Re: [Review] Book: _Empire of Debt_, by Bonner and Wiggin
- From: Lee Knoper <saztac4i@xxxxxxxxxxxxxxxxxx>
- Date: Sat, 19 Aug 2006 05:00:35 -0700
X-No-Archive: yes
On Fri, 18 Aug 2006 17:56:44 -0600, sylvan butler
<ZsdbUse1+noZs_0608@xxxxxxxxxxxxxxxxxxxxx> wrote:
I read the book (public libraries are great... request and
most of the time get it just about as fast as ordering from
amazon, but I do have to go pick it up).
Thanks for your followup, sylvan.
You're absolutely right - and in hindsight I'm embarassed not to have
mentioned this option.
When I lived in rural southeastern Arizona, a small retirement
community several miles south of me built and staffed a beautiful
library. I regularly used the inter-library loan feature. The books
came from libraries all over the country, usually within two weeks.
Here in the big city, budget cuts have made library operating hours a
shell game, so this option has dissolved into the ground clutter on my
radar. However, the library's online presence does make it easy to
check availability and place a "hold for pickup" book request.
I purchased the book in question from the Amazon seller's market and
later sold it there. The net loss was less than the cost of half a
gallon of gas. (How's that for a metric?) I can walk, bicycle or
take the bus to the library, but for someone in less amenable
circumstances the cost of access might be a consideration.
It is interesting, but as always, don't put all your eggs in
one basket. Diversify!
Yes indeed. The contrarian economists have also suggested adding
timber, oil and certain construction commodities to one's investment
portfolio. (China's boom is a big factor here.)
Nickel is one of the mentioned commodities. Developments in the
nickel market, as reflected in recent price movement on the London
Metals Exchange, may even overarch current Congressional thoughts
about removing the penny from circulation. Unless "down-alloyed" or
replaced with aluminum or plastic, the nickel may have to go, too.
I specifically mentioned gold and silver for two reasons.
First, the U.S. economy is in an +unprecedentedly+ perilous condition.
Analysts believe we may be at the base of a 20- to 30-year bull run in
precious metals. Spikes in the runup could exceed what occurred
during the 1978-1980 upset - and could also take place in a much
shorter time frame. (The more pessimistic forecasts envision windows
of anywhere from about two weeks to only a few days.)
The bull run is expected to start in the "near term." Interpretation
varies, but at present none exceeds roughly 30 months. Election
timing may be a factor. Upticks could occur so rapidly that it may
literally be advisable to cash purchase at least a little gold or
silver NOW even if one has outstanding short term debt - because the
increase in the [dollar-denominated] spot market value of precious
metals may sharply outpace the highest APR cap on any debt. Even
ardent "gold bug" financial advisers are loathe to offer this kind of
advice, because it strongly goes against the established dictum of
paying off one's debt =first=. (The harsh reality is that almost
everyone is in debt.) It's a truly rare occurrence, and underscores
the uniqueness and severity of the situation.
One particularly eye opening analysis surfaced in mid-June. By that
time the Federal Reserve had incrementally hiked the prime rate each
month for 16 months. Theoretically that action should have made the
dollar more attractive by "controlling inflation." (Of course, in a
fiat economy this assertion is an insider's joke, because throughout
its entire 93 year existence the Fed has only =increased= inflation
and progressively destroyed the dollar.)
Nevertheless, Asian central banks had became sufficiently worried
about the U.S. economy that, beginning in April, they reduced their
purchases of U.S. Treasury obligations in favor of other currencies.
Had this nervousness become more widespread, then:
A 'run' on the dollar, caused by panicking foreign holders
attempting to sell into non-existent buying, could cause the
dollar to collapse very suddenly, even over a matter of
days. [1]
Caribbean and U.K. central banks picked up the slack....but closer
inspection revealed that technically they don't have the necessary
liquidity. "Therefore, they are acting for a third party, and the
only party that would buy dollars when a loss in value is inevitable
is the US Treasury." [ibid]
Admittedly the analysis is speculative. But if correct, it's a
remarkably hairy development. Essentially Treasury used old debt to
covertly purchase new debt simply to keep up the appearance of market
interest!
It can work for a while, but inevitably if the US becomes
the only major customer for its own currency, the dollar
will go into freefall. [ibid]
Second, discussion in this forum tends to consider "worst case"
analyses and aims for the basics.
Past traffic here evidences some confusion about selecting an economic
frame of reference, and about understanding the distinctions between
the characteristics of money, the functions of money and the relevance
of precious metals to preparedness.
However, almost no conferee doubts the value of having on hand -some-
quantity of precious metals for preparedness purposes. This interest
reflects an appreciation of a store of value, preserving accumulated
wealth and having a medium of exchange.
By zeroing in on gold and silver as basic, historical stores of value,
the book addresses the above issues.
Like most conferees, I monitor a wide variety of threats and
vulnerabilities. Granted, my assessment could change overnight, but
right now the economic picture is at the top of the list. A 1970s-
style stagflation may the most optimistic scenario.
As usual, everyone, YMMV....
Lee_K
Emitting bills of credit, or the creation of money by
private corporations, is what is expressly forbidden by
Article 1, Section 10 of the U.S. Constitution.
-- U.S. Supreme Court, Craig v. Missouri, 4 Peters 410
Endnote
[1] "Dollar on the Edge," by Whitley Strieber, Unknown Country, 12
Jun 2006; <http://www.unknowncountry.com/news/?id=5349>.
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