Hey Beth, Read this: United States of Toast

Bob, our resident trust officer, gave me a copy of the Gold Stock Adviser to read this morning.  The bottom line of David Skarica's report was take advantage of a current price jump in the U.S. dollar, the result of short covering and, perhaps, some movement of money away from the EU as Greece melts down. 

After this period, which will not be too long, the dollar will continue its collapse and gold will move in the opposite direction, not so much as an increase in its real value but as a reflection of the falling dollar.   I have talked about this, so I figure David is a genius. 

One comment I will take to heart is don't fuss over the details of the gold price right now (silver too).  Just get out of the dollar. We are not in a normal cycle, so don't try to play it.  You may want to spread this entry around.

Here are some interesting data (yes, its plural):

1990: the federal government spent 1.25 trillion as against 1.03 trillion in revenue.
   
     Deficit of 221 billion or 3.81% of GDP


2000 the amount spent was 1.79 trillion while revenues increased 2.03 trillion.
    
     Surplus:  2.42%

Now, that all sounds good and we hear about the good old Clinton days, but look closer. 

This "surplus" was a government sponsored bubble, a basis for more spending, as spending went up 97.1% from 1990 to 2000.  Revenues increased by 43.9%.  Congressional saliva was running down the steps of the Capitol and there was precious little difference between the parties.  The GOP had prattled on about being more financially sound than the evil Democrats. A pox on both their houses.

Note the inflation in the 1990s was 31.8%.  Spending, thus, increased a bit more than inflation, but revenue was 2.5 times faster than inflation.  Again, this is not the way to analyze what was done to us. We didn't do anything new other than push a ponzi game.  Inflation was rampant and our revenue was based on a bubble the government fostered.

There was, as George Soros puts it, a "super bubble" being created.  During this time, no one addressed medicare or social security.  Madoff was in charge of the ATM. 

2000 saw the technology mini-bubble, but the government kept the super bubble going.  Fannie Mae and friends were directed by the government to fuel the fire storm.  No one took to fixing anything. Investment banks fed the greedy and made billions.

By 2009 revenues were 2.11 trillion, not much of a rise from 2000, see above, but the expenses were 3.52 trillion,

     Deficit of 1.42 trillion

 Government more than DOUBLED since 1990 and bubble revenue turned flat. 

The deficit was 12% for 2009.  According to the the Rule of 72s, if the 12 percent were NOT increased, the entire deficit would DOUBLE in six years, then doubled again in another six years. 

The current estimate is that up to $9 TRILLION more will be spent in the next 10 years and the mad people in D.C. want to add cap and trade along with a medical spending plan.  Just wait, you will see even more of the rats resign and head for cover.

We are, as a nation, done. Let it sink in.  Idiots have killed us and they are still kicking the fallen body. 

We did not want to be a fallen empire; we did not want to be any empire.  Perhaps, it is just as well we will no longer be responsible for the world, but it is going to seriously hurt as our "friends" decouple and our dollar vanishes.  A new currency is likely and I would not rule out confiscation of gold.

We have two choices:  inflate the curency to pay bills and lose foreign investors and the status of the dollar ( =  more inflation) or declare bankruptcy.  You decide on what will be done.  Hint:  there is not enough money made in the U.S. to pay down the debts.

I can't say it any simpler.  If you didn't follow all this, please reread or let me know and I can revist the prose.  Here is another way to look at things:

*  The total of all governmental debt, today, is 110.8% of the U.S. GDP. 
*  If you include consumer debt the total is 350% of GDP, double our WWII rate.

Let's say your home mortgage is 110% of your income AND your credit cards and insurance are another 240%.  How long will you be able to carry on? 

The only reason no one has foreclosed on the U.S. is YOU and the husbandry of generations of prior Americans.  Our oligarchs have used you.  Our investment bankers used you.  Now, it is all coming to an end and we are being asked to buck up.  For my part, to helll with that.

So, we are done.  Accept this and prepare.  Get out the back, Jack.  Before Europe and Asia decouple from the dollar, YOU DO IT.  You can be in this country, but not of it.

We are not about to leave a war economy ending in 1945 where things were built, factories created, inventions perfected, young people wanted homes and educations, where the church provided stength.  We are not leaving anything; we are falling deeper into government sponsored debt, which we permitted, ultimately. and we still have wars going on. We have precious little in the way of hard industry, though as we fall toward third world status, our prices will be attractive.

Probably, this financial madness is purposeful so that a facist government can now step in to quel the coming chaos, a North American Union can be established.  To my mind, this seems likely because grown ups in government and investment banks can't be as stupid as they act. 

Skarica thinks gold and gold stocks will help you preserve your cash - warning: get out of the dollar immediately in this recent run up.  He assumes a stable political environment.  David is Canadian. He probably thinks a little make-believe socialism is a good thing, but our mess is nothing like the Canadian system, for now.

He did mention a few Canadian gold stocks worth looking into. I will see if I can buy them using a Canadian account.  In the meantime, I continue to suggest US silver coins pre 1965.  Buy some on this weakness, then bury them. Do not participate in the government-banking complex.  Become invisible. 

Your homes, 401Ks, bank accounts, interest income, estate, and car are all targets. Think carefully about blowing your money on good colleges unless you can get a long loan.

If Congress is purged this year, I am still not confident that anyone can fix this mess. Assume you are toast and act accordingly. We need a few more months of blizzards in D.C.Skarica

For update click on title below:  

U.S. NATIONAL DEBT CLOCK
The Outstanding Public Debt as of 16 Feb 2010 at 09:00:11 PM GMT is:

The estimated population of the United States is 307,851,808
so each citizen's share of this debt is $40,171.52.
The National Debt has continued to increase an average of
$3.85 billion per day since September 28, 2007!
Concerned? Then tell Congress and the White House!

A final concept to keep at hand:  The progressive rally cry that we should tax wealth is a misdirection to quiet the masses.  Wealth is not taxed, income is taxed. John Kerry will be fine, but not a truck driver. The oligarchs will protect themselves and set you up.

Seek assets, real ones like land, silver, food.  Convert your financial assets into real wealth. Do not leave them in the intermediary dollar form.  We will all learn soon enough that the dollar is a piece of paper.