home: Golden Jackass website
subscribe: Hat Trick Letter
Jim Willie CB is the editor of the “HAT TRICK LETTER”
For specific detailed analysis of the Gold, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and Fed monetary policy, see instructions for subscription to my newsletter research reports, which include stock recommendations positioned to rise in the commodity bull market. Articles in this series are promotional.
No, not in a military sense, but financial. They are many, and the United States is in firm possession of most of them. We have the corner on this market, a monopoly sort of. Japan has its own Asian corner on this market, only because they have been US lackeys for so long. Space is limited to list them all, but the major weapons which have succeeded in gutting the USEconomy can certainly be cited. Let this article serve as a collage of images, each powerful in its own way. The story lines are brief, since the pictures each tell a thousand words. The United States has put itself in a predicament with over three decades of serious dedication to monetary inflation as a means to wealth accumulation. In the process, real workers have suffered as the Manhattan Made Men have pilfered riches from their corrupt close connections to the Ruling Elite. They have had access to the gold riches in Fort Knox, access to the keys of the printing press kingdom. If money can be printed, then only those who are privileged to borrow it easily can benefit. The hit & run artists in the financial world can actually benefit. But the run of the mill participant typically get the short end of the stick, ones who live with the drip drip drip of accumulating debt burdens. Those who worked their entire lives, saved a gob of money, invested in bonds, are now getting screwed. Bond speculators control the whole game, and have left the public to eat the holes in the doughnuts.
Now we find ourselves in a jam, with labor uncompetitive in its wage, with our commodity deposits (energy & minerals) mostly depleted, with our dependence on foreigners staggering & overwhelming (commodities & capital), with our legitimate wealth engines (manufacturing) largely vanished, with bizarre retail shopping centers the recognized foundation to our commerce (pathological), with reliance upon assets bubbles our chosen way of economic life, with constant raids on our home equity deemed normal. An entire generation of economic counselors has preached heretical principles, strayed from proven principles that have stood the test of time, and adopted absurd mythologies which spring up in order to justify the reckless path they have led us toward. To say the current system is unfixable is an under-statement. All measures toward cure would be met with instant political obstructions. We are so lost. The bread crumbs have long washed away from all the years of liquidity spilling onto our paths.
My country has to resort to coercion, bullying, fraudulent accounting, deceptive statistics, double talk communication, now pre-emptive attacks with flawed intelligence in order to protect itself, or is it to supply itself? We have morphed into a nation of pathetic financial drug addicts, hollowed to the core. Our weapons of mass destruction have set the stage for our own annihilation. Darwinism will be hard at work to cull from the Economic Landscape all those not worthy of natural selection. Some mistakenly believe (surely USGovt leaders) that silent Darwin pickers select the biggest and strongest. Wrong!!! Darwin invisible search committees select for survival all those capable of adapting to a changing environment of our own making. Can we survive our own devices?
YOU GO, GOLD !!!
The gold price shot over $700 this week, even extending toward $720 quickly. My public forecast was for an easy ride to $700 before the end of this year. That was a public wimpy stand. Privately, my emails to friends and objects of my torment cited “before the end of June in breath-taking fashion” most likely. Gold has four bull legs, cited before.
1) Chinese delink of yuan currency
2) King Abdullah assumes Saudi throne
3) retirement of Greenspan as USFed Chairman
4) public removal of M3 money supply statistic
new bull whip) G7 coordinated USDollar devaluation
In the last couple weeks, a bull whip has been applied to the haunches of this bull which shows no fatigue. The bull whip comes in the form of the G7 Meeting of finance ministers, who have blessed a USDollar devaluation. Listen to what they say: the intervention tool has been removed from the table. The latest event was a gaffe during the White House meeting with Chinese President Hu. The obtuse host (slept through history class?) played the Taiwanese national anthem and introduced Hu from the Republic of China. Wow! Try the Peoples Republic of China, dude. Just two months earlier the same man who purports to lead the free world from the White House declared Pakistan as a fine example of free Arabs. Well, if truth be known, Pakistan is not Arab, doesn’t even speak Arabic, and is led by a US-approved dictator who took office after a coup d’état. Leadership of the USGovt has contributed to the gold advance. The world is catching wind to the Keystone Cops as leaders. The flower bed has been trampled so often that flowers no longer grow there.
Proceed through the collage of images. Each has a role in the unfixable predicament the United States finds itself. Prepare for a 20% to 30% decline in the USDollar, a similar decline in the housing sector, as the USEconomy suffers magnificent strain and turmoil. A march past $1000 for gold and an easy move past $25 in silver are assured. Sit back if you are a cool cat investor in gold mining or silver mining stocks. Investors in industrial metals such as copper, iron, zinc, tin, and aluminum are not to be denied either. They received an invitation to the party also.
GOLD INVESTORS – COOL CATS
Got it made in the shade, or fun in the sun, yeah, yeah, something like that !!! Tabby, we sure are politically correct with our spiffy swim wear, eh? We got them all covered.
MONETARY PRINTING PRESS
In good times, print money. We can pay it back later. In bad times, print more money. We need the stimulus to find the good times. When in doubt, print money. Think of it as insurance. After all, printing press output is both legitimate wealth, and costs next to nothing. Acid? What acid?
INFLATION ENGINEERS
Give us (US) Groucho instead of the inflation engineer whom nobody understood, surely not the inflation engineer whom all clearly understand. Transparency is ok unless what we see is scary as hell and shallower than scary. Ok, liquidity is good, but what if that liquidity is from human excrement and effluent?
US FEDERAL RESERVE GOVERNORS
The Knights of the Round Table seem to be block heads. Have any run a business? Can any of them even define inflation, let alone measure it? Do they ever bring reliable proven economic indicators to the table? Is communication in FedSpeak a job pre-requisite? Or is it learned from the sitting chairman? Is it too late to revoke the contract for the Federal Reserve? Is this august body beholden to foreigners? Hmmm.
A TREASURY WITHOUT GOLD
The US Congress cannot get a straight answer to “how much gold is left?” Some cock & bull story is offered about national security in currency management of the USDollar whenever the contractor is asked that basic question. Somehow “no accountability” rings in my ears. So you guys are telling me that we are the wealthiest nation in the world, even though we have gargantuan debts held abroad, with astronomic unfounded obligations, with almost no gold left in our vaults? That makes sense, if residence is an asylum.
ECONOMIC MYTHOLOGY
When things go awry, which is every decade, which is every new Presidential Administration, we just pay a visit to the mountain. When the Pied Piper returns, he claims another Bestial Burning Bush laid it all out on tablets. Poof, we are bestowed yet another nonsensical chapter of pure economic mythology. The ignorant public buys it with a dose of hope. They trust our leaders for economic guidance, since they don’t know any better.
LOST COMPASS ON ECONOMIC POLICY
We have truly lost our way. Not a single utterance from Federal Reserve Governors (nor Chairman), nor White House Council of Economic Advisors, makes a single daggone bit of sense. They are not deserving of capital letters in their titles. Our guiding tools no longer function. The tools themselves no longer meet manufacturer specifications. The corruption of our thought patterns is complete. We have lost our way.
DEBT & CREDIT ADDICTION
Please pass the punch bowl. We need to get to the punch bowl. Let’s hope the maestros spikes the punchbowl. You gotta love that punch bowl. Don’t know what’s in that punch bowl, but sure do love it. No addicts around here! We don’t abuse debt and credit. We deny our denial.
MONEY, AS DENOMINATED DEBT
We have confused legal tender for money. We have confused credit for wealth. Our money could not survive a Constitutional challenge. Nobody would dare challenge it anyway, probably for fear it would be tossed out of court. Nah, nobody challenges it so that the Supreme Court would not be forced to say “the USDollar is illegal, but we will give it official approval anyway.”
STATISTICS AS PROPAGANDA DISINFORMATION
Every single major economic statistic is a lie and a fraud. Every inflation adjusted statistic is wrong, overstated by 4% to 5%. We have motive to sell our debt to unsuspecting foreigners, who work for a living and send us their savings. Economists are proficient at lying with statistics. They make no sense. The world no longer believes them. Tell big lies often enough, and the public will tend to believe them.
LEADERSHIP
Do what extent do foreigners sell down the USDollar because they distrust USGovt leaders? Or distrust US banking leaders? Who knows? It is not so much that the emperor wears no clothes. It is more like the emperor is clothed with nothing but borrowed, tattered clothes more fitting on indentured servants. Skivvies have holes patched by debts.
MERGER OF GOVT & INDUSTRY
The definition of Italian Fascism is a merger of state and large corporate interests. Government institutions and agencies become intertwined with key corporations. The public interest becomes blurred with aristocratic private interests. Can any reasonable person deny that a dozen key giant corporations dominate, determine, and delegate policy for our economic, financial, and commercial directions? To what extent do friends of leaders front run with personal investment, the decisions made by leaders? Dunno, probably to a significant degree.
WALL STREET AS A CASINO
Most households are forced to gamble with their life savings, or else put it in a mattress? Most financial markets are so volatile and laden with risk that an investment account must deal with stresses and strains more in line with the vagaries of a casino. We must manage our pension funds with great care, or else lose them. How many people even have a pension anymore? Many lost theirs in the last fiasco, the tech telecom stock bust of 2000. Even management of a home and its equity has degraded into a fast moving portfolio account bearing resemblance to a housing futures contract on the commodity exchange. How many merger acquisitions have confiscated the target pension fund, of course legally? Who will reap the benefits of Fanny Mae claims on the nonstop archipelago of foreclosed properties?
PORTS FOR ASIAN INDUSTRIAL DEVELOPMENT
We are experts at building up developing economies. When almost 25% of all container vessels return to Asia empty, something is wrong. Most of our ports are operated and owned by foreigners. Most of the contents moved at ports are built by foreigners. The money to pay for such contents surely is paid to foreigners. What is wrong with this picture?
RELIANCE UPON PERSIAN GULF OIL
We rely for over 50% of our crude oil from imported supplies, mostly coming from the Persian Gulf, a hotbed of hostility. Those transactions will increasingly be completed in a currency other than the USDollar. Oil exchanges are springing up worldwide, like in Norway, Qatar, Dubai, Iran, and Russia. In the next couple years, our crude oil dependence will be matched by a natural gas dependence. Are we even bothering to invest in alternatives like fuel cells, hydrogen technology, and others? Give me a break. The Japanese will own those technologies just like the rest, since they are spending vast sums on research. Our priorities are way off base.
THE FUTURE STORM
A mammoth storm this way comes. We are not prepared. We are not properly invested. Our leaders have no clue. Our consumption has gone amok. We have become gluttons. Our chips are on the wrong tables. Our military machinery might be eaten by sand. Even the global climate is changing, with USGovt censoring of that message. A mammoth storm this way comes.
HOUSING BUST
What was inflated, next deflates. What saved our bacon in 2001 through 2005, next cooks our bacon in 2006 through 2010. Legitimate wealth? No way, more like a basic inflated asset soon to come back to earth. The flippers might soon find themselves flipping burgers at the fast food outlets. The pain will be unavoidable.
ECONOMIC DEAD ZONES
This is a concept which will become extremely familiar in time. Mine eyes once gazed upon East St Louis, a dead town. New Orleans qualifies in parts as a dead zone. Is it not being rebuilt because another set of major storms comes this way? Methinks yes. New housing developments will run the risk of becoming dead zones as defaults and foreclosures grow to be commonplace. Communities dependent upon the car industry will run the risk of becoming dead zones. After rationing is ordered, more dead zones will spring up. Creative destruction in capitalist pursuit will yield to basic destruction under benign neglect.
US ECONOMY UNDER WEIGHT OF FALLING USDOLLAR,
RISING INTEREST RATES, RISING COSTS, HOUSING DECLINE
The exhale part is easy to comprehend. If learning is required, that is ok.
THE FUTURE PETRO CURRENCY
The other North American dollar bears respect. They do talk funny up there, eh? They don’t need gold in their government vaults. They have oil in the fields and metals in the ground. That is all the necessary collateral required to fortify a currency, for at least another decade or two. Their western provinces are abuzz with economic development, eh? The Canadian Dollar is the only worthy petro-currency. Next on the table will be the Russian ruble. Gee whizzakers, that is a powerful looking looney chart, eh?
THE HAT TRICK LETTER COMBINES MACRO ANALYSIS WITH INVESTMENTS.
From subscribers and readers:
“I trade commodity futures for my company and it has been one hell of a volatile 2006. Please never compromise on the manner in which you write and thanks for the no BS. I stopped reading Business Week, Economist, Forbes, Barrons, Wall Street Journal, in the 90´s. I am very selective these days.”
(Bill S in Argentina)
“I trade silver futures for a living. So I try to keep up with the omnipresent geopolitical & economic big picture. I can count on one hand the gents I'm willing to invest the time to study on a regular basis, and you are one. Your recent radio interview with the intriguing analysis of the carry trade put me over the edge."
(Lisa Q in California)
“Concise, in-depth, timely information and analysis of global macro-economics is what you get from Jim in trading commodities stocks. I don't believe anyone else writes about and clarifies such a complex topic in such an understandable way."
(Geoff W in Colorado)
“You, sir, are the only writer I would pay to read because your perspectives are unique, upfront, uncompromising, and ACCURATE. I recognize off-the-charts brainpower when I am presented with such.”
(Richard B in Texas)
Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 24 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com . For personal questions about subscriptions, contact him at “JimWillieCB@aol.com”
-- Posted Thursday, 11 May 2006
