Wednesday, September 22, 2010

Turn on Fox Business Channel and cut out the middleman

The stock markets were down today as gold set another new record approaching 1300/oz.  Treasury bills are also trading higher pushing interest rates down further. The wisdom coming from the pundits is that the Fed expects deflation to take hold and this is putting a chill into the air. Perversely the specter of deflation is being used to inflate the price of gold. Gold is not a hedge against deflation, gold is a commodity and will go down in a deflationary environment. Treasuries are denominated in dollars and deflation would make them worth more.

Gold is a hedge against hyper-inflation but with 95% of the money in circulation tied directly to debt instruments and most of those are on the verge of default, so the likelihood of inflation is next to impossible. Many trillions of debt are already in default but are being propped up by unrealistic accounting rules and a “aren’t the Kings new robes wonderful” attitude adopted by the Treasury Dept, the Federal Reserve and the 13 biggest Wall Street banks who control 2/3 of banking assets.

Of course there is the real possibility that USD could become completely worthless but this is not a high percentage bet and dollars are not going to be replaced with gold. Wild fluctuations in prices are the real concern but trading gold for canned goods is not a realistic plan. If you expect things to get that bad you had better have your canned goods and ammunition already on hand.
pictured above and on the left (but not really): Larry Summers
on the right (far right) Jeffery Immlet
The corporate media is circulating a supposed list of nine candidates to replace Larry Summers that is topped by the heads of major corporations and rounded off with Clinton deregulation proponents that all have ties to Goldman Sachs. At the head of the list is Jeffery Immelt who has been Chairman and CEO of General Electric since 2001. Immelt is also a member of The Business Council and is on the board of the New York Federal Reserve Bank. Jeffery Immelt is the same idiot that was whining that China wasn’t letting GE have its way and threatened to leave China for someplace more friendly and he didn‘t mean he would bring the jobs back to the US. GE immediately disavowed his statements. Obama could just turn on Fox Business Channel and get the talking points directly.

A possible candidate that isn’t on the corporate list is somebody Obama seems to personally like in the person of VP Joe Biden’s chief economist Jared Bernstein. In White House meetings about the economy he is often the only progressive in the room. Bernstein was instrumental in the forming the aspects of the Obama economic policy that have actually worked, Larry Summers was not. There are also other progressives on the edges of Obama’s administration that he could choose to elevate if he is serious about re-booting the economy and his Presidency.


ickenittle said...

Oh Great,trading gold for canned goods is not a good idea-really?
Now where am I going to store my surplus-already rent 2 storage spaces for all that canned beef from Argentina.I can barely move around in here as it is,and now you say wait! ok-ok-I'll be patient.But when do you think I can cash it all out and get rich? I just want to be a real American.