“It now seems that Barack Obama and Ben Bernanke here in America are the equivalent of a combined level 9.0 earthquake, tsunami, and nuclear disaster elsewhere.”
“The only reasons that anyone anywhere would buy or accept the Yen, Euro or Dollar right now is because they are either stupid or mad or have no choice (like retirees on Social Security). Get out! Get out! Get out! Put your retirement immediately into gold and silver . . . this government has not shown itself worthy of your trust.
Credit Worthiness Doubts Plague the Once ALMIGHTY $$
Gold Prices Soar, S & P Makes Long Overdue
Negative Critique of U.S. Credit Rating
Gold prices moved to their highest in history in response to monetary shocks involving the Euro and the American Dollar. The incalculable damage done to America's once proud monetary system (for 60 odd years now, the Dollar has been the world's reserve currency) by the policies of Barack Obama and Fed Chief Ben Bernanke over the last twenty-seven months have just received their long-awaited first official comeuppance. Standard & Poors has for the first time in history yesterday put a “negative” outlook rating upon the AAA credit rating of U.S. government Bonds.
The American credit rating has never been anything but “stable” up till now. This long overdue move put American stock markets in a tailspin at least for Monday, 2011’s official Tax Day. Gold finished the day at $1493.00 per ounce while silver climbed to over $43.70 per ounce on the dramatic news. In contrast, after being down over 250 points (1.9%) for most of the session the Dow Jones Industrial Average ended Monday off 140 points or down over 1.14%. The announcement by S&P and the falling of the Euro combined for a bad day for financial markets in the West.
European nations are taking a belated but realistic look at the devastation that the insolvency of the P.H.I.G.I.E.S. countries (Portugal, Hungary, Ireland, GREECE, Italy, England and Spain; with England recently showing semi-drastic policy-change in support of their economy) where the specter of non-stop bailouts has created huge ripples in the world currency and stock markets. The debt crisis in Europe, despite the bailouts has seen the European community as a whole show evidence of some belt-tightening. Here in America, however, Barack Obama has been spending and creating entitlements and big government like a maniac . . . and he’s been willfully abetted by the inflationary policies of Bernanke.
The United States is one of just nineteen governments that enjoy S&P's highest, triple-A sovereign credit rating. It has had that rating, and a stable outlook, since 1941, when Standard Statistics merged with Poor's Publishing to form S&P. S&P’s two predecessor agencies also gave the United States their highest ratings. S&P's warning came as a surprise, but only in the sense "that somebody decided to say the emperor has no clothes," says Howard Simons, a strategist with Bianco Research.
“If an agreement (on cutting deficit, national debt and UNfunded liabilities in the U.S.A.) is not reached and meaningful implementation does not begin . . . this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns,” New York-based S&P said today in a report that maintained its top rating on U.S. long-term debt while lowering the outlook to “negative” for the first time.
By comparison, S&P is widely rumored to be considering lowering the Japanese bond rating because of the effect of the three-pronged disaster that struck that Island recently. Up to now Japan has enjoyed an AAA rating with a “negative” outlook but been able to sell their bonds at lower interest rates because besides eschewing inflationary monetary policies, the Japanese are a long-reputed “nation of savers not debtors” and the internal demand for the nation’s bonds among its people is very high. It now seems that Barack Obama and Ben Bernanke here in America are equivalent to a combined level 9.0 earthquake, tsunami, and nuclear disaster** elsewhere. Rajjpuut looks at some crucial wealth-protecting alternatives to normal investing in the footnotes including so-called “Forever Stamps.”
Standard & Poor’s put the U.S. government on notice it could lose its AAA credit rating unless policy makers agree on a plan by 2013 to reduce budget deficits and the national debt. “If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns,” New York-based S&P said in its report.
S&P said there’s a one-in-three chance that the rating might be cut within two years and that its “baseline assumption” is that Congress and the Obama administration will come to terms on a plan to reduce record deficits. Treasuries and the dollar rebounded from early losses following the statement, while stocks declined. Another financial rating service, Moody’s Investor Service, which has a stable outlook on U.S. debt, today said the U.S. budget debate is “positive” for the country’s credit. The S&P action puts pressure on Obama and House Republicans to come to agreement on plans to reduce the national debt, which S&P says could rise to 84 percent of gross domestic product by 2013 roughly a 25% increase from where it was when Obama took office in January, 2009.
In response, House Majority Leader Eric Cantor called the S&P warning “a wake-up call for those in Washington asking Congress to blindly increase the debt limit.” S&P’s negative outlook “makes clear that the debt-limit increase proposed by the Obama administration must be accompanied by meaningful fiscal reforms that immediately reduce federal spending and stop our nation from digging itself further into debt,” the Virginia Republican said in a statement. Overseas investors hold about half of the roughly $9 trillion in outstanding marketable U.S. debt, including $1.2 trillion held by China and $ 0.9 trillion held by Japan. The specter of the Japanese government and China selling out American bonds and not renewing has many in Washington worried.
S&P failed to mention the $14.29 trillion debt ceiling, but said that if current American budget negotiations fail, it might not be possible to get an agreement until at least the 2014 budget cycle. Our Treasury Department has said the borrowing limit will be reached no later than May 16, at which point it will turn to emergency measures that provide borrowing room through about July 8. Republican leaders in Congress have said they will NOT back increasing the debt ceiling unless Obama agrees to more specific steps to trim the budget deficit, estimated to top $1.6 trillion this year, as well as agreeing to significant cuts. Nevertheless, despite all the attention the Dollar has recently received, the Euro is balancing on the edge of disaster and the Euro has risen in recent months compared to the Dollar. It seems that many worldwide investors are stuck in their ways considering only two currencies. Gold and silver, however, have seen meteoric rises in value compared to the Yen, Dollar and Euro.
Yes, there are other currencies more at risk. But the U.S. has, relative to its AAA peers, very large budget deficits and rising government indebtedness and the path to addressing these is not clear according to the S&P report. The report also said that from 2003 to 2008, the U.S. total government deficit fluctuated between 2 and 5 percent of gross domestic product. "Already noticeably larger than that of most 'AAA' rated sovereigns, it ballooned to more than 11 percent (under Obama) in 2009 and has yet to recover."
Ya’all live long, strong and ornery,
Rajjpuut
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The reader surely noticed that worldwide investors have for the most part shown little imagination in lining up their investment options for the last decade. The only reasons that anyone anywhere would buy the Yen, Euro or Dollar right now is because they are either stupid or mad or have no choice (like retirees on Social Security). Get out! Get out! Get out! Put your retirement immediately into gold and silver (or into “Forever Stamps” ???) . . . this government has not shown itself worthy of your trust.
Taking the tiniest step to purchasing old-fashioned hard money (gold and silver coinage) would have provided investors a boost of roughly 450% in the case of gold and 420% for silver in the last decade. WE ARE LIVING THROUGH INFLATIONARY TIMES . . . fiat, paper currency (paper money NOT backed by gold and silver) is at great risk. Of course, one can always buy bullion gold or silver . . . but the advantage especially of junk silver (90% silver U.S. coins minted before 1965) is that they come in a “package” people are used to dealing with. Robert Ringer (author of “Winning through <despite> Intimidation”) and Harry Browne (author of “How I Found Freedom in an Unfree World) as early as 1973 were touting the opportunity in “junk silver” following the LBJ years.
After LBJ, Carter and now after Obama gets through with us . . . junk silver looks to be among the smartest investments possible. Shortly after the government began taking the silver content out of dimes, quarters and half dollars (55.5% in 1965 under LBJ; and the rest in 1971 by Nixon) the price of silver reached $1.65 per ounce, the break-even point. Silver is now at $43.87 per ounce. When it reaches $51.15 per ounce it will have earned its investors in 1965 3000% gain plus the original value. Let’s say two more things about silver . . . .
Silver is heavy, so for those hoping to store great wealth: alternatives like gold, platinum and palladium are much more desirable in the short run. Let Rajjpuut urge you, however, to keep a lot of silver handy. Why? Because . . . .
A. Silver is a very, very handy and very recognizable unit of exchange for emergency uses and even for everyday purchasing.
B. A strange thing has happened in industry. Gold and silver have always been necessary for manufacturing especially in electronics for both metals and up to recently in photography for silver. The fact is that because of silver’s relative cheapness, it has been the preferred metal in industry. Since when used industrially, a metal is seldom recovered . . . silver, at any given time is now RARER than gold in human hands. (It’s still easier to mine silver which is often found with gold in the earth and more common, but silver because of its cheapness is used so much more frequently in industry that the amount of silver held for wealth repository or for jewelry is less than the amount of gold. Rarity makes things valuable so in Rajjpuut’s twisted mind, silver is the better buy.
C. Historically the easily most common ratio of gold to silver value has been in the 15/1 – 16/1 range. So if gold is worth $1500 than IF the ratio was holding, silver would be selling at $100 per ounce about $150 higher than its present value. So again the balance of value now favors silver.
Silver, alas, is heavy. Gold, platinum and palladium are so very valuable that making small purchases with them is not feasible . . . here’s another alternative: so-called “Forever stamps.” Background: when he was a boy, Rajjpuut lived in Germany and had a brief spell as a junior philatelist, a stamp collector. One of the most remarkable things he experienced was the beautiful mint Adolf Hitler stamps he collected with tiny values like 60 pfenning (then 15 cents American) compared to stamps issued during the German Weimar Republic with enormously high values like 200,000 Deutsch Marks many of which even had the original cost blacked out or just lined through and a higher value printed upon them. The four Deutsch Marks to a Dollar before World War I eventually reached $26 TRillion DM to the buck by November, 1923, at the height of their severe inflation (about the time Adolf Hitler became a well-known national name by attempting the “Beer-Hall Putsch” in Munich <that is, attempting a coup d’ etat at pistol point upon the Bavarian State>). What’s that got to do with the price of tea? The U.S. Post Office “leadership” has decided they can save on printing costs and inconvenience for customers and themselves by printing “Forever Stamps.” The post offices hope to avoid constant rushes of huge customer lines for 1-cent, 3-cent, 5-cent stamps, etc. in their facilities when they start changing stamp prices more frequently due to rising## inflation.
The idea is that stamps printed without a price label and only the words “First Class” written upon them will be issued. Again: notice that NO price will be shown. So, if say, the price of a first-class stamp is now $.50 and the cost of first-class postage increases to say $5.00 per letter in four years, for example . . . even though postage has increased nine times to now cost ten times the original value, the postal customers’ old stamps still do the trick. In INFLATIONARY times that’s a huge boon for the customer savvy enough to have bought in bulk early on in the inflationary history. Stamps, of course, are light but need more protection from the elements especially water. For convenience sake the best way to buy in Rajjpuut’s not-so-humble opinion is in 100 stamp rolls which come in a protective seal. So a 100-roll of stamps today costs, say $50.00 and will do the same trick as a 100-roll of stamps four years from now, but the hundred-roll of stamps at that time in the future costs $500.00. For those doing a lot of posting, the value of keeping ahead of postal rates is obvious. For the rest of us, stamps can be used as a very convenient form of MONEY.
Of course, collectible stamps and coins are also great storehouses of value, however, unlike everyday items like ordinary silver coins and ordinary postage stamps -- which both can be used easily AS MONEY – collectible items are “illiquid.” “Liquid” means easy to dispose of. Dollar bills are highly liquid, but valuable stamps or coins are hard to get rid of without losing a lot of money, because stamp collectors and coin collectors interested in paying you what the item is truly worth are hard to find especially during financial crisis. Pawnshop dealers might give you 35%. So, at most only 5% or 6% of your “portfolio” should be tied up in illiquid assets whatever they be, unless you are amazingly rich . . . in which case, you’d buy lots of valuables and hie thee to a safer haven where inflation is not a prospect. Rajjpuut hope this overview on protecting your wealth helps. He also hopes his 100% wrong about the need to take such extraordinary means. However, in his estimation, these are desperate times courtesy of BHO and call for desperate measures.
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Is there any advantage from Forever Stamps for the Post Office, you might ask? Once purchased, a forever stamp is a perpetual stamp that never expires or declines in value. It's value, therefore, is the First-Class Mail stamp postage rate for a one ounce letter at the time of use (not the purchase-day cost) . . . so isn’t the post office risking bankruptcy? Perhaps not! First of all, the Post Office gets an immediate cash flow. Nobody buys those 100-stamp rolls and uses all 100 immediately . . . if they’re such a big operation and need 100 stamps or more per day, they get a special rate and print their postage labels right at their business. These Forever Stamps are aimed at the individual postal customer. So the post office saves on employees manning their front counter and has all this cash to use now when prices are what they are now, not what they’ll be in the future . . . with good management (oh-oh?!) they’ll stay well ahead of the curve and might show a string of profits for once. However, if the hyper-inflation -- that Bernanke and Obama seemed hell-bent on giving us -- comes about, that might be a different story. People all over the country who’ve bought up dozens or hundreds of Forever Stamps using them like money in exchanges with tiny businesses who use even five to ten stamps daily could put a dramatic strain on the post office finances. Besides Rajjpuut might go into the “Forever Stamp” counterfeiting business . . . .
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