Last Updated: Mar 25th, 2013 - 16:46:15 Newsletters : 2008 Newsletters : 28 November 2008 Thought for the Day The tumult and the shouting dies down and we have a new government. As we move into December and Xmas let us hope that this will bring peace and prosperity to our land. Our previous leadership seemed to forget that prosperity can only be generated by the private sector. Men and women working in their enterprises for the good of themselves and their families are the heart of the nation and the generators of wealth. Governments can only take from them and distribute to their friends and other parasitic voters. More government - less wealth. We have learned this lesson yet again. Behind this obvious but neglected truth lies the problem of funny money. We have had the boom and now we are having the bust. As it unfolds the general public is beginning to get the real story from the newspapers and this will generate panic as people struggle to preserve the little that they still have. This panic has dropped the DOW Jones stock index from over 13,000 down to 8,000 in the last seven months. That and the hedge funds doing a bit of short selling on banking stocks. Unfortunately we are not immune from this turmoil. I hope you are sitting comfortably for this Xmas period it will be a rough ride for many. Nov 28, 2008, 12:08 Newsletters : 2008 Newsletters : 28 November 2008 Rubin-clones And Other Fakers Sometimes the truth can be dreadfully sad. But America is in big trouble, and won't come out of it for a long time yet. REAL Economics teaches us that all the mal-investment produced by the easy money of the boom times must be cleared away so that people can start afresh from a stable base with REAL Money - that is money that has been earned rather than just printed by the government as a loan from the taxpayers of the future. The longer that governments struggle to support bankrupt institutions with more printed money the longer the bust will be. The danger is of course that the bust will turn into a hyper-inflationary boom due to the trillions of newly printed dollar bills! Depressing, but if we know the facts then we have some chance of protecting ourselves. We are all in the same boat! [ Visit Website ] Nov 28, 2008, 11:01 Newsletters : 2008 Newsletters : 28 November 2008 Citigroup Sees Gold at $2,000 Next Year as World Unravels Now even the establishment is becoming a "gold bug". Nov 27, 2008, 12:48 Newsletters : 2008 Newsletters : 28 November 2008 Colossal Financial Collapse "On Friday November 21, the world came within a hair’s breadth of the most colossal financial collapse in history according to bankers on the inside of events with whom we have contact. The trigger was the bank which only two years ago was America’s largest, Citigroup. The size of the US Government de facto nationalization of the $2 trillion banking institution is an indication of shocks yet to come in other major US and perhaps European banks thought to be ‘too big to fail.’" Read on: [ Visit Website ] Nov 26, 2008, 12:40 Newsletters : 2008 Newsletters : 28 November 2008 A Discredited Dollar Is a Likely Outcome of the Current Crisis As the fiat currency system in the USA continues to disintegrate, more and more analysts are starting to think that America may enter a long deflation like Japan. Christopher Wood also thinks that this could see the end of the almighty US dollar. The world needs sound money. What I like to call REAL Money. Will this current crisis be the catalyst that pushes paper money over the edge and causes a reversion to gold as money? Nov 25, 2008, 09:25 Newsletters : 2008 Newsletters : 28 November 2008 Bring Back Link Between Gold And Dollar We have been discussing the basis of REAL Economics over the last few years and more particularly over the past few months as the Credit Crunch struck the money system of the world. There have been many calls for regulation of money and credit recently but in a fiat currency system no amount of regulation will perform the required task of anchoring the value of money. It is only gold and silver that can perform the task of REAL Money. The reason is that governments and bankers cannot adjust the value and amount of gold in the world or in their vaults. It is what it is! This stability is what we need to solve our money problems. It is interesting to see that in this time of crisis when the bankers are manipulating the gold and silver futures markets downwards to help maintain the "value" of their paper money the ordinary citizens are besieging gold and silver suppliers for the REAL Stuff and are using it as a security blanket. This will become the new mania on the world's markets and should be a lot of fun. But now serious people are calling for a return to the gold standard, where all money must be redeemable to a certain weight of gold or silver. Nothing less will suffice. Nov 24, 2008, 11:06 Newsletters : 2008 Newsletters : 28 November 2008 Bar Stool Economics You may have seen this before, but even so, it is worth a revisit as we head into the Obama years… Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this: The first four men (the poorest) would pay nothing. The fifth would pay $1. The sixth would pay $3. The seventh would pay $7. The eighth would pay $12. The ninth would pay $18. The tenth man (the richest) would pay $59. So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I'm going to reduce the cost of your daily beer by $20.” Drinks for the ten now cost just $80. The group still wanted to pay their bill the way we pay our taxes, so the first four men were unaffected. They would still drink for free. But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his “fair share”? They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink their beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so: The fifth man, like the first four, now paid nothing (100% savings). The sixth now paid $2 instead of $3 (33% savings). The seventh now paid $5 instead of $7 (28% savings). The eighth now paid $9 instead of $12 (25% savings). The ninth now paid $14 instead of $18 (22% savings). The tenth now paid $49 instead of $59 (16% savings). Each of the six was better off than before and the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings. “I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man, “but he got $10!” “Yeah, that's right,” exclaimed the fifth man. “I only saved a dollar, too. It's unfair that he got ten times more than me!” “That's true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!” “Wait a minute,” yelled the first four men in unison. “We didn't get anything at all. The system exploits the poor!” The nine men surrounded the tenth and beat him up. The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill! And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier. David R. Kamerschen, Ph.D. Professor of Economics, University of Georgia For those who understand, no explanation is needed. For those who do not understand, no explanation is possible. Nov 8, 2008, 14:27 Newsletters : 2008 Newsletters : 28 November 2008 Quote for the Week American Money. "No State shall... coin money; emit bills of credit; make any thing but gold and silver coin a tender in payment of debts...." -- United States Constitution Source: Article 1, Section 10, Clause 1 "We have what is known as the Federal Reserve Bank System. That system is not owned by the Government. Many people think that it is because it says "Federal Reserve." It belongs to private banks, private corporations. So we have farmed out to the Federal Reserve Banking System that which is owned exclusively, wholly, one hundred percent to the private banks - we have farmed out to them the privilege of issuing the Government's money!" -- Wright Patman [John William Wright Patman] (1893-1976) US Congressman (TX-D) - Source: Congressional Record (29 Sep. 1941) Oct 28, 2008, 12:05