Is Obama Socialist? Many pundits throw the term "socialist" around as if they had some idea of what it means. Many seem to think it means "redistribution of wealth." Every financial transaction involves the redistribution of wealth. By that definition every economy in the history of earth has been socialist. The word itself has no strict definition, but it certainly implies a social engineering of finanicial transactions as opposed to "Free market" transactions. SInce 1913, with the creation of the Federal Reserve Bank - a wholly owned subsidiary of an international banking cartel - the creation, allocation, cost, and flow of money, has been socially engineered by this cartel. This is certainly the clear socialist basis of our economy. Is Obama a staunch supporter of the Fed? So far, yes. In this respect, like JP Morgan Chase, Goldman Sachs, The Rothschild bank, etc, he is socialist. Is Obama Marxist? Few people have any idea what " Marxist" is (including most "Marxists"), yet almost everyone is a de facto Marxist to some degree. The reason for this is that Marx is the single most influential thinker of the modern era, and his thought informs all modern and post modern critical analysis. In simplified form his thesis is that to understand man look at what he makes, not what he says. Look at his structures rather than his narratives. Does this seem obvious? Then you are a Marxist. Before Marx, nobody believed that was a valid way of analyzing human history. Of course it could be argued that this view owes a great debt to Aristotle. But that's another discussion. Anyway, Marx was not a socialist or a communist - though he did theorize about these possibilities. Marx was a philosopher who spent his life analyzing Capitalism in the context of world economic history. Before you ridicule him, read "Capital;" it shouldn't take more than five or six years; then, decide what you disagree with. That way you won't sound like an idiot when you criticise him. So who's to blame for our current mess? Sorry, but it's not Karl Marx. Let's start with Ronald Reagan, a man who turned the greatest creditor nation the world had ever seen into a debtor nation. A transition from which we have never recovered. (See a note on supply side economics below.) George Bush 1 tried to restore some fiscal sanity, and was crucified by his own base for this act of apostasy. Then Bill Clinton handed the reigns of the economy over to the CEO of Goldman Sachs, Bob Rubin who trashed Glass Stegal, which opened the way for the tragic era of unchecked Wall Street greed. This set the stage for George Bush 2 who destroyed the regulatory and oversite systems and stocked them with lobbyists and coroporate cronies who used the offices to plunder the American tax payer. Then when system collapsed under the weight of its own greed and inefficiency Bush installed the CEO of Goldman Sachs to take over the government, and Henry Paulsen used the opportunity to effect the greatest transfer of wealth (form the US tax payer into his own pocket) the world had ever seen in a series of bank "Bailouts." Enter Obama who is now restoring oversite not by getting smart capable people back into existing positions, but by creating whole new layers of government beaurocracy, with borrowed money. There's plenty of blame to go around. But ultimately we elected these clowns.EEnto What's going on in the stock market right now? Is the current US decline justified in light of European debt problems? Let's be clear: the stock market always follows the primary trend in the long run. The primary trend is down. Greece set off the current decline. But Greece is just one problem of many. According to the bank of International settlements (BIS), these are the first world countries currently running a total public debt greater than 100 percent of GDP: Austria, UK, Ireland, Greece, Spain, Portugal, Italy, Netherlands, Germany, Japan (200%) and the United States of America. Debt is always Deflationary. The remedy is for Governments to print money and thereby debase the currency and the debt. However, there is a tipping point at which governments can print as much money as they like, but if the banks can't lend it, and the people can't borrow it, there will still be deflation. Deflation drives down the value of all financial assets. Add to deflation a crisis of confidence: The financial markets have been willingly misrepresenting their products for a long time. But is lying about the quality of your merchandise such a big probelm? The fact that we even have to ask this question is astonishing. Let's say you go into a grocery store and buy a loaf of bread which is supposed to be good before the expiration date. Let's say you take it home and it's rotten. You take it back and the grocer says: "Hey, did you have a wheat expert test that before you bought it? Did you at least weigh it to make sure the true weight is equal to the stated weight? No? Then, screw you, Caveat Emptor. You've been buying bread all your life, you should know better. No refund." This is the banks' attitude towards their clients. If this is how we conduct business, all business will stop.
THE NEW GAME IN "BANKING" The US government bails out Goldman Sachs to the tune of 70-200 Billion dollars (depending on accounting). Goldman Sachs levers the money 30-1 and uses it to engineer naked short sales in distressed markets (like your mortgage) and then buy the beaten down securities for pennies. Goldman Sachs is then turned into a Commercial Bank. The US Government then lends trillions dollars more to Goldman Sachs at the Fed Funds rate of 0 percent. Goldman Sachs then lends the money back to the US Government in the form of buying 10 year treasuries. The US Government pays Goldman Sachs 4 percent on the money Goldman Sachs has loaned back to them. Goldman uses the free money to take huge gambles in small illiquid markets they can artificially push around with outsized bets made possible with the free government money. Goldman Sachs pays itself tremendous bonus on this astute financial engineering. Then Goldman Sachs pays back some tarp money plus interest with some of the rest of its "Earnings." The US Government then claims it made a profit on the tarp money. Everybody wins. Except you and me, since this fantastic institutionalized fraud is ultimately paid for with our Tax Dollars. SUPPLY SIDE ECONOMICS: The original institutionalized fraud. Massive debt + opaque financial system = tremendous short term profits for the very few. The 'supply' in supply side economics is easy money. The idea is that a ready supply of easy money would iron out the business cycle. Easy money is a synonym for debt. We create money in this economy by floating debt. The Supply Siders figured any amount of debt would be manageable since we could always pay it back in printed dollars. After all, we have the world's reserve currency. Other countries with strong currencies followed suit. What resulted is an absolute orgy of debt. The debt was bolstered by monetary policy that kept interest rates low for an extended period of time, tax policy that favored debt over equity, and regulatory policy that allowed financial institutions to operate opaquely. Policy was justified by a systematic doctoring of government figures such as the CPI which in turn bolstered GDP numbers. Moreover, as more and more debt was created through financial engineering and policy prescription, the prices of these were bid up higher and higher. This led these products to become grossly inflated in value compared to any inherent economic worth they might possess. The risk inherent in these products were purposefully misrepresented (in collusion with the rating agencies) and sold throughout the world to investors who were ill equipped to assume such massive risk. Once the bubble burst, the value of these products dropped precipitously. If marked to market and sold at market value, these instruments would still bankrupt the world banking system. Thus "mark to market" has been suspended indefinitely and the Fed has cleaned up the mess with 27 TRILLION DOLLARS of bailout money (read your tax dollars). Which means the Fed is technically bankrupt, since their balance sheet is filled with crap nobody else in the world would ever buy. And still the balance sheets of the banks are only solvent as long as "mark to fantasy models" persists. How long can this game last? A WORD ON GOLD COLLECTING/INVESTING: NOTE: The history of gold is the history of political power in the world. The ebb and flow of governmental gold selling and buying shows the ebb and flow of world power. Right now: Net sellers: IMF, United States, ECB. Net buyers: China, Russia, Vietnam, Brazil, India. Draw your own conclusions. First principle: gold is not an inflation hedge. During periods of massive inflation you could buy almost any commodity and make a killing. You don't need gold. Gold is a monetary instability hedge. Say it 10 times slowly. It is a monetary instability hedge because it is a stable currency. Gold does well during periods of inflation when the inflation is a product of a huge current account deficit and a weak currency rather than a product of a rapidly expanding economy and a stable currency. Gold does well during periods of deflation when the deflation is a product of a debt driven liquidity crisis morphing into a solvency crisis rather than a product of a stable yet stagnant economy experiencing a bout of very slow growth. You must analyze gold in relation to other forms of currency. World Financial Assets excluding derivatives (500-2000 trillion) and world real esate (75 trillion?)
They key however is the 500-2000 trillion in unregulated derivatives. This will be the issue of the next 5 years that must and will destroy the dollar. How to invest in gold: Gold bullion coins are the most popular and most liquid form of bullion. They trade at a premium to the spot price which rises and falls according to a demand which is linked to the overall financial stability of the current period. Bars are cheaper, but somewhat less popular, hence they trade closer to the spot price. Paper gold (futures, gld, cef) track the spot price, and are extremely liquid, but like all paper assets, they are subject to possible default. Paper gold during periods of high instability can also be extraordinarily volatile. 99% of gold futures contracts are never exercised. There is no question that there are far more contracts than underlying bulllion. What will happen if some large player demands delivery and the bullion isn't there? Historical Investment coins tend to move with the overall public (collector, investor) interest in gold, though the bullion content comprises only a tiny percentage of overall value. The rest of the value depends on demand which in turn depends upon historical importance of the periods, events, and personnages depicted; as well as rarity, state of preservation, and overall beauty of the compostions, as well as the skill (and perhaps fame) of the artists who rendered them. High grade investment coins have been appreciating right through the financial crisis. Check out recent auctions. Confiscation? During periods of great financial dislocation governments may suspend gold trading, and make illegal gold bullion ownership, as they did in 1933 during the great depression. Some feel that pre-1933 gold coins will be indemnified from such a confiscation, because of collector value. There is a thriving market in 20th century pre 1933 gold coins because of this. Certainly, historical investment coins will be indemnified because of their small bullion content and high collector value. Gold Stocks. Gold stocks also tend to rise and fall with the price of gold. But a down market can bring stocks down regardless of gold action. Ancients vs US coins: Test your coin IQ. Take this pop quizz at home: A top quality lincoln wheat penny in a scarce year and mint can cost 15,000 dollars. There might be 5000 of these pennies in similar condition. And it looks subatantially similar to a billion other pennies you can get at the bank for 1 penny. A top quality Julius Caesar portrait denarius can cost 15,000 dollars. There might be 30 coins in similar condition in all the world. And it looks substantially different from any other coin minted in world history. Which will be more valuable in 10 years? BUYING! Top quality coins are rapidly disappearing from the market. I am always seeking new ancient, medieval and world high quality material. Because of low overhead I can pay top dollar. Please contact me if you are looking to sell. I am only interested in coins of the highest quality. Resources: To learn more about gold coin prices at auction: www.coinarchives.com To see coins for sale in an on line coin mall: www.vcoins.com To learn more about gold stock investing: www.midasfunds.com/gold-investing.html To follow the ancient coin market subscribe to: The Celator magazine:
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Glossary: (Grk) tongue Coin: Koine (Grk): common.
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