Bernanke's plot to overthrow the US dollar
With the US so deeply in debt and the economy stagnated, even heavy taxes on the rich won't recoup government costs
Where’s the Bastille…?Skip to next paragraph
Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning (dailyreckoning.com).
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The Dow got a boost yesterday — up 143 points.
Gold remained where it was — about $1,617.
Dear Readers know what we think.
The Great Correction has a lot of work to do — there are so many things that need correction. And it will take time to do it. Meanwhile, your goal as an investor is to lose less money than everyone else. He who loses least wins!
Stocks should go down. Real estate should go down. Even gold should go down…as the dollar goes up!
Cash will be king…
…until the revolution.
What kind of revolution? When?
Ah…dear reader…you’re asking a lot from a free service!
But what the heck… We’re happy to tell you what we think. We just hope it’s worth at least what you paid for it.
Here’s the way we see it. Cash is king in a de-leveraging, dis-inflationary, depressing slump. The king should reign for a long time…because it will take a long time to squeeze the excess debt out of the US economy.
But as you know, there’s a lot more going on. While the private sector reduces its debt the public sector adds debt. And the people who run the public sector are activists…determined to de-throne the king. They are plotting treacherous acts of insurrection… They are looking for the Bastille!
Here’s Ben Bernanke, stirring up the mob. Bloomberg reports:
Federal Reserve Chairman Ben S. Bernanke said the US is facing a crisis with a jobless rate at or above 9 percent since April 2009, and that fiscal discipline would help spur the economic recovery.
“This unemployment situation we have, the jobs situation, is really a national crisis,” Bernanke said in response to questions after a speech yesterday in Cleveland. “We’ve had close to 10 percent unemployment now for a number of years and, of the people who are unemployed, about 45 percent have been unemployed for six months or more. This is unheard of.”
Mr. Bernanke is preparing the crowd. He wants to take action to topple his royal highness, king dollar. He wants to bring cash down… And he figures that the way to do it is to drop him out of a helicopter.
When people see so much cash fluttering in the air they’ll want to get it…and get rid of it…as soon as possible. That will get the economy rolling again and convince people that he, Ben Bernanke, actually knows what he’s talking about…and that he, Ben Shalom Bernanke, should be in charge. He should be the real monarch…
But Mr. Bernanke’s hour has not come round yet. He is faced with opposition in Congress…and in his own central bank. He will have to wait before it is time to slouch to Bethlehem…he’ll have to wait for things to get worse…then, he’ll be able to start up the helicopters.
What might make things worse? When? Keep reading…
Here’s more bad news for the world economy. Again, Bloomberg is on the case:
China Growth Seen Less Than 5% by 2016: Poll
Most global investors predict Chinese growth will slow to less than half the pace sustained since the government began dismantling Mao Zedong’s communist economy three decades ago, a Bloomberg poll indicated.
Fifty-nine percent of respondents said China’s gross domestic product, which rose 9.5 percent last quarter, will gain less than 5 percent annually by 2016. Twelve percent see such a slowdown within a year, and 47 percent said it will occur in two to five years, the quarterly Bloomberg Global Poll of investors, analysts and traders who are Bloomberg subscribers showed.
China, which saw its exports tumble the most since at least 1979 amid the 2008-09 global crisis, may not be able to rely on trade in any prolonged demand slump in Europe and the US, now battling to avoid returning to a recession. Managing the economic downshift would fall to the Communist Party’s next leaders, as President Hu Jintao and Premier Wen Jiabao begin their transition from power late next year.
“If we’re not buying things, they’re not making them,” said Charles Doraine, Chief Executive Officer of Doraine Wealth Management in Corpus Christi, Texas, and a respondent in the poll of 1,031 investors, analysts and traders taken Sept. 26.