovel ready jobs we were promised?¬† We find out that unemployment is now 9.8%¬† nationwide. I would guestimate we’re higher here in Nassau County and Amelia Island and¬† it appears that it will continue to climb regardless of what we’re being told by the spin doctors on the evening news.¬† We are in the midst of the worst recession this country has seen in seventy years.

Can we continue to call this a recession?¬† Or should we invent a new term, how about recession/depression, or a “redep”.¬† I will admit we are not in the middle of a depression, but I would question how far are we from entering into a one?

It is going to take jobs to revive this economy, plain and simple.¬† That will not happen until businesses start expanding and growing again thus creating the demand for jobs.¬† We¬†are¬†not seeing¬†businesses grow because of the lack of capital.¬† Money from the banks to businesses and consumers is still tight.¬† What will it take for the banks to start lending to businesses?¬† One simple order or policy from the chairman of the Fed, Uncle Bennie would do the trick.¬† The Fed should be charging banks to borrow instead of¬†a no strings attached approach and an interest rate of only 1/4 or one percent.¬† ¬†I wrote an article a couple of weeks ago about how the economy was rebounding at a healthy rate in Denmark.¬† Their Central Bank issued a warning to all smaller banks, no more money until they started lending to small businesses and making consumer loans.¬† Guess what, businesses are growing and hiring again.¬† People are beginning to make those purchases and banks are beginning to earn interest once more, from interest on loans they have issued, not their government handing out free money to them.¬† This almost sounds like a thriving economy, something we haven’t seen in a long while.

I predict we are going to see rising unemployment and more and more businesses closing their doors.  If you think the fall of the residential real estate market had a devastating affect of the economy, wait until you see what the commercial fall is going to do combined with the credit card crash coming up, it may just finish the job.  Folks, believe me when I say I am not a pessimist, I am an optimist and I always look on the positive side of things.  I see nothing positive to look at though.  What I do see is an economy that continues to spiral out of control and getting worse.  I hope I have some good news for you with my next article.  Peace.

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