This week, the White House released their proposed 2013 Budget, which can only be described as fanciful, to put it mildly. Take a look:
Ok, first of all, when has Obama or this Congress been able to make any cuts even to proposed increases in spending let alone REAL cuts? We're supposed to believe that they're going to knock $35 billion off of discretionary spending from 2011 to 2013? Fat chance.
Next, they project a 6.7% increase in mandatory spending on entitlement programs... are they not aware that Baby Boomers are now retiring in droves? 6.7% over two years (3.35%/year) doesn't even keep up with inflation let alone account for all of the new recipients! This number is obviously severely low-balled.
So, total outlays going up only 1.4% over two years is laughable. But if you think that's funny, just look at the other side of the balance sheet! Individual income taxes are being hiked 18%? Corporate taxes by 101%? That's just outlandish! And then look at entitlement income... more people are retiring and less people are working, but payroll taxes are going up by 25%? And how about those excise taxes jumping 20%? Apparently we're going to enact protectionist trade policies! But then how do they expect customs duties to jump by 13%?
It is just beyond comprehension how any serious person could propose that they can increase government revenue by 25%. Did they not get the message from the Tea Party movement that we're TAXED ENOUGH ALREADY? Trying to enact this kind of tax scheme would drive corporations to foreign shores, small businesses to bankruptcy, and most individuals onto the ever expanding unemployment rolls. This proposal is not merely optimistic, but seriously puts into question the sanity of those who proposed it.
Here's my prediction of what actually happens... Discretionary spending increases by 6% (to $1,378 billion), which hardly even keeps up with inflation. Mandatory spending increases by 15% (to $2,383.95 billion), which is probably conservative. Also, forget about that $71 billion cut from the "Joint Committee enforcement". That's not going to happen. That puts 2013 total outlays at just over $4 trillion.
As for receipts, none of that stuff is going to happen. If they're lucky, they'll manage to pull in the same amount in 2013 that they did in 2011. If they try to raise taxes (which is doubtful to pass Congress), it will tend to depress economic activity and result in even lower receipts. I would expect no more than the same $2,303 billion.
That means that in reality, the deficit will climb to $1.7 trillion in 2013. By the end of the year, the national debt will be pushing $18 trillion, or over 110% of GDP. That assumes of course that we haven't yet experienced the likely imminent currency collapse. But by that time, the Fed is going to be monetizing like crazy to keep up with this debt, so it will be a miracle if we last that long.
In December, I tried repeatedly to predict where the consolidation patterns would break out, with frustrating failure time after time. My last prediction was actually pretty close, but it did ultimately take until the end of January for the bullish flag formations to conclude what has been the by far biggest consolidation in silver for this bull market and the second largest for gold after 2008's meltdown:
But I'm no longer front-running the charts. Now the break-out has actually occurred, as you can see. We've broken out of the pennant formations, especially convincingly with silver, which is always the more energetic of the two precious metals. We should now expect fairly rapid appreciation, just as in previous bull moves following consolidation. Upside targets are defined by previous moves.
I would expect the next top to be reached before the end of May for the typical seasonal sell-off. That means at least $2,050 gold and $50 silver, which isn't all that much higher than the previous highs. However, the next consolidation should be significantly smaller (probably a re-test of the old highs around $1,900 and $48) before we resume the next bull move, possibly to $2,500 and $75 for gold and silver, respectively, in the autumn.
I'm not sure yet how this impacts the previously delineated trajectory for our moon-shot. It's possible that the Euro troubles and subsequent capital flow into U.S. Treasuries has permanently changed that trajectory -- not the destination, just the trajectory. I'll watch what happens over the next few weeks to analyze what, if any, impact this consolidation has had on it.
We still remain in a strong up-trend which should culminate in a blow-off top, but we may have been handed a little more time before that happens. We'll see. All the fundamentals driving gold and silver higher remain intact and have only grown stronger. The U.S. government will spend another $1+ trillion in debt before the summer is out. The national debt is now well over 100% of GDP, having blown through the first debt ceiling hurdle since the August deal. Europe continues its rapid decline. And warmongering with Iran has reached a fever pitch. The upside in gold and silver against this backdrop is limitless.
I highly recommend signing up for a BullionVault account right now and loading up on as much as you can afford in their Swiss vault. You will probably never ever see gold this cheap again and will kick yourself for not taking advantage of this opportunity. As this global financial collapse progresses and fiat currencies go down the proverbial drain, physical gold and silver in your possession or in a responsible vault in a foreign jurisdiction will be your only insurance and protection.
Gold and silver mining equities are also severely oversold here. Even more so than the metals themselves. Expect company stock buybacks and mergers and acquisitions to increase. I think we definitely have a floor under stock prices at this point. Call options could leverage a spring-back in mining equities into a fortune.
After many confirmations of the exponential trend, this is the first major challenge since I started publishing these charts over a year ago. Let's look at the concerning development:
To repeat what I wrote last time: not every 10-20% retreat is "the end of the bubble". They call this the "wall of worry" in a bull market. I must admit I'm kinda worried this time because the exponential trend line being confirmed multiple times was giving me some serious confidence in the trajectory, and this move now challenges to invalidate that trajectory. The fact that it crossed under the 200 day moving average also adds to that concern.
That said, the depth (in percentage terms) of the pull-back at this point is only slightly more than the average correction during this bull market and has a long way to go to match 2008. It also has quite a ways to go before becoming true bear market territory. Technically speaking, we're still in a flag formation, which is a bullish continuation pattern. Unless we have another steep sell-off from here down to $1500 or lower, we're still in a strong up-trend.
So, we've got some mixed technical signals here. Looking at the charts alone, it could be another 2008-style bottom which catapults higher back into the exponential trend, or it could be setting up for a redrawing of the trend.
Good thing technical indicators are just a tool to gauge transient market sentiments and not our only method of gauging where the market is headed. We also have fundamental analysis. All the fundamentals driving gold and silver higher remain intact and have only grown stronger. The U.S. government agreed to add another $2.4 trillion to the national debt in August and just yesterday approved another $1 trillion in spending for a short-term continuing resolution in lieu of a real budget. The national debt is now over $15.100 trillion (more than 100% of GDP) and will probably hit the ceiling of $15.194 trillion within a month. And as we go into ferocious politicking around this issue in January again as we did in August (Obama can sell up to $1.2 trillion more in bonds, but he will have to veto a Congressional vote against it with each bond issue, and possibly face further credit rating downgrades), it will be accompanied by a far worse and quickly deteriorating situation in Europe which will almost certainly result in the break-up of the monetary union and several major economic powers declaring bankruptcy.
The Federal Reserve has pledged to keep interest rates at zero percent until halfway into 2013. Meanwhile all of that Treasury debt that's piling up is eminently unattractive to foreigners at zero percent interest; as a consequence, they have drastically reduced participation in Treasury auctions of late. The Federal Reserve has been and will increasingly continue to act as the lender of last resort, quietly engaging in "quantitative easing" to buy those Treasury bonds without announcing it to anyone as such. Moreover, we've just recently learned that the Fed is participating in bailing out European banks and governments, providing trillions in liquidity. As such, the monetary base is expanding rapidly and inherently fueling inflation.
China is dealing with high inflation and a crashing economy, but yet are also now easing their monetary policy. The Swiss Franc is now pegged to the dying Euro. Central banks are now net buyers of gold. And the Fed is probably going to declare a new major program of easing as the economy suffers another leg down following a very weak holiday shopping season. The Yahoo Finance headline today reads, "Ho, Ho, No! Santa Claus Rally Won’t Hit Wall Street This Year." We've already seen ample evidence that the Fed won't sit back and do nothing, particularly since their manipulated inflation indicators are still within their "targets". This is not an environment in which gold could suddenly become a bear market!
So where to from here? Gold and silver have been correcting for nearly four months and have now breached the 200-day average and the exponential trend line, but fundamentally are in a bull market and severely oversold. I don't think they'll long stay at these levels, but I said that last time too. Already they have stayed down far longer than I've expected. How much longer until the next break-out to the upside? Unfortunately, short-term movements are incredibly difficult to predict. We could hang out here or even lower for another month or even two. Or we could get an inflationary catalyst to set it off tomorrow! I would expect increasing volatility, with possibly $100/day moves either up or down.
We did spend all of November above $1700 for gold, as predicted, and we even had a confirmation of the trend by bouncing off the lower limit that month. This recent crash to $1600 was highly unexpected, especially since this is historically the strong season, but we could very easily see a year-end rally to the minimum for gold near or above $1800 to continue this same exponential trend. A $200 move is not at all out of the question. Silver also handled November as expected, but is below the trend now like gold. Silver should end the year above $35, which is a $5 gain from here. I don't know how likely this is -- the rally may not come til January or even February as an outside possibility. I do not see us getting into spring without a significant rally though. History has shown that precious metals achieve most of their annual gains between Sept and May, with Dec through Feb being the strongest months. All else being equal, the time of year alone should bring our rally. Any number of black swans could catalyze an even more significant move.
The main take-away is that while it certainly can't hurt to be cautious and hedge your bets, we're very likely currently at an incredible buying opportunity, just like in November/December 2008 when I picked up some gold and silver miners which ended up being 10-bagger gains for me!
And especially if you don't have any physical metals yet, I highly recommend signing up for a BullionVault account right now and loading up on as much as you can afford in their Swiss vault. You will probably never ever see gold this cheap again and will kick yourself for not taking advantage of this opportunity. As this global financial collapse progresses and fiat currencies go down the proverbial drain, physical gold and silver in your possession or in a responsible vault in a foreign jurisdiction will be your only insurance and protection.
Update: 12/14/11 -- Well, the pattern as previously drawn has definitely failed -- foiled by a precipitous drop in the Euro sending Dollars artificially higher. But fundamentally speaking, this is a blip, and it only extends the buying opportunity on gold very shortly. So, the fact that we're in a bull market has not changed, only the technical indicators. Here's my updated expectations:
Update: 12/12/11 -- Looking bad for this pattern this morning with an overnight selloff to $1670. If it doesn't recover above $1700 by close, we'll probably have to consider this pattern to have failed. It could possibly be redrawn with support at $1600, but I wouldn't bet on it. I'd be looking to hedge this bet at the end of the day if we don't see a rally at least above $1700.
Ever since the explosive move to $1900 following the failure of the U.S. Congress to constrain government debt this summer, gold has been consolidating in a very large and well-defined pennant. The gold chart is converging on $1750 as the terminus of the pennant and will have to break out of the formation within the next day or so -- early next week at the latest.
This is the largest bullish consolidation pattern since 2008. The "flag pole" of the pennant is approximately $400, from the previous break-out point around $1500 to the top near $1900. The expected upside target of the next break-out should be at least an equal move, or approximately $2150 from the current $1750.
It could also be a proportional move -- i.e. $400 was 26.7% of $1500, so 26.7% of $1750 would send gold soaring to $2217. This would be more consistent with the exponential nature of the gold chart over the past 10 years.
The prior break-out in July/August lasted approximately one month, so we could see the next high point in mid-January before the next consolidation sets in.
Don't have a lot of money to donate to your political campaign of choice (e.g. Ron Paul)? Make an anti-contribution to other political campaigns instead! How do you do that? Simple... a single Google or Facebook ad can cost a campaign $5, $10, maybe even $20 per click! Whenever you see an ad for a candidate you don't like, click their link and waste their money! That reduces the mindshare available for people who might actually be swayed toward them and increases the relative mindshare for Ron Paul ads! You essentially cancel out someone's (probably a big Wall Street bank's) donation to that campaign.
If you want to target a particular candidate, just search for them and click on their sponsored listing. Otherwise, just click on them whenever you see them pop up wherever you're at on the Internet.
You can actually get a bonus if you're on a website you really like -- you cost the opposing campaign money and generate revenue for your favored site! E.g., I have some Google ads in the right-hand side of this page! If you see Newt or Mitt pop up -- click 'em like whack-a-mole! (Also don't be afraid to click if you see something you genuinely like!)
You can also save your favored candidate (e.g. Ron Paul) money by NOT clicking on his ads. Instead, type in the URL (http://ronpaul2012.com) directly in your browser. Or if you see something specific you want to get to, do a Google search and click on a non-sponsored link to find that content.
Presto! You've made an anti-contribution almost as good as donating!
At the same conference, Rick Rule, founder of Global Resource Investments, spoke about the unwinding of the U.S. Dollar...
And finally a sobering, in-your-face, but ironically optimistic talk by Doug Casey on the stupidity, evil, and decline of the United States...
The lesson is that things are going to be volatile, lots of people will be hurt (or killed), a massive transfer of wealth will occur, but the future is still bright and especially so if you position yourself well today.
Occupy Wall Street has now been raging for a few weeks and I've been trying to understand what specifically it's all about. It's a given that the mainstream media are telling the story wrong, or telling the wrong story, so my facts are gathered mostly over the internet from the horse's mouth as much as possible. Much can be gathered from signs held by protestors; however, there are quite a few divergent and even mutually-exclusive memes, indicating that the protests encompass more than one goal or mindset, perhaps with some overlap. This is to be expected from the wide range of groups who jumped into the mix right off the bat -- anti-consumerists, unions, Anonymous, libertarians, hippies, anarchists, socialists, etc.
I think that what unifies everyone is the emotional feeling that things are very wrong in this country and the overt involvement of banks at its root. What's interesting is that this is also what drove the organization of the Tea Party movement two years ago. The major difference, I think, is that the Tea Partiers identified President Obama as being a part of the problem, whereas the Occupy Wall Street movement only later came around to that understanding. Many people were naively charmed by Obama and genuinely believed he would bring hope and change. When it turned out that Obama not only continued many of the corrupt policies of George W. Bush, but layered on even further corruption, opaqueness, and infringements on our civil liberties, the masses became disenchanted. However, having bought into liberal punditry falsely labelling Tea Parties as racist corporatists, they were incapable of assimilating into that movement. At least not right away anyway.
What I'd like to do is try to address some of the more glaring fallacies eminating from some in the Occupy Wall Street movement based on "official" decrees, common protest sign themes, and prominent apologists, and try to reconcile some differences so as to suggest a more cohesive and appropriate direction. Perhaps even cross-polination with the Tea Party movement.
The Declaration of the Occupation of New York City, which has widely been proclaimed as the "official" manifesto of Occupy Wall Street, identifies that the chief goal of the protests is to "express a feeling of mass injustice". They then go on to list some "facts" which may or may not be agreeable to everyone, but I think that most would probably agree that the feeling of mass injustice is the main gist of it all. That's what the Tea Party has responded to as well and it's a great common ground. Where things go sideways is who and what people blame for the feeling of mass injustice.
Let's start with the Declaration... the second paragraph begins to lay blame at the feet of "corporations", who they say "do not seek consent to extract wealth from the people and the Earth... [and] place profit over people, self-interest over justice, and oppression over equality". They also allege that corporations "run our governments". They then list a few dozen grievances against corporations. Sounds pretty bad. But what exactly is a corporation anyway? Merriam-Webster says it comes from Latin corporare, meaning "to form into a body", and in the present legal sense is "a voluntary chartered association of individuals that has most of the rights and duties of natural persons but with perpetual existence and limited liability." There is a charter which defines the governance of the association and the rights of its members (shareholders and officers). Individuals are members voluntarily, meaning they can come and go as they please. Nobody is holding a gun to their heads. The association of individuals has similar rights and duties to any single individual, since it is composed of individuals and acts on individuals. It survives any of its members freely coming or going. And it has limited liability, meaning that if one of its members or officers does wrong, they are personally liable, and the shareholders are not directly liable for the one individual's actions. This all seems very reasonable and not the least bit evil. Corporations are formed when individuals don't have sufficient resources on their own to accomplish a large goal and so they pool resources to accomplish it such that any benefits are equitably shared according to the individual risks taken. What's so bad about that?
Well, let's look at some of the particular grievances...
They have taken our houses through an illegal foreclosure process, despite not having the original mortgage. This is clearly specific to banks, not corporations in general. But isn't the "foreclosure process" a legal procedure? So isn't it the legal system which has failed in this case?
They have taken bailouts from taxpayers with impunity, and continue to give Executives exorbitant bonuses. Well, what shareholders choose to pay their officers is their own business. It's their money. But it's interesting that they phrase this as "they have taken bailouts". Corporations have no means to take anything from government; they can only accept what is freely given. So this seems to be a complaint against the government giving bailouts, not banks or corporations taking bailouts.
They have perpetuated inequality and discrimination in the workplace based on age, the color of one’s skin, sex, gender identity and sexual orientation. I wonder how this is possibly the sole province of voluntary associations of individuals called corporations. This seems to me to be a general gripe against culture itself! Discrimination is rarely if ever a corporate policy, but rather the result of many individual interactions.
They have poisoned the food supply through negligence, and undermined the farming system through monopolization. Monopolies do not exist in a free market, but only through government force. So to the extent that there are monopolies, the fault lies with government laws, regulations, subsidies, and other interventions in the market. As far as having "poisoned the food supply", that would necessitate that the food supply is indeed controlled by a monopoly, and it is not, although the government has increasingly tried to make it so by outlawing everything produced by small, independent farms in favor of heavily-regulated food conglomerates. Again, the gripe here seems to be properly aimed at government, not corporations.
They have profited off of the torture, confinement, and cruel treatment of countless animals, and actively hide these practices. Again, this seems to be an issue with culture rather than particular corporations who fail to share the same values as some individuals regarding humanity's use of animals.
They have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions. Corporations are intriniscally incapable of such action, because in a free market, employees work at will. The employer-employee relationship is inherently a negotiated one. The great leaps in pay and working conditions have been a direct result of such free-market negotiations.
They have held students hostage with tens of thousands of dollars of debt on education, which is itself a human right. Nobody has a right to the labor or property of others. Education is a service. To suggest that anyone has a right to this service is to make educators slaves. Everyone has a right to voluntarily engage the services of an educator, but not by force. Like everyone else, educators must earn a living from the services they provide. They do so by charging tuition. If students don't have the means to pay tuition, they borrow the money to be repaid later after they presumably get a better-paying job as a result of their education. This debt is entirely voluntary. Who is being "held hostage"?
They have consistently outsourced labor and used that outsourcing as leverage to cut workers’ healthcare and pay. Outsourcing is a direct result of market forces reacting to the costs largely imposed by our own government. When taxes and regulation make hiring onerous here, it is natural to look elsewhere to conduct business. This is not the result of any evil intentions on the part of corporations, but the desire to provide a cost-effective product or service to customers. Corporations are always doing what's in the best interests of customers, because that's who pays the bills.
They have influenced the courts to achieve the same rights as people, with none of the culpability or responsibility. Since corporations are composed of people, why wouldn't the rights of the shareholders extend to their voluntary association? And in what way are they not responsible? The liability of the whole is limited, yes, but only insofar as the liability of the individual is intact. If the courts have been "influenced", isn't that a gripe against government rather than corporations?
They have spent millions of dollars on legal teams that look for ways to get them out of contracts in regards to health insurance. A contract is a voluntary agreement. The only way to "get out" is by satisfying the terms of the contract. If they manage to find a "loop hole", then it is because the other party allowed that loop hole into the contract in the first place.
They have sold our privacy as a commodity. People give up too much privacy voluntarily. Every company has a privacy policy. Customers engage freely with companies knowing full well what their privacy policy is. Much more disturbing is when government infringes on your privacy by force without your consent.
They have used the military and police force to prevent freedom of the press. They have deliberately declined to recall faulty products endangering lives in pursuit of profit. Corporations do not control the military or police. That's government, again. And have you ever heard the phrase "caveat emptor"? Nothing is perfect. To the extent that some companies recall their products (usually under a specific warranty period) does not imply that everyone should do so in reaction to every potential flaw or misuse of every product. Take some personal responsibility!
They determine economic policy, despite the catastrophic failures their policies have produced and continue to produce. Corporations do not determine economic policy for the society at large. To the extent that economic policy is determined centrally at all, it is (unconstitutionally) by the government. The blame for catastrophic failures of economic policies lies squarely with government.
They have donated large sums of money to politicians, who are responsible for regulating them. To the extent that regulators are influenced by large sums of money, that is a failure of government.
They continue to block alternate forms of energy to keep us dependent on oil. Corporations have no means by which to "block" alternate forms of energy. Corporations merely sell things to willing customers. Failure of any particular corporation to offer a product is not the same as "blocking" a product. Corporations will sell whatever is profitable. Alternate forms of energy have largely been unprofitable, costing more to produce than customers are willing to pay.
They continue to block generic forms of medicine that could save people’s lives or provide relief in order to protect investments that have already turned a substantial profit. Corporations have no means by which to "block" generic forms of medicine. This is more a function of the patent system instituted by government. Patents are granted in order to make the massive investments into research worthwhile. If patents last too long, they give more benefit than is necessary to incentivize and prevent generics from competing. If patents are too short, it is insufficient incentive to research new life-saving medicines. I don't know whether patents are too long, too short, or just right. But whatever your opinion, you have to take it up with government, not corporations.
They have purposely covered up oil spills, accidents, faulty bookkeeping, and inactive ingredients in pursuit of profit. These are largely crimes of individuals, not corporate policies. And to the extent that they are corporate policies, they are crimes if they cover up culpability in causing harm. It is the job of victims to sue and the job of government to prosecute. But you can in no way blame the institution of corporations for the crimes of particular ones. This is merely a function of humanity.
They purposefully keep people misinformed and fearful through their control of the media. Corporations in general do not control the media. Only specific ones. And with the advent of the internet, that is becoming less of an issue. Unless of course we permit the government to regulate the internet.
They have accepted private contracts to murder prisoners even when presented with serious doubts about their guilt. Corporations do not execute criminals... that's government, again.
They have perpetuated colonialism at home and abroad. They have participated in the torture and murder of innocent civilians overseas. That's the military... i.e. government, again.
They continue to create weapons of mass destruction in order to receive government contracts. Government orders weapons; corporations do not impose weapons on government. Again, the gripe seems to be with government.
By and large, these grievances seem to be misdirected. What is blamed on corporations is mostly the fault of government or the crimes of particular individuals. To the extent that there is a "feeling of mass injustice" caused by these particular grievances, that injustice is perpetrated by our government. In this sense, Occupy Wall Street is in the wrong place. It should be Occupy DC (which there is one now). More importantly, the common solutions offered are way off the mark! Calling for greater regulation and more taxation would be feeding the beast! It is not agents of Merrill Lynch or Coca Cola who are beating and pepper-spraying the protestors on Wall Street. That's the government doing that! It's not Goldman Sachs that's arresting people on the Brooklyn Bridge (no matter how big the revolving door with the Whitehouse), that's the government doing that! Do these protestors not see the irony of seeking to increase the number of jackboots standing on their necks? The "feeling of mass injustice" is a feeling of the loss of freedom. Government is the opposite of freedom. To increase freedom, you must shrink government.
But maybe we're missing the point to focus on these particular grievances, which were created by a very small subset of the entire movement and does not speak for everyone. What other memes pervade the crowds of protestors?
We are the 99% This slogan (along with "Eat the Rich", "Workers' Rights Now", various things about "Greed", etc.) is an element of class warfare illustrating a growing distaste for the escalating wealth disparity in this nation. Where does this wealth disparity come from? The crowds seem to think that "the 1%" are engaged in criminal activity and somehow stealing it from them. There is no overt theft though, so they surmise that people should be receiving better pay and benefits and are being shafted. But employment is a voluntary agreement, and individuals are free to negotiate for better pay or benefits if they like. However, workers find that they don't have any leverage. There are too many workers and not enough jobs. Ah, but whose fault is that? Well, the greedy corporations are outsourcing all the jobs, they think. But that is far too simplistic. The fact of the matter is that labor is a commodity which reacts to supply and demand, just like any other market. If the supply is too high, it's probably because it's too pricy. I.e. it costs too much to hire that labor because either the wages are too high or taxes are too high or there are too many regulatory strings attached. If the demand is too low, it's probably because it's too hard to start a new business or because it's too onerous to hire someone given the amount of red tape involved. All of these problems stem from our massive government intervention in the economy. If more employees could become employers, the labor market would quickly balance out. But it's too hard and costly to start a new business these days. That's why the labor market is unbalanced and workers have no leverage.
End the Wars People are really fed up with our foreign militarism now. They first elected Bush to enact a "humble foreign policy". That failed. Then they elected Obama to bring the troops home ASAP. He even staked his eligibility for a second term on fulfilling this promise. But the wars continue. Obama not only didn't bring the troops home, he started a NEW undeclared, unconstitutional war! This is tangentially related to the other issues in that the Pentagon is a massive expense in our unbalanced national budget besides the fact that it kills many of our young people and makes us enemies across the globe! As with the other problems, this gripe is against our government, not against corporations.
Expose the Corruption Also, "Outlaw Lobbyists" and "End Corporate Welfare". Corruption is by definition a problem of government. Often it is related to wealthy people or companies buying favors, privileges, subsidies, loan guarantees, etc., but ultimately this is a problem of government having unnecessary, unwarranted, and unconstitutional powers to grant such favors. Lobbyists will stop having influence when government stops having unlimited power. The problems of "revolving doors" will end when government stops regulating and having the power to grant special privileges to those they regulate. That's the sole reason why ex-regulators go to work for the corporations they once regulated as lobbyists -- to get special favors from government! Stop giving government the power to grant favors and this all ends!
Reinstate Glass–Steagall This regards the Banking Act of 1933 which created the Federal Deposit Insurance Corporation (FDIC), allowed the Federal Reserve to regulate interest rates, and introduced banking reforms meant to curb speculation. Specifically, the calls are to reinstitute a provision repealed during the Clinton administration which prohibited bank holding companies from owning other financial firms, separating commercial banking from investment banking. Some economists believe that the newfound ability of investment bankers to gamble with depositors' money contributed to the 2008 financial collapse. But this wasn't really a newfound ability at all. It merely allowed bankers to gamble with depositers' money in a different way. Previously, they could issue mortgages and other kinds of loans with depositors' money. Now they could also buy stocks, bonds, and derivatives. So it wasn't a different kind of activity, just a new class of investments. The problem isn't that investment banks are comingled with commercial banks, it's that commercial banks operate a fraudulent fractional reserve system wherein they're free to invest their demand deposits in hopes of greater profits all the while pretending that any depositor can retrieve all of their funds at any time. Whether they invest in mortgages, mortgage-backed securities, bonds, or stocks doesn't make a lick of difference. The problem is that they don't keep 100% of your checking account in a vault reserved exclusively for you. And the Federal Reserve exists explicitly to protect this fraud. And under current law, this fraud is LEGAL. Let's outlaw the fraud and banks will no longer be a systemic economic issue.
Prosecute the Wall Street Criminals This demand is based on the fallacious belief that anyone on Wall Street broke any laws. You'll be hard-pressed to find anyone on Wall Street who broke the law. The 2008 financial crisis was caused by government policies (i.e. the law itself). To the extent that Wall Street helped, they did so at the behest of their regulators. Increasing regulation will only cause more problems, not less.
Pass the Buffet Rule Also "Tax the Rich", "Pay your Fair Share", etc. There's nothing "fair" about forcefully taking from any minority group, especially those who have been successful. You get more of what you subsidize and less of what you tax. So why would you subsidize poverty and tax success? I might take Buffett seriously about his political positions when he writes a check in the amount of his entire fortune to the U.S. Treasury. Until then, I know he's a two-faced liar who knows very well that the government does NOT know how to spend his money better than he does!
Eliminate Corporate Personhood I'm not sure what evils are specifically ascribed to corporate personhood, which is merely a convenient legal fiction which simplifies transactions between government and corporations, which are composed of perhaps thousands of individual shareholders, each having rights and obligations which are honored in proxy through corporate personhood, including the freedom of association. How would anything improve by ignoring the association and dealing with each shareholder directly? Some people like to claim that corporations are some kind of modern artificial invention which are not necessary or beneficial, but you should recall that corporations were integral to our society from the very first settlers. Plymouth Company and Virginia Bay Company were corporations which brought our very first colonists to America. The building of ships and all of the necessary provisions to survive the voyage and establish a colony were a massively expensive undertaking frought with risk, and this depended on investors self-interested through the profit motive to share in that expense and risk. Only through corporations were we able to establish a thriving society in America. Corporations financed industry and municipal corporations became our towns. This recent antipathy toward corporations belies their long history of good works. Corporations are clearly entities which require legal acknowledgement of some kind. Treating them as any individual would be treated is not an unreasonable method to do this, since they are composed of individuals each having individual rights. As a group, they still exercise individual rights which cannot be taken away simply because they are a member of a group. Like I said, I don't know what great evil is supposedly attributed to "corporate personhood", but it seems like a flimsy scapegoat to me.
End the Fed This, the title of a Congressman Ron Paul book decrying the evils of the Federal Reserve System, is a common refrain of libertarians and Austrian economists -- and rightly so. The Federal Reserve is indeed at the very heart of the evils and misery being felt by the protestors.
And this last point is probably where the protestors should be concentrating most of their efforts. The Federal Reserve is the genetically-modified bastard son of Big Government and Big Banks. The Federal Reserve Act was secretly written by wealthy bankers such as J. P. Morgan and John D. Rockefeller, Jr., who also helped fund President Wilson's presidential campaign for the purpose of signing this act, and then stealthily passed it on Christmas Eve when most of Congress had gone home. The Federal Reserve Act established a legal banking cartel, owned and operated by private banks, which would act as the central banking system of the United States. They were given the monopoly power to print money out of thin air, i.e. to counterfeit! The U.S. Treasury would sell Treasury bonds to the Federal Reserve, who would buy them with freshly minted paper, and the Treasury would then spend the money on government projects, essentially laundering it into the economy. The Treasury would of course pay interest on those bonds to the Federal Reserve. The Fed does contribute the bulk of its profits back to the Treasury, but after their own fees are assessed of course. Moreover, the Fed prints and lends paper money to the cartel members at virtually no interest, and the member banks then lend it to the public at high interest, again laundering it into the economy.
But how does the Federal Reserve contribute to the "feeling of mass injustice"? In The Economic Consequences of the Peace, John Maynard Keynes wrote (probably his only great insight): "Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." And that is PRECISELY the "feeling of mass injustice" -- the hidden forces of economic law on the side of destruction that not one man in a million is able to diagnose. The protestors know the banks are involved and they know that the economy stinks, they just don't know why. THIS IS WHY!
The Federal Reserve debauches the currency and causes inflation in a number of ways. One, they hold interest rates lower than the market rate through bond purchases on the open market. They buy the bonds with newly created (counterfeited) money. Another way is by loaning newly created money to the member banks or even foreign banks and governments. It was recently uncovered that in response to the 2008 financial collapse, the Fed loaned out over $16 trillion -- more than the entire U.S. GDP! In some cases, they may hide their purchases of U.S. debt through loans to banks and foreign governments for the purpose of buying U.S. Treasury bonds covertly. They also buy other financial instruments on the open market, sometimes under the auspices of fake front companies, e.g. Maiden Lane, so as to hide their actions from the public. The Fed bought loads of mortgage-backed securities from Fannie and Freddie, for instance. And the banks to whom they lend cheaply engage in "fractional-reserve banking" wherein they multiply the amount they have in reserve by 10 times or more in the loans they give out at high interest. No matter the source of the debauchery, the end result is always the same though -- they print money out of thin air, and that new money dilutes the money supply and devalues every other dollar already in existence. It reduces the value of fixed income instruments, salaries, and savings. The prices of inelastic commodities such as oil and copper go up first, and eventually all prices go up, albeit unevenly throughout the economy. Wages always rise last with inflation. The result is that people have to spend more and more to maintain the same standard of living, but don't get paid enough to keep up. Worse, even when they get a raise, it may not be enough to make up for inflation (which is ALWAYS understated by the government), so while they feel like they should be richer, they still can't afford as much as before. And who gets blamed? Innocent oil companies and employers just trying to keep up like everyone else.
The Federal Reserve is the cause of the "business cycle" of booms and busts. E.g. in response to the housing collapse in the early 1990s (itself the result of an earlier Fed-induced boom), Alan Greenspan expanded the money supply and blew up the Nasdaq "dot-com" bubble. When that bubble collapsed, he fueled the next housing bubble. Then that collapsed, and Ben Bernanke is in the process of blowing up the next bubble, perhaps in commodities such as gold. This happens because inflation is a false signal. It tells the market that there's plenty of savings (the natural source of loan capital), and so people should take more risks to grow the economy, and so they invest in factories and housing and internet companies. But when it turns out that the demand wasn't really there, these turn out to be bad investments and the bubble collapses. Meanwhile, real wealth is destroyed in the process. The Fed can only print money, not the wealth that is supposed to be represented by that money. So when people work hard and invest their skill, labor, and capital chasing after fake demand represented by the illusory wealth of counterfeited money, the economy loses. Every bubble and crash takes us to a new low. And there aren't really vast amounts of savings on which to soften the crash, but just another illusion. The result is that more and more people end up unemployed and on welfare.
None of this is a part of free-market capitalism, which tends to get blamed. The cause is fiat money, fractional-reserve banking, and the central bank cartel. That is the source of the "feeling of mass injustice". That is where the energy of Occupy Wall Street should be directed. At the Federal Reserve, at the U.S. Treasury, and at Congress. This triumvirate are the culprits and the only ones who can change the direction of this country and the plight of the people. First we need a full, independent audit of the Federal Reserve and of the U.S. gold reserves supposedly at Fort Knox. Then we need to abolish the Federal Reserve and replace it with competing free market money. No more counterfeiting. No more government-created monopolies. That is how our economy regains a solid foundation upon which it can grow confidently. That's how people can be secure in their savings and their wages. That's how companies can plan well into the future, which supports hiring and investing.
It's something that everyone can get behind. Occupy Wall Street, the Tea Party, Democrats, Republicans, Independents. The time has come to finally end the Fed. Like Andrew Jackson and Thomas Jefferson before him, we must kill the bank. It is the key to our ongoing prosperity.
Look, markets do not go up or down in a straight line, no matter how bullish or bearish they may be. And precious metals are especially volatile. Not every 10-20% retreat is "the end of the bubble". They call this the "wall of worry" in a bull market. People think it's all over after each pull-back, but all this does is shake out the weak hands (unknowledgeable speculators greedily riding a trend and then panicking) and give those with conviction the opportunity to average in again at a temporary low, which is exactly where we're at today. If you're smart, you'll add to your position today because the metals could easily catapult off of this low to all new highs.
The last time I published these charts in my "To the Moon" series was almost four months ago, at which point I predicted almost exactly the events which transpired. Gold and silver both remain precisely on-trend and I don't see that changing anytime soon. Back in June, I was noting that gold was kissing its trend line at $1540. Guess what? After launching all the way to $1900, it's back at the trend line again around $1650.
Meanwhile, silver has been playing around in the middle of its very broad range, and despite crashing by 25% this past week, it's still within its exponential trend.
All the fundamentals driving gold and silver higher remain intact. The U.S. government agreed to add another $2.4 trillion to the national debt in August and will probably hit the ceiling again by next summer. The Federal Reserve has pledged to keep interest rates at zero percent for two years! Greece has been acknowledged by most world leaders and economic analysts as inevitably declaring bankruptcy, with or without another bailout, and this very well may bring down the majority of European countries and almost certainly dissolve the European Union. China is dealing with high inflation and a crashing economy. The Swiss Franc -- the last nearly honest currency -- is now pegged to the dying Euro. Central banks are now net buyers of gold. And the Fed is probably going to declare QE3 in response to the crashing stock market and rising unemployment. This is not an environment in which gold could suddenly become a bear market!
So where to from here? We just had a pretty substantial correction in gold and silver this past week, to within a breath of the exponential trend lines. I don't think they'll long stay at these levels, but probably bounce right off. Just look at the slope of the exponential trend lines now! Volatility will likely increase from here. I don't see any more long consolidations in our future.
To reiterate my predictions since the beginning of the year: if the trend remains intact, and at this point there is every indication it will, then by November we'll be to $1700 at minimum for gold and end the year near or above $1800. Silver should end above $35. Again, that's at a minimum, which means there's little room to the downside at this point. If we had a move proportional to the 2005-2006 rally or the 2007-2008 rally, we could see gold go to $2200 this year. And given that we've already seen $1900 in August, I think we could very probably breach at least $2000 in a mid-autumn to mid-winter rally. Silver could certainly see its spring highs and maybe reach $60. These possibilities are likely because the metals usually have their strongest months between now and February. It could be different this year and move only modestly to the minimums I've specified along the exponential trend, but I find that unlikely.
It's clear blue skies to the upside, with only the Moon in sight!
I highly recommend signing up for a BullionVault account right now and loading up on as much as you can afford in their Swiss vault. You will probably never ever see gold this cheap again and will kick yourself for not taking advantage of this opportunity.
I've now seen several analysts back up my prediction that we could see a sovereign debt crisis and currency crisis in the United States before the end of 2012, and probably in Europe before that. The best financial protection is precious metals. Silver in a home bolt-down safe and gold in a highly secure foreign vault covers your bases well. After considerable research, I've found BullionVault to be the best and I highly recommend it.
40 years ago today were sown the seeds of our present monetary crisis. Richard Nixon defaulted on the U.S. debt and ended the Gold Standard, beginning an unprecedented period of purely fiat global currencies, precipitating massive bubbles and crashes and debt accumulation.
The Dollar has lost over 90% of its value since then. I.e. if you put a dollar under your mattress for retirement in 1971, it would buy 10 cents worth of goods today. But while prices have increased by 10 times, the median household income has only increased by 4 times, which is why the American quality of life has plummeted, notwithstanding technological improvements. Workers get raises, so they think they're earning more, but in reality their money still buys less.
This is "stability" according to Nixon and his Keynesian economic theory.
Don't have a lot of money to donate to your political campaign of choice (e.g. Ron Paul)? Make an anti-contribution to other political campaigns instead! How do you do that? Simple... a single Google or Facebook ad can cost a campaign $5, $10, maybe even $20 per click! Whenever you see an ad for a candidate you don't like, click their link and waste their money! That reduces the mindshare available for people who might actually be swayed toward them and increases the relative mindshare for Ron Paul ads! You essentially cancel out someone's (probably a big Wall Street bank's) donation to that campaign.
At the recent 
Occupy Wall Street has now been raging for a few weeks and I've been trying to understand what specifically it's all about. It's a given that the mainstream media are telling the story wrong, or telling the wrong story, so my facts are gathered mostly over the internet from the horse's mouth as much as possible. Much can be gathered from signs held by protestors; however, there are quite a few divergent and even mutually-exclusive memes, indicating that the protests encompass more than one goal or mindset, perhaps with some overlap. This is to be expected from the wide range of groups who jumped into the mix right off the bat -- anti-consumerists, unions, Anonymous, libertarians, hippies, anarchists, socialists, etc.
40 years ago today were sown the seeds of our present monetary crisis. Richard Nixon defaulted on the U.S. debt and ended the Gold Standard, beginning an unprecedented period of purely fiat global currencies, precipitating massive bubbles and crashes and debt accumulation.