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Showing posts from December, 2010

Richard Russell's Observations on the Current Gold Bull

Today's gold bull market, Russell writes, is "one of the greatest and least appreciated bull markets in history.  Take in this series, you may never see its like again.

2000 -- $273.60
2001 -- $279.00
2002 -- $348.20
2003 -- $416.10
2004 -- $438.40
2005 -- $518.90
2006 -- $638.00
2007 -- $838.00
2008 -- $889.00
2009 -- $1118.40
2010 -- ?

"I've been around a long time, and I've studied many primary bull markets.  And now I want to venture a few of my observations.

"In markets, I have never seen a series like the above end with a whimper or a fizzle.  The end or the wind-up of such a series usually arrives with an upside 'explosion,' as those who have failed to participate in the series finally rush in to join in the apparent endless advance. . . .

"A great primary bull market is an expression of something changing in a very fundamental and meaningful way.  Following a great bull market, the world is never quite the same."

Read the rest.

Why Ron Paul? Krugman asks

Paul Krugman's article When Zombies Win, published last Sunday, claims that free-market fundamentalists have been a dominant political force in D.C.  In Krugman's words,
When historians look back at 2008–10, what will puzzle them most, I believe, is the strange triumph of failed ideas. Free-market fundamentalists have been wrong about everything — yet they now dominate the political scene more thoroughly than ever.Krugman takes aim at Ron Paul, who is set to chair the congressional subcommittee that oversees the Fed.   Krugman asks,
How did that happen? How, after runaway banks brought the economy to its knees, did we end up with Ron Paul, who says "I don't think we need regulators," about to take over a key House panel overseeing the Fed?Krugman is not asking a serious question, but we can take him seriously for a moment.  How did that happen?

The short answer is: By popular demand.

It happened because of growing distrust of the big banks and of the government tha…

iPad & iPhone Christmas Concert

Proof that Bernanke and pals can't stop youthful creativity:

Charlie Rose interviews three gold experts

New York Times acknowledges Ron Paul

Rep. Ron Paul, G.O.P. Loner, Comes In From Cold

By KATE ZERNIKE  NY Times

Published: December 12, 2010




WASHINGTON — As virtually all of Washington was declaring WikiLeaks’s disclosures of secret diplomatic cables an act of treason, Representative Ron Paul was applauding the organization for exposing the United States’ “delusional foreign policy.”

For this, the conservative blog RedState dubbed him “Al Qaeda’s favorite member of Congress.”

It was hardly the first time that Mr. Paul had marched to his own beat. During his campaign for the Republican presidential nomination in 2008, he was best remembered for declaring in a debate that the 9/11 attacks were the Muslim world’s response to American military intervention around the globe. A fellow candidate, former Mayor Rudolph W. Giuliani of New York, interrupted and demanded that he take back the words — a request that Mr. Paul refused.

During his 20 years in Congress, Mr. Paul has staked out the lonely end of 434-to-1 votes against legi…

Ron Paul Claims Chairmanship of Monetary Policy Subcommittee

As reported by Mike Shedlock (Mish) with an accompanying YouTube video:
Proving that on occasion the little guy can indeed win, Ron Paul announced tonight that he will be named Chairman of the Monetary Policy Subcommittee.

When asked if he would take over chairmanship of the subcommittee, Paul replied "The chairman of the financial services subcommittee, Spencer Bachus, has told me today verbally that I will be the chairman of that subcommittee. He was the one who appointed me as the ranking member and he is sticking to his guns and that I will have responsibility of that committee."

When asked about subpoenas and "audit the Fed", Paul went on to say that he can issue subpoenas but would need agreement from the chairman [Bachus] as well as speaker.Needing such agreement might render Paul's appointment toothless.  But it's a move in the right direction.

Also from Mish: Bloomberg Poll Shows More Than Half of Americans Want Fed Reined In or Abolished

Obama cuts deal, offers to extend tax cuts

From Bloomberg:
The dollar rose to near a 10-week high versus the yen as speculation that extended U.S. tax cuts will bolster the economy drove Treasury yields higher and boosted demand for assets denominated in the greenback.

The U.S. currency gained against most of its other major counterparts as 10-year Treasury yields surged to a six-month high after President Barack Obama late Dec. 6 agreed to extend tax reductions for two years. . . .

Obama said he would accept lower tax rates on high earners’ income, dividends, capital gains and multimillion dollar estates for the next two years in exchange for extending federal unemployment insurance. The tax rates, enacted in 2001 and 2003, were set to increase on Dec. 31.Where are the spending cuts?  Is Obama going to pay for all this with Bernanke's QE?  This only guarantees more price inflation (i.e., dollar devaluation).  Gold and silver may have dipped in recent days but long-range their trend is consistent with everything else denomi…

An Essay on Sound Monetary Policy

This will be a short essay, appropriate to the topic at hand.  It consists of a quote from Milton Friedman, found in Joseph Salerno's outstanding book, Money, Sound and Unsound, p. 366:
If a domestic money consists of a commodity, [such as] a pure gold standard or cowrie bead standard, the principles of monetary policy are very simple. There aren’t any. The commodity money takes care of itself.  [emphasis added]
Imagine that.  If we have sound money we don't need the Fed.  Or Congress.  We just need sound money.

End of essay.

Postscript:

Economist Nouriel Roubini recently attacked the gold standard.
Roubini raises the following question: If you are on a gold standard, or modified gold standard, what do you do in the event of a bank run—if you don't have enough gold to fully back the currency?Translated: What happens if the banks have created bogus IOUs for their depositors' gold?  Suggestion: Have them indicted as embezzlers.  Gold doesn't "back" anything.  …