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    Archived pages: 26 . Archive date: 2014-10.

  • Title: US Debt Bubble will Influence Gold Silver and the Economy
    Descriptive info: .. The Federal Reserve has assisted in the growth of the.. US debt bubble.. Debts must continue to grow by at least.. $2.. 5 trillion.. per year in order to keep GDP growth at 3-4%.. Unlike prior recoveries, economic growth is dependent upon new credit creation.. Videos.. updated Oct 08!.. Alert.. Signs in the markets of asset price deflation some call the beginning of the Kondratieff Winter.. At the same time we see the Federal Reserve performing the largest infusion of cash into the banks in the history of human existence.. Your life savings may be at risk and depend upon your actions today.. From July 2008 through the beginning of 2009, oil and most commodites have plunged to inflation adjusted levels never seen in the past.. The January 2009 oil price is the lowest in history when priced in the value of one ounce of gold.. Until the recent plunge in price, the number of barrels of oil bought by one ounce of gold.. did not fluctuate.. The.. money supply.. has grown at an exponential rate since the mid '90s.. The US dollar has dropped in relation to other foreign currencies, Currently the US needs to attract almost 2 billion dollars per day (.. $500 billion.. in 2003) to subsidize our foreign trade deficit, in addition to annual federal budget deficits.. Inflation.. is a hidden tax on consumers.. Over time it is added to the cost of each item purchased as each unit of currency buys less and less until it is worthless.. By changing the way the CPI is computed, government is able to create an illusion of stability.. Ten deficits.. that have been building over the past decade that cannot continue to grow indefinitely.. Continued growth in the economy and equity markets are dependent upon growing debts from foreign sources.. The recovery since the year 2000 has been unlike any other recovery  ...   Game.. YouTube Videos.. Saturday:.. Zapata George.. -.. Web Radio.. Jim Puplava.. Website.. Archives.. McAlvany.. McAlvany Weekly Commentary.. World Energy TV.. Weekly Video.. BullionMark.. Video Collection.. Kwaves.. L I N K S.. BEST OF.. ADVISORS.. NEWS - USA.. NEWS - ASIA TIMES.. NEWS - BBC.. NEWS - RUSSIA.. NEWS - MOSCOW TIMES.. NEWS - CHINA DAILY.. NEWS - ALJAZEERA.. NEWS - ABU DHABI.. NEWS - CRUDE OIL.. NEWS - BALTIC DRY INDEX.. NEWS - OIL DRUM.. LEAP 2020.. GOLDSEEK.. SAFE HAVEN.. CHARLES HUGH SMITH.. FIENDBEAR.. HARVEY ORGAN-GOLD/SILVER.. INCITERTRADING.. FINANCE AND ECONOMICS.. GOLDEN TRUTH.. SPROTT JOHN EMBREY.. COMSTOCK FUNDS.. EXPECTED RETURNS.. FINANCIAL ARMAGEDDON.. THE BIG PICTURE.. ZERO HEDGE.. (remove ZH clutter).. DOG POET TRANSMITTING.. CHRIS MARTENSON.. GONZALOLIRA.. CALCULATED RISK.. GOLD-EAGLE.. HOWE STREET.. CONTRARY INVESTOR.. FINANCIAL SENSE.. 321-GOLD.. JIM SINCLAIR.. GATA.. CRACK-UP BOOM SERIES.. MARKET-TICKER.. MINYANVILLE.. REALITY LENSES.. TED BUTLER SILVER.. JESSE'S CAFE AMERICAIN.. ERIC DE GROOT'S INSIGHTS.. DOLLAR COLLAPSE.. URBAN SURVIVAL.. ITULIP.. CONTRARIAN ADVISOR.. DAILY RECKONING.. FREEBUCK.. WHISKEY & GUNPOWDER.. MISH GLOBAL ECON TRENDS.. GOLDISMONEY.. INFO.. PRUDENTBEAR.. VON MISES.. GLOBAL COMMUNISM.. GARY DORSCH.. BOB CHAPMAN INT'L FORCASTER.. DAVID MORGAN SILVER-INVESTOR.. GOLDEN JACKASS.. JOHN HUSSMAN.. COMSTOCK.. NORTHERN TRUST.. TY ANDROS.. MARKET ORACLE.. BULLNOTBULL.. MAULDIN 2000WAVE.. LONGWAVE ANALYST.. FREEMARKETNEWS.. COT CHARTS.. STOCK TIMING.. FIDELITY SELECT SECTORS.. DAN BASCH.. MUTUAL/ETF FUNDS BY SECTOR.. BORIS & CO.. MARKETTHOUGHTS.. SNIPER MT.. 52PAGES.. RESOURCE STOCKS.. MAX-PAIN.. LEMETROPOLECAFE.. DEEPCASTER.. YIELD SPREADS - MONEY SUPPLY.. ECONOMIC DATA CHARTS.. FED RESERVE-FLOW OF FUNDS.. FED RESERVE-BANK DEBT.. JOE F ROCKS.. ECONOSTATS.. SHARELYNX.. FINANCIALS-5 DAY.. INDEX-5 DAY.. VTO - COT/VIX/VXN.. STOCKCHARTS.. MARKET GAUGE.. STOCKWERLD.. SAAVYCHARTS.. Silver-Fundamentals.. DOW/GOLD RATIO.. DEFLATION WATCH.. CREDIT SPREADS.. STEVE ROACH.. DRBOB.. ZEAL.. OBSCENE PROPHETS.. STORM WATCH.. BLOOMBERG.. CBS MARKETWATCH.. CNBC.. CNN MONEY.. SILICON INVESTOR.. SMART MONEY.. THE STREET.. YAHOO FINANCE.. TRENDING123.. COM.. MAJOR US INDICES.. WORLD MARKETS.. GLOBEX.. KITCO.. TODAYS MARKETS.. Gold Index.. 10 Year Bond Yield.. S&P Index.. Euros per $1.. CRB Index.. TOP OF PAGE.. HOME.. |.. DEBT.. MONEY.. CONTACT US.. Copyright 2004..

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  • Title: Kwaves.com - Exponential Growth of the US Debt
    Descriptive info: The US is replete with debt.. In order to experience continued growth in our Gross Domestic Product, the economy must generate increasing amounts of debt at an exponential rate.. For Each $0.. 50 growth of GDP, Total debt grows by $2.. 5.. Most of the debt growth has been funded by increases in pools of mortgage money borrowed from foreigners thru GSE's and Mortgage pools and growth of home equity loans and consumer debt.. Exponential growth of debt  ...   of GDP,.. debt growth must continue.. at current accelorated levels.. Debt Components.. Total in relation to GDP has moved in a predictable cycle over the past century.. We have still not seen the peak last visited in the mid '30s.. Total personal bankruptcy filings continues to set records each year.. It is now more commmon to file bankruptcy than to file divorce.. Total divorces are not expected to exceed 1,000,000 per year, bankruptcies now exceed 1,600,000.. Copyright 2000-2003 -..

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  • Title: Kwaves - Video Page - Gold and Silver Will Benefit from US Debt Bubble
    Descriptive info: Inflationary Holocaust.. Jim Rogers - Dollar Collapse - America Bailing Out Wallstreet (Incompetents And Crooks) At The Cost of The People.. Video Link.. [YouTube Video (6:50)].. Financial Sense - Oct 24 2008.. Financial Sense Interview.. - Bill Haynes, President CMI Gold and Silver discusses shortage silver in the wholesale market and probable dollar devalution like a "thief in the night".. MP3 File Download.. [Audio File (28:54)].. Download Windows Media Player Here.. McAlvany ICA Summer 2008 Seminar Dollar Collapse.. McAlvany ICA.. presents financial, political and geo-political information to aid investors in developing sound alternatives for their portfolios in uncertain times.. [YouTube Video (10:20)].. McAlvany ICA Summer 2008 Seminar economic explosion of China.. [YouTube Video (3:44)].. McAlvany ICA Summer 2008 Seminar overview of Financial Crisis.. [YouTube Video (4:12)].. McAlvany ICA Summer 2008 Protect Your Assets 1.. [YouTube Video (6:15)].. McAlvany ICA Summer 2008 Protect Your Assets 2.. [YouTube Video (5:13)].. Inevitable Collapse of Dollar.. Why it is probable we will see a collapse of the Dollar.. Short film by Ghoeberx.. [YouTube Video (7:06)].. Russia Today (English Ver).. News piece on EU "request" to discuss reserve currency status of US Dollar before Jan 2009.. [YouTube Video (3:05)].. Phantom Stock.. Millions of shares traded each year on Wall Street are created out of thin  ...   Video (13:25)].. Fractional Reserve Banking.. How each dollar is borrowed into existance (at interest).. The true story of how money is created out of thin air under the fractional reserve banking system.. [Google Video (47:07)].. History of US Dollar.. Short overview of how the dollar lost its backing of gold and silver and is now Fiat (a piece of paper).. [Google Video (25:16)].. Money, Banking and the Federal Reserve.. Steeped in American history and Austrian economics, and featuring Ron Paul, Joseph Salerno, Hans Hoppe, and Lew Rockwell, this extraordinary film is the clearest, most compelling explanation ever offered of the Fed, and why curbing it must be our first priority.. View it now.. [Google Video (42:08)].. History of the Federal Reserve.. Comprehensive video on the 200 year history of the battle between private bankers (federal reserve) and the power of the people to control the issuance of money.. [Google Video (3:36:06)].. The End of America.. Naomi Wolf's movie which demonstrated that the United States was on a remarkably certain path toward ending democracy.. Wolf set out on a national tour to discuss the evolution of America from a functional democracy into a closed, fear-driven society with a terrifying absence of due process.. [Snag Films (75:00)].. Share This Page With a Freind..

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  • Title: Kwaves - Deflation or Inflation - How can Gold and Silver be Declining in a Time of Supply Shortage and Economic Crisis
    Descriptive info: The Federal Reserve and the U.. S.. Treasury.. , with the aid of the U.. Congress, have embarked on a.. massive monetary inflation.. that will only weaken or destroy the US Dollar.. By supporting asset prices of failed institutions and inflated home values entering foreclosure, they will rob a nation of its wealth.. We will live to see either a rapid devaluation or progressive hyperinflation of the US Dollar.. Normally, Gold and Silver provide an early warning of a pending Inflation.. The Federal Reserve chief has stated that he intends to use.. "whatever means necessary".. to correct a deflationary crisis.. Using its.. Emergency Powers.. , we believe the Federal Reserve is intervening to keep the "paper" price of Gold and Silver low in order to fool as many possible into thinking the US Dollar is a better safety net at a time when they are inflating the money supply faster than at any time in human history.. In a FREE market, there has never been a time when gold and silver dropped in price when the wholesale market experienced.. global bullion supply shortages.. , at the very same time as the Federal Reserve embarks on the.. LARGEST monetary infusion.. in the history of the world.. You should consider obtaining.. physical gold and silver.. at any point at or below 100 day moving average.. Note, we do not consider Gold and Silver ETF's physical metal.. If you cannot obtain the physical metal, try either.. BullionVault.. ,.. Goldmoney.. , or shares in the.. Central Fund of Canada.. (CEF) as the next best thing.. In advance of the 2004 Asian Tsunami, the water level receded before the 100 ft waves hit the shore.. Few animals were killed.. and others who understood the signs were saved.. We believe the short term rise of the US Dollar reflects a coming Financial Tsunami.. The "unsinkable" Titanic rose before it sank to the bottom of the North Atlantic.. Those on the upper decks are currently running for the preciously scarce lifeboats of Gold and Silver.. Gold is a hard currency with a 3,000-year history and no liability, and therefore it will never default.. The dollar is a paper currency that lost all backing of gold 37-years ago.. It has $10 trillion of debt behind it.. (and growing).. It is an IOU whose value can only fall over time.. If you believe that the massive monetary infusion will add jobs and bring the American consumer back to the stores to purchase (on credit) new cars, cheap Chinese made products they don't need, and houses that are located in neighborhoods of growing numbers of unsold homes in foreclosure, please disregard our recommendations.. Jim Waters.. kwaves.. Oct.. 26.. 08.. Deflation Scare the Perfect Camouflage.. By Christopher Galakoutis.. Friday, October 17 2008 12:48 PM.. It is said the market can sniff out prospective problems and price itself accordingly.. If so, then someone needs to get this dog some nasal spray, lickedy-split!.. Inflation and Deflation are Monetary Phenomenons.. The deflation scare currently hovering over the entire market, particularly in the metals and commodities sectors, has been brutal.. But the key question today is whether this scare will evolve into a genuine deflation threat to the US and the world?.. Inflation and deflation are monetary phenomenons.. Monetary inflation occurs when the supply of money increases faster than the supply of goods and services.. This is different from the concept of price inflation, which, depending on several variables that may impact inputs along a given production chain, can cause an increase in the price level for certain goods and services at any given time.. Otherwise said, monetary inflation causes price inflation, but a price rise isn t always a result of monetary inflation.. With monetary deflation you have the opposite effect, in that it relates to a contraction in the money supply.. If the supply of money contracts, while the supply of goods and services either remains constant, increases, or contracts at a slower rate, then that can lead to price deflation.. Otherwise said, a contraction in the supply of money will in most cases cause asset prices to fall,.. but falling asset prices are not always the result of a monetary deflation.. (the oil price can rise if the supply of oil is falling at a faster rate than a money supply contraction, for instance).. We Do Not Have Monetary Deflation.. What we have today is falling asset prices in, specifically, real estate and stocks, and a rise in the value of the US dollar.. This has led many to wrongfully conclude that we are not only experiencing a deflation scare, but that a depression brought on by a deflationary collapse is imminent.. I don t see it that way.. Stocks and real estate are collapsing because the US was on a debt binge for many years.. Given that real estate purchases are mainly financed by debt, and that many have used margin in stock portfolios, as well as, in the cases of hedge funds and others, dangerously high levels of leverage, the deleveraging that was forced upon the market following the collapse of debt instruments tied to bad loans is what is causing the dramatic declines in these asset prices today.. In a fiat money world with governments controlling the money printing presses you can be sure those governments will do everything in their power to fight off depressions.. Anyone who continues to doubt this must have been living under a rock the past couple of months.. We Cannot Borrow Our Way Out of This.. With much of the world holding the same toxic instruments and in similar, but not as horrific shape as the US, the ability of the US Treasury to tap its foreign creditors and borrow its way, to the tune of trillions, out of this mess has been severely impacted.. On the domestic front, the savings rate is approximately zero, and increasing levels of unemployment will cause tax receipts to collapse.. The only alternative will be the printing of money.. Fed is Forced to Create MASSIVE Amounts of Money.. The US is the world s greatest debtor.. Money printing will bring on monetary inflation, which will wipe out those debts, savings, as well as the US dollar.. That is the real scare that markets today, as well as foreign creditors, should be pricing in.. It is only a matter of time.. To borrow a line from the classic film The Usual Suspects : The greatest trick the Devil ever pulled was convincing the world he didn't exist.. 2005-2008 Christopher G.. Galakoutis.. Website:.. Murkymarkets.. Disclaimer: The commentary on MurkyMarkets.. com is not intended to constitute investment advice or a recommendation to buy, sell, or hold any security.. It is also not intended to meet your specific individual investment needs and it is not tailored to your personal financial situation.. Commentary found on this website reflects the personal views and opinions of Christopher G.. Galakoutis -- and/or any guest writers -- and that is all it purports to be.. IS IT INFLATION OR IS IT DEFLATION?.. Peter Degraaf.. Nov 5 2008.. Almost daily I receive emails from subscribers who worry about deflation.. Here is my simple answer: Watch what they do not what they say!.. The above chart (courtesy Federal Reserve Bank of St.. Louis), is up-to-date.. It reflects a monetary increase of 305 billion dollars into the US money supply in the short space of under 2 months.. Nothing like this has ever happened in the USA before.. ! The little bumps on this chart between August 2007 and August 2008 include Bear-Sterns, Northern Rock, Lehman Bros, Fannie and Freddie and AIG, yet none of those monetary shocks compare to what the FED is doing now.. This is inflation with a capital I !.. Quite often when the monetary authorities inflate the system, it takes a while before the newly created funds filter down, and before people catch on.. Large numbers of people believe what the officials are saying (communications like: we re more worried about deflation than inflation ).. They want you to believe that asset inflation (lower prices for stocks and commodities) translates into monetary deflation.. The two are quite different.. The current asset deflation is caused primarily by gross mistakes made by people in the banking industry.. This assets deflation continues while monetary authorities worldwide are adding to the money supply.. Meanwhile fear then sets in and the decline in asset values continues till it exhausts itself.. As soon as enough people catch on to what is happening, scarce commodities, (and the stocks involved in bringing those commodities to the marketplace), will rise and rise much higher than most people anticipate.. It behooves those of us who understand what is going on, and to position ourselves to benefit from the rise to come by investing in gold, silver, oil, natgas, copper, coal, uranium and agricultural commodities.. Just about anything that the government does not have the ability to produce.. (Government s specialty is cutting down trees into thin slices, adding some ink, superimposing a picture of a former ruler and adding a number, and.. voila.. their product is ready for circulation).. Featured is the weekly gold chart, courtesy.. www.. stockcharts.. The call-out boxes on the chart represent the net short gold positions of the commercial traders.. The report  ...   about when they hear the word "deflation.. " What they really mean is a deflation spiral, with the money supply imploding, credit contacting, large scale bankruptcies, rising unemployment, and falling economic output.. Note that there was not a single month of inflation from 1930 to 1933.. Prices went down and down and down.. For years.. The 1930s deflation spiral ended abruptly in 1934.. Why? FDR took the US off the gold standard and devalued the dollar against gold which remained the international currency for trade transactions.. And this is key there has never been another similar period of deflation since then, in any country.. Ever.. There is a reason for that: since the 1930s no country has been on a national gold standard.. Only one other government made the choice to stay on the gold standard at the time, Germany.. Every other government got off the gold standard in the 1930s and inflated.. Many, such as the US, finally resorted to currency depreciation when the pain got bad enough, exporting deflation.. That was the impetus for Bretton Woods after the war: don't allow a repeat of competitive currency devaluations because nations in a global depression that fight each other with currencies are soon fighting each other with guns.. There were a very brief few months of deflation after WWII as the government attempted, Paul Volcker style, to wring inflation out of the post WWII economy.. But note the deflation scale in this post-Bretton Woods period has now changed from the post-gold standard era where deflations exceeded 30% in some periods.. Since then, no more 30% deflations.. Rarely, for short periods when deflation has happened since Bretton Woods deflation has only once exceeded 10% in one month and has generally been limited to less than 5%.. Take-away: No gold standard, no deflation spirals.. Ever again.. The first years of the 1960s were the golden era of monetary stability.. In fact, life was so good the US government decided to ruin it by starting a war, building the military industrial complex, and launching numerous entitlement programs that we are to this day still kidding ourselves into thinking we can pay for.. After running up a trade deficit that our trade partners feared we intended to pay with devalued dollars, the Europeans figured we were cheating and called our bluff by demanding payment of debts in gold.. So we defaulted.. US to the world: Thanks for playing!.. This was the ugly era of birth of the FIRE Economy.. I won t go into the details here but, clearly, deflation was.. not.. the problem.. I will mention that this is when we came up with the dollar cartel to knock back OPEC and Nixon got to tell OPEC: "Thanks for playing!".. As the Volcker Fed raised interest rates, the US economy experienced a short spike of deflation around -5%.. Since the technology stock bubble popped in 2000, the US has had several months of deflation like that in 2002, 2004, 2006, and 2007.. If you want to call today s period of low inflation a "deflationary period" then you must also call 2002, 2004, 2006, and 2007 deflationary actually more deflationary than today if you look at the graphs.. Meanwhile oil increased from $20 to $147 over that period, which is not exactly a typical symptom of deflation.. Japan also has never experienced a deflation spiral.. They could end their modest deflation, never exceeding -2% in a quarter off and on for more than a decade in short order, but the trade-off for them is a crashed yen so they don't.. I think we'll crash the dollar fighting off deflation.. The critical take-away is that we are indeed experiencing short term deflation.. We call it disinflation here in the context of Ka-Poom Theory to keep readers from confusing the process with the start of a deflation spiral which cannot happen under a floating exchange rate, fiat money system.. The only way it could is if governments around the world all got together and decided to crash the global economy.. That strikes us as unlikely.. More likely one or more will move to reflate using currency devaluation.. If the Fed so desired the US could have 100% inflation by the middle of 2009 as the US did in 1946.. All that is needed is for Congress to borrow a few more trillion into existence to fund old and new liabilities and have the Fed print it because our government cannot borrow the money from overseas or raise taxes, or devalue the dollar, or both.. It s just that simple.. Wish it wasn t so.. Trust your government not to do it?.. Neither do we.. If not deflation, then what? Stagflation?.. Keep an eye on producer price index, commercial lending rates, and wage rates.. These tell you how much your local grocery stores, restaurants, gasoline stations, and other businesses have to pay their input costs as the recession drags on.. As recession deepens, businesses have to cut prices to their customers to meet lower demand.. If input costs don't fall quickly, many of these companies will either go out of business or be acquired by stronger rivals that have more cash or access to credit.. If this goes on for years, as we expect it to, instead of a short drive to the local Home Depot it's a long drive, instead of 10 restaurants to choose from in the area there are five, instead of four grocery stores to visit there are two, instead of four daily flights to your favorite destination from the nearest airport there is one.. The plane is crowded.. You are packed in like a sardine.. The fare is expensive.. Inflation comes not only from surfeit of money relative to goods and services but also a shortage of goods and services relative to the supply of money.. In a couple of years when you get to the one remaining Home Depot in your area that has not closed you will find that it's crowed.. As most of the goods that Home Depot sells are imported, and the dollar continued to decline after the current short term panic into dollars ends and the impact of net negative capital flows exerts its natural downward pricing on the dollar the wholesale prices Home Depot pays will not decline much if at all.. The government will welcome the devalued dollar, as it has since 2002, because the inflationary impact helps counter the deflationary impact of debt deflation and helps the US export position.. Wage rates will not rise because recession will have caused higher unemployment and reduced wage earner's pricing power.. However, at that point there will be few stores (boom market in plywood to cover plate glass windows?) and two or three times as many consumers vying for the same goods, and the cost of imports is up because the dollar had depreciated further; prices may actually rise.. In response, consumers will buy fewer things and will substitute lower quality products for higher quality products, hamburger for steak.. The golden age of the American consumer ends.. Let's say you are an American visiting an indebted country years ago that has lost its ability to extend its purchasing power via foreign borrowing because that is the situation that the US faces today.. For example, Mexico in the early 1980s.. What do you see? You spend your strong dollars so experience prices there as cheap.. You see crowded stores and low prices crowded because the equilibrium price between the cost of goods that stores pay and prices that customers can afford creates only enough demand to support a small number of stores for the local population.. But the people who live there experience the same stores as crowded but with.. high.. prices.. Why? Because while the new equilibrium price for goods is now the same as before or maybe higher, but the purchasing power of consumers has fallen due to lack of access to credit and falling incomes.. That is our future in the US once the spike in the value of the dollar ends and the dollar continues its decline through this recession.. This picture may, however, be distorted by government intervention to support the housing and credit markets to slow debt deflation.. Government spending may further weaken the US dollar.. Then there is the possibility that immigration and trade policy will change to address wage deflation by lowering competition for jobs via restrictions on outsourcing and immigration.. For my take on where the financial crisis and economic recession are going see.. Global Finance Disneyland Demolition.. ($ubscription).. The fantasy is over.. Select.. : The Investment Thesis for the Next Cycle.. To receive the.. iTulip Newsletter.. or.. iTulip Alerts.. Join our FREE Email Mailing List.. Copyright © iTulip, Inc.. 1998 - 2007 All Rights Reserved.. All information provided "as is" for informational purposes only, not intended for trading purposes or advice.. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument.. iTulip, Inc.. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.. Full Disclaimer.. Video Collection.. See our collection of video and audio clips regarding the pending dollar devaluation and the benefits of Gold and Silver..

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  • Title: Kwaves - Barrels of Oil for One Ounce of Gold - Gold and Oil are seldom mis-priced Economic Crisis
    Descriptive info: The Real Price of Oil:.. Dollars, Gold, and the Price of Tea in China.. Written by.. Vito Rispo.. Oil, it s the lifeblood of our society.. It s given us the freedom and wealth we have today.. It s given us automobiles and machinery and greased the wheels of the industrial revolution.. It made old Jed a millionaire.. But oil s in trouble, the price is up and everyone thinks they understand it.. But what if the price of oil wasn t really up? What if it were just an illusion?.. The price of oil is skyrocketing, and that means gas prices are up.. That s about the limit of what most Americans know and understand about the whole oil situation.. But there are more complex issues at work, and they involve more than just Middle East politics and China.. American Geological Institute (AGI).. recently released a report looking at the price of crude oil in relation to the U.. dollar and the price per ounce of gold.. It highlights a fact that probably makes some folks at the Federal Reserve very nervous.. This graph makes it easier to understand:.. The bottom purple line is the price of a barrel of crude oil per ounce of gold (if you wanted to use gold to pay for a barrel of oil).. As you can see, that line is stable, and has been for the entirety of the graph through June 2008, which is about 7 years.. The top two lines are the price of oil in relation to currency (blue is the Dollar and the red is the Euro).. Those lines show that the cost of oil has been going up in relation to currency only.. What this chart makes obvious is that the value of oil.. has not.. been increasing in real terms, currency has just been.. decreasing.. in value.. The 20 year average number one ounce of gold buys is about 15 barrels of crude oil.. Over the most recent 10 years, the average has dropped to 10 barrels.. The previous peak of 26 barrels was over 10 years ago when crude oil was under $20/Barrel.. At the end of 2008, one ounce of gold buys over 22 barrels of oil.. One of two conditions exist.. Either gold is overvalued (ie should be valued at about $400), or oil is undervalued (should be in the $80 range).. Either way, as the above chart shows, this imbalance should not persist for long.. The US dollar is a poor indicator of the real price of oil.. If the US Dollar were still based on gold (as it was until Nixon eliminated the Bretton Woods system in 1971), then the price of oil would be just as stable as that purple line in the chart is.. So oil is worth the same, and the US dollar is just worth less.. Maybe we need to shift our focus away from war and drilling; and towards a better economic policy at home.. Here is the AGI data report.. Whisperings of a New Gold-Backed Global Currency From the BRIC Countries Could Decimate Both the U.. Dollar and the Euro.. Posted Thursday, 25 September 2008 | Source:.. GoldSeek.. By: Vince Byfield,.. dailydose4u.. ca.. With the BRIC (Brazil, Russia, India, China) economies in much stronger shape domestically compared to the sickly U.. and their respective markets already pricing in much of the coming collapse yet to really hit the U.. stocks I wonder when these countries will band together to form a new currency of their own? They may as well, since many global financial instruments already treat them as an economic unit (.. case in point.. And if these countries were to form a new global currency that s 100% backed by gold (like the U.. dollar  ...   of the largest gold exporters to India, says it has seen a spike in sales.. John Reade, UBS metals strategist, says that the near-absence of jewellery demand in India between August 2007 and July left the local market largely de-stocked, hence the tremendous pickup in demand over the past five weeks.. From China: Also big gold lovers, the Chinese government is now openly questioning the use of U.. Dollars as the default world currency.. China paper urges new currency order after financial tsunami.. Threatened by a financial tsunami, the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.. The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States.. -- Posted Thursday, 25 September 2008 |.. | Source: GoldSeek.. Gold, Oil and the Middle East.. Written by, Jim Waters, Kwaves.. com.. -- Posted Sunday, 25 January 2009 |.. The "bargain" price of oil at the end of 2008 is well below 50% of the 10 year average price of oil if you price oil in terms of what 1oz of gold will buy.. The unusual drop in price from June 2008 through December 2008 has been blamed on "demand destruction".. However, the latest reports from the IEA indicate demand has fallen by only.. 2% on a global basis.. (drop of 2mbd from 87mbd to 85mbd global demand).. This should not trigger a 70% crash over 6 months in the global price of oil.. A more reasonable explanation is that oil was a victim of.. forced deleveraging.. by very large hedge funds or possibly a victim of.. oil swaps.. from the.. Strategic Petroleum Reserve.. (SPR).. Assuming gold is conservatively priced at current levels, expect to see the price of oil rise to the historical average of 12 barrels per ounce of gold.. Expect Oil Exporting nations to continue to press for a gold backed currency to replace the US Dollar as the preferred currency for sale of Crude Oil.. The (Arabian) Gulf Cooperation Council launched a.. 10 year plan.. in 2001 to replace the US Dollar as the medium of exchange for oil.. The group met as recently as.. January 2009.. still on track to launch a united (Arab) currency by the end of 2009.. It may not be prudent to assume our oil exporting friends are encouraged by US and European plans to inflate their currencies (using.. quantitative easing.. ) in order to stimulate jobs and the economy.. We may see more reports similar to the recent headlines of.. Somali "pirates".. holding Arab super-tankers hostage as the 2010 deadline of a United Arab currency approaches.. Watch for.. Chinese.. Russian.. , and.. EU.. naval exercises to intensify.. Our friends in China, Russia and Europe are very familiar with the motives of the US in the Middle East.. Watch what countries in the region DO, not what is SAID in the corporate media.. Another possible consequence of the artificially low oil price is more instability in the middle east.. The large drop in oil revenues could be perceived by some oil exporting nations (Venezuela, Russia, Iran, Saudi Arabia, Mexico) as a financial attack by the US.. Since the US is dependent upon most of these countries to purchase and retain US Treasury Debt, those countries may use their Treasury Bonds as financial weapons to restore the historical value of their oil in relation to the value of gold (not US Dollars).. The role of the US dollar as the medium of exchange for the purchase of oil in the world is not guaranteed.. Gold should be a good tool to determine if oil is fairly priced in whatever currency is used.. Written by Jim Waters, kwaves..

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  • Title: Kwaves.com - Exponential Growth of the US Dollar and Debt
    Descriptive info: The dollar has been falling in relation to other currencies since May 2002, the dollar should continue to fall due to the inability of the Federal Reserve to raise interest rates until sustained growth is achieved.. 1776 to 1983 M3 growth $2.. 5 Trillion in 207 years.. 1983 to 1997 M3 growth $2.. 5 Trillion in 14 years.. 1997 to 2001 M3 growth $2.. 5 Trillion in 4 years.. At the Current Exponential Growth Rate:.. We should have hit.. $10 Trillion.. by Dec 2003, however, in Sept 2003, the money supply began to fall.. This may be an indication that the Federal Reserve's interest rate reduction stimulus measures have run their course.. We may see increased printing of dollars and accelerated dollar depreciation in the months ahead.. Thomas Jefferson's Warning.. Given the exponential growth of debt and the US money supply today, it is important to remember the warning of Thomas Jefferson in 1791,.. "I believe that banking institutions are more dangerous to our liberties than standing armies.. Already they have raised up a money aristocracy that has set the government at defiance.. This issuing power should  ...   hope we shall crush in its birth the aristocracy of the moneyed corporations which already dare to challenge our Government to a trial of strength and bid defiance to the laws of our country".. Thomas Jefferson, 1791.. Money is Debt.. Currently, there is about 9 trillion of US dollars in the world but a total of $32 trillion in debt.. If all the US debts were repaid tomorrow, there would be not be any US dollars in the world.. All the dollars in circulation today, are backed up with debts, not precious metals.. Therefore, our economy today is dependent upon more debt creation.. George Washington and the Dollar.. It is unfortunate that the picture of George Washington is reflected on the $1 dollar bill today.. His gift to us was a solid currency backed by gold and silver.. He despised the false promises of fiat money, enough to encourage Congress to impose a.. death penalty.. for issuing the type of money he is now pictured on.. How did our currency loose it's gold backing? For a brief history,.. Where are all the debts coming from? For more info..

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  • Title: Kwaves - Ten Deficits in the US That are Not Going Away
    Descriptive info: Reagan proved deficits don't matter.. US VP Dick Cheney.. So far, the Vice President's statement is true.. Using the Vice President's logic, we can expect many deficits in the economy to continue indefinitely, such as:.. 1.. Trade Deficit.. We are importing foreign goods in excess of exports at a rate of $1 billion/day and hoping that the funds are used to buy US debt.. 2.. Federal Deficit.. US is spending in excess of current receipts by $1 billion per day.. 3.. Social Security & Medicare Deficit.. US has guaranteed benefit payments to retiring baby boom generation when demographics dictate that benefits will exceed payroll taxes in 2018 while current "surplus" taxes cover current retirees benefit checks.. 4.. Housing Affordability Deficit.. House prices will continue to outpace household incomes and interest rates will stay at current 45 year low levels providing cash for more consumer spending.. 5.. Savings Deficit.. Baby boom generation will be able to maintain their current standard of living without saving for retirement.. 6.. Consumer-Credit Deficit.. Consumers will continue to increase spending beyond the growth in their incomes with additional easy money from government tax rebates and credit card debt.. 7.. Energy-Oil Deficit.. Fossil fuel reserves that are controlled by Islamic nations will continue to meet growing consumption of India / China and US at under $40 per barrel.. 8.. War Deficit.. President Bush's policy of "making the world a safer place", will not increase anti-US activities by extremist Islamic factions.. 9.. Credibility Deficit - External.. 10.. Humility deficit.. As a result of huge annual trade imbalances, foreigners now own 2.. 5 trillion of America.. And it'll get worse.. America is currently consuming more than it produces.. In exchange for goods and services (mostly from China), we are exporting US dollars.. Under normal circumstances, this would depress the value of our currency outside the US which we have seen over the past 2 years.. In addition, to keep the US dollar from falling too far, and loosing a trading advantage with the US, our trading partners continue to repatriate those dollars back to the US in the form of US treasury bonds and agency securities (Fannie Mae and Freddie Mac).. This keeps long term rates at modest levels, enabling the US consumer to borrow more money to spend on products made outside the United States.. In effect, we are mortgaging our property to continue to import cheap foreign made goods.. This does little to benefit our domestic job market.. The trade deficit is currently growing at 543 billion per year or a cumulative total of 4.. 3 Trillion through 12/31/2003.. Maybe deficits don't matter.. But out-of-control spending does.. The budget is growing at an annual rate of nine percent.. Yet neither Congress nor the President has any desire to control spending.. Instead, Today's 500 billion annual deficits have reversed a one-time projected surplus of 5.. 6 trillion and will drive America 7.. 8 trillion in debt by 2011.. The three largest items.. in the budget are not expected to decline anytime soon.. Health & Human Services,.. Defense, and.. Interest on the national debt.. A.. Brookings Institution study.. warns that if we do nothing for the next 10 years, problems will get so bad that balancing the budget would require a 41 percent cut in spending on Social Security and Medicare, a 47 percent cut in discretionary spending, or a 17 percent cut in all non-interest spending.. The study also predicts that politically nothing will be done until the crisis explodes.. Social Security and Medicare Deficit.. Social Security will be bankrupt by 2016.. Or  ...   debts became worthless.. Household Balance Sheet Item.. Growth In 2003.. Growth Since 4Q 1999.. Household Real Estate.. 3%.. 45.. 9%.. Household Financial Assets.. 12.. 9.. (1.. 9).. Household Liabilities.. 7.. 41.. Household Net Worth.. 11.. 5%.. 2%.. Wages And Salaries.. 6%.. 7%.. Payroll Employment.. (0.. 1).. 4).. http://www.. contraryinvestor.. com/moapril04.. htm.. We have become a financially obese consumer nation, with little set aside for the future.. Since 1980 the savings rate of American citizens has dropped from eight percent to about one percent.. Only one in three Americans is saving enough to retire comfortably.. The net worth of the average American, exclusive of home equity, is only 15,000.. Without Social Security the average person over 65 would be living below the poverty level.. Easy credit encourages ever increasing consumption.. Today consumer debt is about 2 trillion and increasing.. That doesn't include home mortgages.. Meanwhile, more than one million Americans declare personal bankruptcy annually.. We are a nation living beyond its means, mortgaging the future excessively.. Energy-Oil Deficit.. Economist Paul Erdman recently wrote: One of the great geopolitical cliches of our time is that he who controls the supply, and thus also the price, of crude petroleum, is Master of the Universe, but that's no longer true.. So far the Iraqi war has produced the opposite result intended.. We've driven allies away and hardened alliances among Islamic nations, many of which control the supply and price of oil.. More and more we see deficits in our access to oil.. The rising price of domestic gasoline is just one consequence.. War Deficit.. We are now engaged in World War III, euphemistically calling it a war on terror.. It will continue indefinitely.. Unfortunately, the federal budget omits long-term estimates of maintaining 100,000 military in Iraq, another deficit exceeding 1 trillion over the next decade.. The "security" forces in Iraq will not change subsequent to the official turn-over of provisional authority to the Iraqi counsel on June 30, 2004.. This could be viewed by the Arab world similar to the.. Vichy government.. installed by the German occupation forces (WWII France).. At the point in time that our forces are extracted from Iraq, the.. Shiite majority.. would probably install a government structure similar to that currently in force in Iran.. Credibility Deficit - External.. America's international credibility is near zero due to our failure to find the weapons of mass destruction in Iraq.. Even our allies don't trust us.. And a billion Muslims worldwide now see America as the neo-Christian crusaders attacking their culture.. Conservative talk-show hosts down play pictures of US soldiers "hazing" Iraqi detainees, these pictures reinforce the erroneous stereotypes of American infidels that mock the foundation of Muslim principles currently taught at all levels of.. State schools.. and religious schools called ".. Madrassas.. ".. This reduced international credibility has had little effect on the popularity of the current administration.. However, these external forces are the very same that the US relies upon to subsidize it's consumption deficit in consumer goods and oil.. Humility? We've lost it.. Political historian Kevin Phillips warned us: Most great nations, at the peak of their economic power, become arrogant and wage great world wars at great cost, wasting vast resources, taking on huge debt, and ultimately burning themselves out.. And the cost of our arrogance may compound America's multiple deficits for generations to come.. Warren Buffett offers a tip, he has 31 billion in cash sitting in his Berkshire Hathaway Fund because he says there's nothing worth buying.. If you're a bullish investor, do nothing -- assuming you have a well-diversified portfolio..

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  • Title: Kwaves - Jas Jain DEBT
    Descriptive info: Debt.. by Jas Jain.. Debt in the US is the biggest bubble and the mother of all the other bubbles.. In this regard, Doug Nolland's weekly Credit Bubble Bulletin, for the past several years, is the best chronicle of the process that is headed straight to Greater Depression.. (BTW, Greater Depression is a term that I coined after comparing the imbalances in the US economy in recent years with those during 1925-1934; the term has been picked up by few people who were on my e-mail list during 1998-2000, including James Davidson who wrote a piece with the title of "Greater Depression").. The primary objective of this paper is to quantify what will happen to the US economy when the excessive private debt is corrected, one way or the other, i.. e.. , by a combination of repayments and defaults, and to let you conclude on your own why I think that the Greater Depression is unavoidable.. Higher that we climb up the debt ladder, deeper the US economy would fall during the coming Greater Depression.. Excessive Debt and Economic Imbalances.. Level of debt, in relation to production and incomes, plays a central role in a politico-economic system such as that of the US.. The GDP is a good proxy for the production of goods and services and incomes; hence, the ratio of debt level to GDP is a good long-term forecaster of the economy.. Unfortunately, the long-term could be too long for most people and they begin to believe that it would be different this time.. Mr.. Long-term, like the great Shogun, walks in confidently after all the resistance has been dissuaded, or spent, or obliterated.. Excessive debt creates many imbalances and distortions in the economy.. Asset bubbles, e.. g.. , stock market and residential real estate, are prime symptoms of excessive debt in the US in recent years.. In the beginning, excessive debt feeds these asset bubbles and then the asset bubbles induce households and businesses to take on further debt, thereby creating an unstable condition, positive feedback loops, that always end in an economic downturn as the bubbles invariably burst.. Asset bubbles also distort economic variables like inflation rate and productivity.. Excessive Investment Debt leads to over capacity and it is deflationary.. At some point it leads to increased business bankruptcies and creates recessionnary conditions for the economy.. The over investment in technology during 1990s and the recession of 2001 are examples of this.. Other things being equal, the increase in Household Debt exerts inflationary pressures while decline in Household debt exerts deflationary pressures.. I hope that this is obvious.. As the economy progresses thru the long-term cycle, other things are not equal in terms of inflation.. But, our goal here is to look at how debt impacts various economic variables including the inflation at the consumer level.. Long-term, inflation rate has been falling in the US for some 24 years.. At the end of 2003, the core inflation rate hits its low of 1.. 1% and is up by a percent since.. Yet, this does not reflect change in the long-term trend.. Deflationary, or disinflationary, pressures in the economy are very powerful.. The most amazing thing is what it took to keep the inflation rate from falling - the biggest 5-year borrow-and-spend spree by households recorded in history anywhere that I am aware of.. Productivity reports in the US are a joke.. How do you measure productivity of a financial, or an asset bubble, economy? If the same house by a homebuilder is sold for 2-3 times its price compared to six years ago, as has been the case in Southern California, is everyone involved, except for construction workers, at least twice as productive? Is the person who arranges the loan for 2-3 times the amount and gets his, or her, points, or commission, that is 2-3 times now that much more productive? Or, a realtor, who now earns 100-150% higher commissions by the sale of the same house that much more productive? Quarterly productivity gains at annualized rates of 8.. 2%, 1.. 5%, 2.. 7%, etc.. , etc.. , tell you some thing.. Do actual productivity gains vary that much? How does one measure productivity of a lawyer? Or, a Harvard professor?! For the most part, in the US we get lot worse "education" for lot more money these days compared to the past.. Do we measure the productivity of a highway patrolman by how many tickets he writes? Of course, how could I resist asking about the productivity measurement for Wall Streeters? I think that more and more of wrong kind of "productivity" is taking place.. Anyway, we have a measurement problem.. Let us examine the productivity numbers after all the bubbles have been fully burst.. The productivity measured over the past 25 years is abysmal, but somehow the past 9 years have been wonderful.. Maybe, bubbles do have some thing to do with that.. Debt and Long-Term Economic Cycle.. The above chart has appeared in many articles over the past year and if history is any guide, and I don't know of any better guide, it portends an economic disaster far worse than the Great Depression in the US that lasted for some 20 years despite the huge economic activity during the WW II.. BTW, at the end of 2004, the TOTAL DEBT is higher than 300% of the GDP.. What got the US out of the Great Depression was not the WW II but the normal working of the long-term cycle - the debt was washed out, as can be seen above and the accumulated savings and the pent-up demand fueled the explosive growth during 1950-1965.. In 1950, the private debt, Household Debt plus the Investment Debt, was merely 30-40% of the GDP and the US Govt.. (USG) Debt, at 70%+ of the GDP, was being paid down very rapidly.. And the GDP itself was below its long-term trend-line.. The private debt, presently, is well in excess of 200% of the GDP, maybe close to 250%, as a result of over consumption (fueled by the Household Debt) and over investment (fueled by the Investment Debt).. Excessive private debt leads to the Boom and the washing out of the excessive private debt leads to the Bust.. It is that simple, ladies and gentlemen.. If you take a second look at the debt chart above and focus on the two areas designated as "DEBT BUBBLE," you will see a fit-and trim "person" on the left and a "half person" with huge middle and fat legs on the right.. Sign of the times? :-).. Three Components of Our Debt.. The three important components of the TOTAL DEBT - USG Debt, Investment Debt and Household Debt - have different time horizons when it comes to their resolution if they are excessive, or unsustainable, by historical standards.. Federal Debt.. Regardless of what people think, the USG has been extremely honest, or open, about its debt and has one of the best, if not the best, record of any entity, public or private, in history, of repayment as per the terms.. The idea of the USG "Printing Money" to pay its debt, i.. , not by taxation and borrowing in the open market, is absurd and would not happen until after a financial catastrophe like the Greater Depression, or some other catastrophe like war in the case of Germany in 1920s.. "Printing Money" would be suicidal for the USG and I don't expect the USG to commit suicide any time soon.. Too many powerful people, in the US and around the world, have too much vested in the USG remaining alive and solvent.. A Greater Depression is preferable to death of the USG, i.. , the politico-economic system, as it exists today; and it would be preferable to all concerned.. The USG Debt outstanding today is anything but excessive by historical, or any other, standards.. , as we shall see later when we focus on far more serious and immediate debt problem.. The only time that the USG Debt has been excessive has been during wars and in very case the excessive part was paid off promptly.. By looking at historical data, I believe that a USG Debt level up to 40-50% of the GDP is sustainable very long-term, i.. , hundreds of years.. Any govt.. that enjoys the highest debt rating, as do govt.. of Japan and the US, can sustain much higher level of debt if the interest on that debt is a very small percent of the GDP, as is the case in Japan.. The Japanese govt.. has a huge debt outstanding and continues to run huge deficits to keep its best customer, the US, happy! (Otherwise, the US will accuse the Japanese govt.. of not doing enough to spur growth of the economy; when Americans are in a deep dodo and in no position to tell the Japanese govt.. what to do, the Japanese govt.. will take care of the deficits by a combination of raising taxes and cut spending).. The only problem for the USG Debt is in the future beyond the next 10-15 years in terms of future obligations as those obligations are defined, or understood, today.. Most Americans already believe that the unrealistic level of future promises, e.. , Social Security, would be lowered.. When the time comes, whereby not lowering the promised benefits would hurt the economy and the younger workers, the laws that promised the benefits would be changed.. The thing that matters the most for govt.. debt is the interest payments as a percent of the GDP and that percentage in the case of the USG Debt, approx.. 2%, has been declining for most of the past 10 years and still quite low.. As we shall see, the USG is far more responsible compared with the American households.. Also, the USG is lot more trustworthy than the bankers.. Anyone who trusts Wall Street over the USG, for his retirement savings, needs to have his brain examined.. Those Baby Boomers who are counting on their High Tech stocks and not much on the Social Security for their retirement have a shock waiting for them.. Remember that ten years ago 4-6 trillion dollars of cumulative deficit was projected.. Then, some 5 years ago, a 3-4 trillion dollars of cumulative surplus was projected.. Greenspan had bought into the surplus scenario! Now, we are back to 3-5 trillion dollars of cumulative deficits.. Looks like these projections should be taken with a big grain of salt.. The bottom line is that whatever the USG Debt problem is, it is at least ten years away and lot will happen to the US economy in those ten years.. The focus on the USG debt is a diversion tactic to take the focus away from the real, more serious, and immediate debt problem.. The USG has had budget surpluses, and paid down the debt, several times in our lifetime including during 1998-2001; the last time that the US households paid down the debt, in nominal dollars, was 1944.. ! (In real dollars, the last time that the US households paid down debt was during the deep recession period of 1980-82).. Investment Debt.. Unless explicitly stated, I am not including the stock market as a debt substitute as a part of the Investment Debt.. The Investment Debt is the largest component of the Total Debt and has the sharpest variations over time, especially, during the last phase of the Boom and thru the whole period of the Bust, which in the last cycle covers the period 1927-1951, approximately.. (In the current cycle, it began approx.. in 1996 and could last until 2030 because the bust period of the current cycle would be deeper and last longer).. During the earlier cycle, the Investment Debt was as high as 185% of the GDP during 1935-36 and as low as 30% of the GDP soon after 1950.. During the early 1950s, when the current Longwave cycle began, most of the corporate investment came from the income of businesses and most of the individual investment came from the savings.. That is what 20 years of depression does to the psyche of investors! (What applied to business investment psychology also applied to the stock market, which made a very important low in 1949, the lowest-risk long-term entry point in the last 80 years; the risk at 1932 low was much higher).. Speculative investments are very common in the US.. Thing about speculative investments, by corporations as well as individuals, is that they invariably lead to over-investment as everyone rushes to cash in what is believed, at the time, to be a great  ...   which the Household Debt as a % of the GDP was flat.. This period covers the whole gamut of economic and political conditions - low inflation and interest rates, very high inflation and interest rates, severe recession, strong growth, historically high stock prices, low stock prices, Republican Presidents, Democrat Presidents, war, peace, domestic unrest, racial violence, political murders, etc.. Based on these facts I am of the opinion that a Household Debt level somewhere close to 45% of the GDP is sustainable, very long-term.. Any level of Household Debt above 45% of the GDP is excessive and over long-term it would correct and fall below 45%; and in all likelihood quite a bit lower, because things always over-correct.. Regardless, the fundamental fact is that higher the level of borrowed consumption at any given time, it would negatively impact future consumption.. Conversely, lower level of borrowed consumption today bodes well for the future consumption.. Higher consumption leads to higher GDP and lower consumption leads to lower GDP.. Essentially, borrowing and consuming today means borrowing the GDP growth from the future! Usually, with additional cost in the form of interest.. What Is Driving Excessive Household Debt?.. The "DEBT BUBBLE," especially, the Household Debt, got lot of press and general awareness in the US during 2004.. It would be very bad for the US economy's performance if people became cautious and stopped borrowing more or, God forbid, started to pay down the debt that they already owe.. American households, as a group, have negative "Debt Service Burden;".. they are borrowing the part of payment that goes towards the principal.. , they are borrowing the interest payment, and they are borrowing some more for the good measure! American households are simply piling on debt without much thought.. The data that your own Federal Reserve publishes every quarter show clearly that American households, as a group, are NOT servicing their debt.. Some are, but many are not and they are adding to their existing debt.. But the net result is no "Debt Service Burden" for the group as a whole.. We know that a debtor has a problem when he has to borrow the interest payment and borrows more on top of that.. A simple example would be that a person makes mortgage payments of $1,000 a month for two years, but at the end of two years she, or he, borrows $40,000 more on the house.. Not to mention the fact that she buys a car with 0% interest rate and buys new furniture with no payments until 2008! She feels no "Debt Service Burden.. " But, she does feel the debt burden, as evidenced by surveys.. She wonders how long she can play the game of borrowing the payments.. In addition, the household, or personal, bankruptcy rate in the US has no correlation with the "Debt Service Burden" but high correlation with the Household Debt as a % of the GDP with, probably, 2-4 years of time lag.. The Personal Bankruptcy Filings rate is at the highest since the records have been kept.. I am not aware of any nationwide records of bankruptcies for the period of Great Depression.. It would be very interesting if such data can be extrapolated from what records are available.. There are Households in America whose debt is 3, 4, 5, even 6, times their gross income; that is when they have the job, or jobs.. It is the horrifying distribution of the Household Debt that would trigger the depression when housing prices, the chief source of borrowing, fall even by 10-15%.. Household Debt and GDP Growth.. If you are persuaded that the Household Debt is excessive, based on 450%+ increase in number of Personal Bankruptcy Filings over the past 20 years and many other indicators of debt-distress among households, then the question arises: What will happen to the economy if the Household Debt could not be increased as the % of GDP and at some point it gets back to historical levels?.. Another way to ask the above question would be:.. Where would the US GDP be today had the Household Debt, as % of the GDP, remained at the historically high level before the current run up?.. What if the GDP growth came from growth in the income of households and Household Debt growth that was at 45% of the growth in GDP? The primary reason that I picked the 45% number is that it is the average for 19 years, 1965-1983, and that.. after 1984 the Personal Bankruptcy Filings exploded.. So, we are not talking about a case of no growth in Household Debt; we are simply talking about growth in household spending coming primarily from growth in incomes.. Such a GDP would be a Secular GDP with organic growth.. As some of you may know, growth in household incomes, in real terms, has been poor over the past 5 years (negative for the last twelve months).. How long can debt be a substitute for growth in household spending when income growth is hard to come by?.. To answer the questions posed in the above paragraph, I decided to recompute the GDP by assuming that the growth in Household Debt was at 45% of the growth in GDP.. Further, I assumed that one dollar of additional Household Debt translates to additional dollar of GDP; this I believe to be a conservative number, because it could be closer to $1.. 5 of GDP growth for each additional dollar of increased Household Debt.. Such a recomputed GDP I have termed.. Secular GDP.. 3 below shows graphs of Reported GDP and Secular GDP (projected GDP from historic household debt levels).. You will notice that during 1940s and 1950s the Secular GDP was above the Reported GDP, with peak difference at the end of the WW II.. Longer term, the Secular GDP has the Pull Effect going forward.. Also, you will notice that about half the time, notably 1955-1984, the two graphs are close to each other; this doesn't prove anything but lends some credence to the methodology employed in arriving at Secular GDP.. During most of the Fall and early Winter of the economic Longwave, the red is expected to be above the blue line, but before the Winter could end the blue comes on the top decisively.. It will happen again over the next twenty years.. The wide gulf that has opened up between the red and blue, especially, over the past 5 years, reminds one of the gulf between the Red States and the Blue States in America! Currently, the Secular GDP is 58% of the Reported GDP; this means that the US GDP would have to decline by 42%, in real terms, just to give back the borrowed growth from excessive borrow-and-spend by the households.. And thing are likely to be worse than this because the red will fall significantly below the blue before it is fully resolved.. This would be Greater Depression in all caps and would lead to massive dislocations of the economies and the governments all over the world.. US Economy is Dependent on Household Debt Growth.. What would happen if the Household Debt in the US stays the same, i.. , new borrowing by some equals pay down by others just for one year? The US economy would enter depression instantly! You do the math - in 2004, Household Debt is estimated to have INCREASED by $1,050B while the GDP is estimated to have increased by $700B (both numbers are in current dollars).. But for the increase in Household Debt driven growth, the GDP would have declined at least 3% in nominal terms and 5% in real terms.. The 2.. 2 million additional jobs would have been replaced by the loss of 9 million jobs in just one year.. If you include secondary and tertiary effects, we are talking about lot worse than the immediate effects listed above.. And what would it create in American minds? SHOCK AND AWE! Americans will become dumbstruck.. I don't know the exact date of when this process would be triggered, but it will not be three more years.. It is likely to be in quarters, in single digit.. All these numbers are annual rates.. For 25 years, 1950-1974, the Reported GDP grew at 3.. 65% and Secular GDP by 3.. 04%.. For the past 25 years, ending in 2004, the Reported GDP grew at 3.. 01% and Secular GDP by a meager 1.. 03%.. Do you notice something interesting? The Secular GDP growth for the earlier 25 years equals the Reported GDP some 30 years later.. The Secular GDP has the Pull Power.. For the past 5 years, the Reported GDP grew at measly 2.. 15% while the Secular GDP has been falling at 2.. 56% rate.. If it weren't for the excessive Household Debt, the US would have been in depression since 2000.. If you look carefully at the Secular GDP (blue) graph in Fig.. 3, you will notice that since 2000 it has been dependent on growth from Consumer Spending feuled by Debt! The borrowed economic growth must be paid back.. And with interest.. There are no defaults or bankruptcies here; only heavy penalties for late payments.. Let us see how long Americans can keep piling on consumption debt.. At some point they will get buried in the pile.. Had the bankers, Central or private, kept a watchful eye on the level of debt in the economy, and set the interest rates accordingly, we wouldn't have the booms and the busts and the wealth and income inequality that we do have.. Keeping interest rates at artificially low level is the worst aspect of the Central Planning of the US economy in recent years and there will be hell to pay.. The name of this hellish period in the US would be Greater Depression.. Our bankers have baked this in the US E-Con cake.. It is better to be safe now than be sorry later.. Methodology and Debt Components.. All the raw data for the graphs are from official sources, e.. , Federal Reserve.. Wherever there are discrepancies in various series from the same source, due to revisions, I have adjusted the data towards what I believe to be the later revision.. Debt data from 1945 onwards are from the latest Federal Reserve revisions, with minor adjustments as appropriate, and data prior to 1945 are the best extrapolation from the available data.. The emphasis is primarily on data after 1950; the data from 1929 to 1950 are primarily to understand the workings of the long-term economic cycle, i.. , the Longwave.. For 2004Q4, I have assumed the same level of increase in the Household Debt, USG Debt and the GDP as 2004Q3.. data refers to consumption related debt, as individual debt for investments is excluded from it.. There is a tiny component under the category of "other" included in the reported Household Debt.. Yes, one's residence is a consumption item; it is an expense like any other expense regardless of how one chooses to pay for it.. If one borrows on his, or her, residence and spends on cars, motorcycles, vacations, or other consumption items, a common practice in the US these days, it is very much a part of the consumption debt.. The.. US Govt.. (USG) Debt.. data is the actual debt that is outstanding.. The book entry of Social Security Trust Fund and all other future obligations are not a part of the USG Debt outstanding, which is a contractual obligation, i.. , a non-payment as per the terms would result in default.. future obligations.. , including the Social Security payments, are NOT contractual, i.. , the terms, or the "formula," can be changed at any time!.. The laws that made the future promises could be, and would be, changed when it becomes obvious that they simply couldn't be fulfilled without crushing the younger workers with a level of taxation that would leave very little incentive to work hard; and thereby crushing the economy.. Another important component of the Total Debt, and the largest, is Investment Debt, both individual, including partnerships, and corporate.. The debt owed by.. local governments (LG).. is small in comparison to the Household Debt, the USG Debt and the Investment Debt.. Its impact on the economy is local and over a shorter period of time because local governments are required to balance their budgets over a period of few years rather than decades.. Recent events in California are good examples of this.. The LG Debt is certainly not hanging on the neck of the US economy and the local govt.. Jas Jain,.. the Prophet of Gloom and Doom..

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  • Title: If Only... Perfect Gold Investment
    Descriptive info: If we could write the script for the perfect backdrop to a true bull market environment for precious metals let see where we stand.. IF ONLY.. By: Richard J.. Greene, Thunder Capital Management.. Government spending.. is out of control with little regard for bringing budget deficits into balance;.. Trade deficits.. are mounting toward new records despite a more than 30% decline in the value of the dollar;.. Inflation rates.. and.. employment statistics.. were actually much worse than the Government reported figures;.. Real interest rates.. were to remain negative for an extended period of time, not only destroying the purchasing power of savings, but also encouraging the misallocation of capital to assets with artificial demand;.. Government sales.. of gold and silver were to subside or diminish;.. Production and Demand.. annual amounts are bullish for both gold and silver;.. The trend of the.. Dow/Gold Ratio.. is bullish for gold;.. There are huge.. short positions.. in gold and silver that could not be delivered;.. Loose regulations.. on the CFTC to encourage dangerous short positions existed;.. A major.. lawsuit.. was underway to uncover the manipulation of gold and silver prices from attaining true market prices, (allowing us the gift to purchase almost unlimited amounts of gold and silver now at what is surely below market prices);.. The masses, particularly in the US, were so uneducated in the histories of.. fiat money.. systems and historical prices of gold and silver, allowing for the buying opportunity of the millennium;.. The  ...   of.. financial derivatives.. , (last estimated by the BIS at $234 Trillion notional);.. biggest savers.. in the world, Asians, believed in gold and silver;.. Other commodity prices.. such as gas and oil are soaring.. goldinfo.. net/silver600.. html.. Historical price of gold.. in 1998 dollars.. Relax precious metals investors.. While there are many things to worry about in this world, including many of the things listed above, your choice to invest in precious metals is hardly at risk.. Most of the things on this list have already occurred or are in the process of happening.. These are the very reasons you would want to invest in precious metals in the first place.. In the past few months, there are undoubtedly investors of precious metals fleeing the market; prices have come down.. Many do not understand why they were there in the first place and are selling because they stopped going up, technical chart patterns have broken, etc.. etc.. , but the fundamentals have NEVER been better and are getting better every single day.. Just look at their selling as your opportunity to buy at a generous discount to true value.. You are among the few who are buying true value in the markets today.. Richard J.. Greene.. May 28, 2004.. (Other articles by the author can be accessed by the Research Articles choice at:.. thundercapital.. ).. -- Posted Wednesday, June 2 2004.. Previous Articles by Richard J.. This page printed from:.. http://news.. goldseek.. com/ThunderCapitalManagement/1086183273.. php..

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  • Title: US Debt Bubble will Influence Gold Silver and the Economy
    Descriptive info: Click the individual steps for more details.. Taken from.. Financial Sense News.. HOME PAGE..

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  • Title: Kondratieff Long Wave Cycles Past and Present
    Descriptive info: Kondratieff Long Wave Cycles Past and Present.. The Kondratieff Theory.. Nikolai Dmyitriyevich Kondratieff (1892 - 1938).. Who Was Kondratieff?.. To introduce the Kondratieff Theory, we must go back over seventy years and examine a remarkable story in economic history, encompassed within the life of one still little known man.. I am certain that, in time, Kondratieff will rank with the giants of discovery as Einstein and Newton.. Like these men, his insights have begun to alter radically and permanently our perceptions of economic history.. The Kondratieff wave cycle goes through four distinct phases of beneficial inflation (spring), stagflation (summer), beneficial deflation (autumn), and deflation (winter).. Since, the last Kontratyev cycle ended around 1949, we have seen beneficial inflation 1949-1966, stagflation 1966-1982, beneficial deflation 1982-2000 and according to Kondratieff, we are now in the (winter) deflation cycle which should lead to depression.. Professor Nickolai Kondratieff.. ( pronounced Kon-DRA-tee-eff ) Shortly after the Russian Revolution of 1917, he helped develop the first Soviet.. Five-Year Plan.. , for which he analyzed factors that would stimulate Soviet economic growth.. In 1926, Kondratieff published his findings in a report entitled,.. "Long Waves in Economic Life".. Based upon Kondratieff's conclusions, his report was viewed as a criticism of Joseph Stalin's stated intentions for the total collectivization of agriculture.. Soon after, he was dismissed from his post as director of the Institute for the Study of Business Activity in 1928.. He was arrested in 1930 and sentenced to the Russian Gulag (prison); his sentence was reviewed in 1938, and he received the death penalty, which it is speculated was carried out that same year.. Kondratieff's major premise was that capitalist economies displayed long wave cycles of boom and bust ranging between 50-60 years in duration.. Kondratieff's study covered the period 1789 to 1926 and was centered on prices and interest rates.. Kondratieff's theories documented in the 1920's were validated with the depression less than 10 years later.. Today, we are faced with another Kondratieff Winter (depression) when the majority of the world anticipates economic expansion.. Each individual needs to weigh the risk of depression in light of Kondratieff's work.. Accumulation and Consumption.. U.. S.. wholesale prices dating back to 1800 show several periods of accumulation followed by periods of over consumption.. Because these periods are statistically difficult to measure our outline follows historical events, pinpointing major changes in trend.. During periods of relatively cheap prices, assets accumulate.. As prices increase, the consumption of assets are necessary to maintain a standard of living.. When new production fails to keep up with consumption, due to relatively high prices, the economy begins to decline to another period of cheap prices, and a new growth cycle begins.. Four Phases of One Cycle.. A Kondratieff cycle consists of four distinct phases, or distinguishable, dramatic mood changes, the tone of which determines the actions of individuals involved in the economy.. The awareness of these characteristics allows for the anticipation of the change in the economy and the psychological mood that will prevail.. SPRING - Inflationary Growth Phase.. A common premise among business cycle economists supposes inflation as an inevitable part of growth.. Government becomes a passive participant in the inflation cycle.. Growth begins from a depressed economic base and expands in an ever-increasing spiral.. The interaction of the participants within the economy causes wealth, as represented by savings, and the production of capital equipment to be accumulated for the future.. The expansion of production and affluence causes prices to rise, and the increased volume of goods requires a higher velocity of money, thus creating a higher price structure.. Historically, the growth phase requires 25 years to complete.. During this time, unemployment falls, wages and productivity rise and prices remain relatively stable.. The mood of the growth phase is one of accumulation and the desire for new product manufacture.. Accompanying growth is a shift in social demands.. As wealth is accumulated and new innovation introduced great upheavals and displacements take place.. The process of social unrest builds with growth culminating in massive shifts in the way work is defined and the role of the participants in society.. SUMMER - Stagflation (Recession).. Eventually, the continuation of exponential growth reaches its limits.. Excess capital produces a shortage of key resources and the economy enters a period where growth creates a shortage of resources.. An economy will only support expansion to the limits of its resources, both human and material.. The mood of affluence also brings a change in attitude towards work.. As an economy gets closer to its limits inefficiencies build up.. The imbalances of this period have been historically exaggerated by what can be labeled a peak war.. Examples such as War of 1812, the Civil War, World War I and Vietnam, came at the end of a very affluent period.. These Wars produce strains on the economy increasing the impact of inflation.. A dramatic drop in output, rapid rise in unemployment and unusually severe recession characterize this period.. Although this primary recession is short lived lasting only three to five years, it is key in altering perceptions and the structure of the economy.. No longer does excess create an abundance.. The Limits to Growth now define a maximum level of economic activity that traps the economy into consolidation and tight bounds for the next 20-25 years.. With the change comes a conservative shift in the popular mood reinforcing the limits.. AUTUMN - Deflationary Growth (Plateau Period).. The primary recession occurs out of an imbalance forced upon the economy by real limitations.. The rapid rise in prices and changes in production correct this imbalance -- at least temporarily.. The change in price structure, along with the mood of a population used to consumption accompanied by the vast accumulation of wealth from the past 30 years, causes the economy to enter a period of relatively flat growth and mild prosperity.. Due to structural changes and the limits of the existing paradigm the economy becomes consumption oriented.. Excesses of an unpopular war, along with fiscal liberalism, cause popular reaction toward stability or normalcy.. A mood of isolationism permeates.. The plateau period generally lasts seven to ten years and is  ...   interest rates and all the stimulation in the world has failed to bring it out of its slump.. We are witnessing merely the beginning of the debt implosion that inevitably follows the excesses.. The collapse of the tech market and NASDAQ, Enron, Aldelphia, K-Mart, Global Crossing, WorldCom, Arthur Anderson and numerous others are the corporate face of the scandals and the debt collapse.. On the country side we have the implosion of Argentina and possibly Brazil, which would imperil all of Latin America.. African countries never seem to be out of bankruptcy.. As the job losses mount the consumer driven economy will fall into a deep funk and the consumer will go through their own debt implosion.. As occurred at the end of previous Autumn plateau K-wave's (1920-1929) the winter that followed revealed numerous financial scandals.. This one has been no different.. Enron and WorldCom are big and visible but are they merely the tip of the iceberg? The Autumn plateau K-wave brings on excesses in both the stock market and the board room.. Even the early part of the Autumn plateau K-wave had its share of scandals and debt implosions with the insider trading scandals of the 1980's followed by the debt implosion and scandals of the Savings & Loans.. If the 1990's were a decade of loss of faith in government for its excesses of debt buildup then the first decade of the millennium will see the same occur with capitalism and the corporation.. One of the more intriguing characteristics of a K-wave winter is the buildup of sinister forces that are religious in nature.. The 1930's saw the rise of Nazism that led to WW2.. But in an earlier generation K-wave winter in the latter quarter of the 19th century we saw the rise of the Klu Klux Klan as a backlash to the South losing the Civil War.. Today it is the so-called war on terrorism led allegedly by Muslim fundamentalist fanatics.. There is a titanic religious war being played out.. The Arab/Palestinian/Israeli conflict has the attention and imagination of conservative evangelistical religions in the United States.. It is their belief that the current conflict was ordained in the Bible and will ultimately lead to the apocalypse.. The President of the United States George W.. Bush owes his election to these same conservative religious groups (as was Ronald Reagan before him).. Many of his key aides are cut from the same cloth.. Thus the many references to God and evil empires that dot President Bush's speeches.. The religious right firmly backs only Israel in the conflict.. They view Israel as integral to their fermentations of the coming apocalypse (Time Magazine - The Bible and the Apocalypse, July 1, 2002 Vol.. 160).. On the other side conservative fundamental groups, some of whom see glory in suicide bombings, are swaying the Muslim world.. We have entered the downside of the current K-wave.. This wave could last anywhere from nine to twenty years as we saw in earlier winter K-waves.. The K-wave is the rise and fall of a generation and covers both the social and economic life of the period.. The ancient Mayans knew of the inevitability of the cycle and took steps to mitigate its effects (although ironically in the end it did not save them).. Our challenge will be to see that we come through so that once again we can rebuild.. The current winter K-wave is still young.. We have noted in the past that following a speculative bubble things have a tendency to return to where they started or stated another way the gains of the previous period are wiped out.. Already some stocks such as Nortel Networks have fallen 98%.. Other big names are just disappearing period.. We highly suspect that the NASDAQ will ultimately lose at least 90% of its value from the top.. That means a fall to at least 500 over the next decade.. We have already fallen about 75%.. For the Dow Jones Industrials, in theory at least that could translate into a fall back to 1000.. While that may be only for some super bears vivid imagination we believe that at a minimum the Dow Jones Industrials will ultimately fall at least 50%-60% or down to around 5000.. The highs of January 2000 are but a dream for years to come.. The current 4-year stock cycle is coming to an end.. Some thought it ended last September 21, 2001.. It may still be in play and could bottom in early July 2002 although we suspect it will, following a summer rally, bottom later in the fall of 2002.. That should set up a decent run in 2003, which should allow for graceful exits for those still caught in the malaise of the first big drop.. That would set the next cycle bottom for around 2005/2006, which could be the ultimate low for the markets.. Time of course will tell.. The Winter of the K-wave is a dangerous period.. But it will be eased for those holding gold or gold stocks.. That new bull market is still in its infancy and may yet face a significant shakeout to make its final bottom.. But we would all be wise to hold at least a little gold.. The winter of the K-wave is upon us.. See.. Cliff Droke's theory.. on a 2008 to 2014 "hard winter".. THE KONDRATIEFF WAVE.. Peaks and troughs are associated with major political or cultural events.. Summary.. Probably Kondratieff's greatest contribution to the science of investment is not his observation the world economy operates in long cycles.. Cycles would suggest a repetitive nature to events.. While the underlying economic conditions will repeat over time due just to the physical nature of our world, our reactions will always be tempered by knowledge and experience.. The history of man has been one long climb higher.. Kondratieff recognized progress as the irreversible trend.. Imposed upon our progressive nature are the physical limits of life.. It is the interaction of these physical limits with our dreams and aspirations that creates the constant push pull of the economy known as the Long Wave.. March 2002..

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