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Blunt Force Trauma

" If I have $100 in savings and parking it in a bank reduces its value via inflation by 10% or more a year, I will NOT put it there! I will find a place where the $100 will grow faster than the rate of inflation."

Uggh. Where to put it then? Can't trust any of the trader/broker/fund manager weasels anymore. They see you coming, take your money and make what they can off it as fast as they can since they know it's all going bust; just before or after telling you it's all gone or freeze accounts.

Pat O'Meara

I am confused. I agree if a lot of new money is created this will be inflationary. However it is my understanding that new money is created when the banks increase their loans. This will usually occur when the Fed drops the interest rate but banks are tightening credit and in fact raising interest rates. This is because they have very little capital relative to their loans and they are holding a bunch of toxic paper that they mark to model (or more realistically to fantasy)I agree that the fed is trying to 'bubble' the way out of this mess (and this is stupid) but it seems to me the Fed. can't even make that happen and are totally powerless in this situation.
I think the inflation in the USA will mostly come from the increased cost of everything that is imported due to the falling USD. Since consumer spending is 70% of the GDP and consumer incomes and wealth is falling and the manufacturing base has been destroyed, the outlook is horrible.

On top of all this there is a 9 trillion debt . America needs investment in infrastructure and this could create jobs and provide stimulus but where is the money to come from?

I have been an optimist all my life and have had great faith in America. (I am Canadian). I wish I could see the light at the end of the tunnel. The only positives I can see right now is an increase in exports due to the falling greenback and the strength of the agricultural sector.

I hope I am proved wrong but I think the U.S economy is in for a very rough ride for a long time.

D. F. Facti

I rarely watch TV, but this a.m. there were gold infomercials all over the place. That and buying real estate for $3.00 and selling it for $150,000. kind of thing.

I hear Depression Era songs in my head:
"We're in the money, that sky is sunny,
Old Man Depression you are through, you done us wrong."

Elaine, I sent you an email yesterday I think it was. No need to respond to it, but we are having problems from time to time with emails either not reaching the recipient, getting shut down by Yahoo, or seeing l-o-n-g delays. In other words, we think someone is watching us.

Elaine Meinel Supkis

Oh, that email! I did get it! But my husband deleted it! By mistake. I did get to read it before he messed with it. Good work you are doing. You take care, stepping on toes can be dangerous.

Yes, there is now an official gold rush. Why, gold sellers even had me on the radio this week! I am amazed, Heh. Considering my darker views about this.

Namely, the government can't stop this damn rush with cheap loans. This makes it WORSE. And we can see clearly how people would be very happy to buy 20% bonds. In my latest story, by the way, I talk about fractional banking, the history of housing and the last 60 years of prime rates set by the Fed. Lots of eye-opening facts emerge! I am big on HARD FACTS.

And my faulty memory. I can't forget losing lots of money in a previous housing crash. Under Bush Sr.

Chris

Don't you think they want a gold bubble? Isn't that a glorious opportunity to fleece an enormous amount of people, workers all over the world, including the ME, India, Asia etc out of their savings? Heard the saver sheep, desperate to save their money out of rampant inflation, towards gold with global inflation in this globalized age. When the trap snaps shut a lot of loot will be in the 'right' hands again (from their perspective of course).

GK

How interesting that you bring up an analogy with Germany. Both Germany and the US are manufacturing powerhouses that have even more powerful enemies that use money and war to destroy them. Or have them destroy themselves.

Germany decided to print money to get pay for their crushing war debt from the Treaty of Versailles. Expansion of Money, Collapse, Depression, War. Repeat forever.

Speaking of analogies, have you read the amazing post 'CIA Holocaust Claims Twenty Million Victims' at this blog?

http://existentialistcowboy.blogspot.com/

Elaine Meinel Supkis

The CIA has backed every possible crappy dictator and murderer on earth.

GK

Yah! Matt at LATOC linked this article in today!

http://www.lifeaftertheoilcrash.net/BreakingNews.html

Elaine Meinel Supkis

Matt is a sweetheart. We know each other. He runs a great site and I encourage people to please visit his web page: full of information.

Robert

Too much attention is given to money and monetary policies and not enough attention is spent on basic economic issues: Why is the productivity of the US economy so low? Why can the US car industry not compete with the foreign car makers? Why does the US import twice as much as it exports ($2 trillion versus $1 trillion)? Why do we have so many people who can not pay their mortgage?

People who think about money only are not economic producers. They are consumers who view money as a means of survival. For them money is a means of entitlement on the goods produced by the productive part of the economy. In order for the US to do better in the future, people need to stop talking about money and start talking about important economic questions not involving money. In order to fix the many potholes on our roads, it does not require money. It requires the willingness to work hard and to provide a quality product, that is, a road which does not have to be patched up after each winter.

In the US we ask: How much do you make? In Europe, they ask: How much do you earn? This subtle difference indicates an important difference in attitude. We care about the money only, and do not care about the other side of the money: the goods and services for which the money was paid for.

Elaine Meinel Supkis

National health care. That, in a nutshell, is the differential.

Better Back

Good commentary.
I'm not American - now Australian, originally English - but I feel for you guys.
The US Empire is soon to fall, just like every empire there has ever been before it.
You are just so screwed on every front - health (toxic environment, food and medical system), economically, socially and morally bankrupt (in a governmental sense).
Losing an empire is a painful national process of readjustment - Britain went through it after WWII.
Australia has unfortunately acquired many US characteristics and we actually have more debt per household that the US - a scary thought.
We also have the same sprawling suburbs with ridiculous 3 bathroom, air conditioned McMansions reached only by big, gas guzzling cars.
"Build more roads for economic growth" is the catchcry from the transport planners and limitless economic growth spruikers.
F--k me dead, these guys are so far removed from the realities of sustainability and resource (esp. oil) depletion its just like watching a Xmas pantomime.
Fortunately we just got a new Prime Minister with a conscience and who appears to be somewhat connected to reality.
Anyway, enough ranting, the only solution I know is to raise your personal consciousness guys, because it will affect and infect those around you and ultimately belief systems drive behavior.
Good luck!

Elaine Meinel Supkis

We need to build a rail system. Ours is the worst in all the first world countries. By far. It is terrible.

But this is NOT what will get any money.

Robert

"We need to build a rail system".

Excellent idea. In Japan, the government decided that the future of the country needs a high speed train system in order to move millions of Japanese workers into and out of the large cities. That decision was made already before WWII. The first Japanese high speed "bullet" trains operated in the early 1960.

I lived in Japan for over one year and witnessed first hand that one can travel from Fukuoka to Tokyo (650 miles distance) by plane, by highway and by train. The big surprise is, that all means of transportation are equally expensive. You do not save a penny by using the highway. The highway tolls add up to a fee which is almost as high (a couple hundred Dollars) as the train ticket. The amazing thing is that the population does not protest. They patiently pay the very expensive train tickets - the trains are always full.

There is no miracle in Japan. The capital necessary to build the high speed trains was obtained from the public by forcing people to buy the expensive train tickets. There is no alternative to trains as planes and cars are burdened with high taxes in order to make the trains competitive.

In order to build a modern train system in the US, the public must be willing to pay the cost of construction in form of higher taxes on air travel and highway trips. Are we willing to pay that cost? The Japanese and the Europeans are willing to pay that cost. I doubt this will ever happen in the US. Perhaps the huge size of the US explains the difference.

Robert Sczech

Elaine, are you suggesting that woman are responsible for inflation by refusing to give their gnomic men free sex?

It is an interesting idea. It is supported by the fact that most of the money in the real economy is spend by women - not by men.

Buffalo Ken

i had this same question, but i think like everything (as far as i know) it is a 2-way street....

her (er) and him (mi).

Said another way, mi-re.

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