[Money-matters] MOney Matters Update Dec 16 2008

Wed Dec 17 03:26:59 UTC 2008

With the Fed's statement, policy makers joined the Bank of Japan as the only
other major central bank in modern times to mix a policy of steep rate
reductions with quantitative easing, or the strategy of injecting more
reserves into the banking system than needed to keep the target interest
rate at zero. 
Japan's central bank kept its main rate at zero from 2001 to 2006 while
flooding the banking system with extra cash to encourage lending, spur
growth and overcome deflation. The abundant funds failed to prompt lending
by commercial banks, which expanded their reserves at the central bank
almost nine times by early 2004. 
Marc's Notes
Well, Japan tried it and they are 20 years into their recession with
property down 85 % since the peak. Welcome to ZIRP. ( Zero interest rate
policy as it is known).
The Feds lowered rates again today and promised to buy just about every sort
of debt known to man. They will stop at nothing to "get the banks lending
again" and thereby destroy your currency and probably the US as we know it.
Now more then ever, they are embarking on Ludwig Von Mises  "Crack Up Boom"
as detailed in this link.
http://www.dailyreckoning.com.au/crack-up-boom/2007/06/26/
The FEDS are going by the BOOK in their monetary policy that every banana
republic has tried before us, none have worked. They fail to see the
difference between making stuff to pay off your debt OR making more debt to
get the banks "lending again". They continually try to get the consumer
"spending" again thinking that will bring back our economy. Since when is
getting into debt and spending on stuff you cant afford making a strong
economy? Not in any world I come from!
Incredibly, history is RIDDLED with governments that have tried this and
none have succeeded. NONE. You cannot print your way to prosperity.
So be it. You must prepare for the inevitable. Trillions in deficits
resulting in an eventual crashing US dollar and all things denominated in US
dollars. Obama will add to the bill. I will support him for now, but if he
starts doing the same sort of monetary insanity, I will call it as I see it.

Don't let the recent dollar strength fool you. It is doomed. There can be no
other way. It is inevitable. The only question is how long it will take.
For now, you have time to prepare. Bless them for that time. Most will not
prepare and go down with the ship. Don't be one of them.
What to do in the coming months:
A stock market rally is underway. Read the "Crack Up Boom" thesis listed in
the above link.  You can ride this rally to some profits if you are nimble,
but only for day traders. (see below). I will update you when the tide turns
negative. For now it is neutral.
Get "real" money, that is gold and silver. Stocks are ok for now but get
physical metal in your possession. 
Get money offshore and in other currencies. ITS EASY!   Email me for free
booklet. When push comes to shove, they will attempt to take everything you
have, either directly or by INFLATION. (The stealth tax without the bill).
Interest rates WILL RISE. Count on it. They will monetize their debt for
now.  See show #3 ( yes I predicted it that far back !) That means they will
buy their own debt with more printed money. A neat trick if you can get away
with it.  The world WILL tire of our shenanigans eventually.
When they do, pray it is orderly. If not, an all out dollar collapse could
be swift and devastating. I hope it wont be.
Look for rising interest rates on Treasuries first. We are not there yet. In
fact interest rates are still falling. This will "suck" in all the dumb
money. That is the way of markets, separating the ignorant from their money.
Look for inflation to raise its ugly head from the pond sometime late in
2009, maybe sooner. Meanwhile, DEFLATION is still with us (falling prices).
Yes, I know it's complicated. These are the EBBS AND FLOWS of market
turbulence. Look also for "black swans", unforeseen events, which occur as a
result of distortions caused by not allowing natural corrections. The FEDS
are hell bent on not allowing our natural "forest fires" to clear out the
rot. The result will be an inferno when it finally lights. Such is the
nature of things.
Meanwhile, there is money to be made. Precious metals, oil, commodities- all
will rise soon. It is already happening. Those slaughtered in commodities,
DON'T FRET. Your money is being returned to you soon. DBC, Uranium, Oil,
OIH, UNWPX, Gold stocks, foreign currencies, all will reflect a new down leg
in our dollar by RISING.
Our dividend payers are still paying and rising slowly. Also note the slow
rise of your foreign currency funds. They paid you while they got beaten up,
now they are still paying you as they start their rise again. Look for
increasing balances in your accounts. Meanwhile, you can keep taking the
checks as I do. Both UNWPX, IFN and BEARX paid huge dividends.
Day Traders:
Auto trades are up from our buy-in price but today are flat. HOLD for the
bailout that will be announced in a day or 3. Then sell on the POP.
Housing and retailers- the time to short is coming- WAIT FOR NOW. I hold NO
retailer shorts for now. You can ADD a real estate LONG  ( URE) for the POP
when they announce the mortgage bailout  that is coming. Sell a few days
after the announcement as housing stocks will suffer long term, but will go
UP until the bailout is finalized.
Obama Trades- Infrastructure stocks- ok to ADD small amounts now, more
movement in January as inaugurations approaches. Load up now for maximum
gain. Look to valve, engineering, pumps, concrete, construction, water and
similar stocks.
Banks- This one is a market beta neutral group for now (moves with the
markets) and is a wild card. There are many more banks going under but with
all this FED money, banks may not crater as they would if left to their own
hell. Could go either way. Your call.
Summary:
Patient is on steroids so his actions are unpredictable. The law of
unintended consequences will be in full effect. I know not what they will
spawn but whatever it is wont be good.
All for now- Website coming!   Really cool and interactive ~  Cant wait
until we announce it.
Upcoming shows:  3 weeks off and much needed rest. Tuesday newscasts at 6.30
pm as usual.
Have a great Holiday if we don't talk again.
Marc
Special Posting: ( read below).
"A democracy is always temporary in nature; it simply cannot exist as a
permanent form of government. A democracy will continue to exist up until
the time that voters discover that they can vote themselves generous gifts
from the public treasury. From that moment on, the majority always votes for
the candidates who promise the most benefits from the public treasury, with
the result that every democracy will finally collapse due to loose fiscal
policy, which is always followed by a dictatorship." 
The average age of the world's greatest civilizations from the beginning of
history, has been about 200 years. During those 200 years, these nations
always progressed through the following sequence:
*	From bondage to spiritual faith;
*	From spiritual faith to great courage;
*	From courage to liberty; 
*	From liberty to abundance; 
*	From abundance to complacency;
*	From complacency to apathy;
*	From apathy to dependence;
*	From dependence back into bondage
Another American Tragedy is in the making. A much bigger Ponzi scheme that
will shock every person in America is still operating. It is being conducted
by the U.S. government and your elected politician leaders. It is called our
National Budget. With most of our spending on automatic pilot, the aging of
the baby boom generation will put tremendous strain on our economic system
in the coming years. Medicare costs will explode over the next 40 years. The
increasing debt will result in interest payments on the debt becoming the
largest expenditure in the federal budget. The longer we wait to address
this unavoidable train wreck, the more likely it will result in generational
war between the baby boomers and younger generations. Mandatory spending for
agriculture subsidies, unemployment benefits, civilian and military pensions
and health benefits continues to grow. The ponzi aspect of this system is
that we continue to pay out benefits by printing money. We are obligated to
pay $53 trillion that we do not have. Social Security has run at a surplus
since its inception. The money is not in some lockbox. Your trustworthy
leaders have spent all of the surpluses ever generated by Social Security to
keep the ponzi scheme going. The game will end as it always does, badly,
bankrupting millions of our citizens.

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