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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers

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To: Rarebird who wrote (11264)	5/14/2006 8:35:46 PM
From: John McCarthy	of 78417

Hi Rarebird .... just my dumb ass 2 cents ..... you gotta start with the top line which is USA Taxpayer INFLOWS ---> US Governament OUTFLOWS ... = NET TERRIBLE DEFICIT everything else is subsumed by and secondary to the above .... Per the budget plan (sic) OUTFLOWS exceed INFLOWS and (as you know) the difference is made up by selling US Tres. (primarily) to foreigners ...... about 2 1/2 billion USD per day .... as/IF we let the dollar TANK THEN nobody buys that (INFLOWS less OUTFLOWS) = DEBT = 2 1/2 billion USD per day BECAUSE the interest rate req. (on the Tres.) to protect against the uncertainty of the FUTURE value (decline )of the STINKY dollar becomes unknown/uncertain/too risky ... I am NOT certain what happens THEN (I.E. nobody buys the debt)... because it has never happened before ..... to my knowledge ..... Notwithstanding ... Everyone (the world) will quickly realize as we go down ... they go down ... meaning THEIR unemployment level(s) will go thru the roof .... as an aside: don't have the link but somebody wrote that China is willing to take an annual 4% deprecation of their USA holdings because its worth 25 million jobs. I can't verify this, etc. but it is what one of those pundits wrote a few months back ... in any event ... that trillion dollars China has in THEIR bank becomes 750 million then 500 million then 250 million and so on .... simply due to the lower dollar .... this is already happening and contrary to some posts around SI - China can't sluff off all those dollars to some other dumb foreigner .... such that THEY have the problem ... doesn't work like that ..... all that dumb foreigner does is require the China person to give them MORE DOLLARS for their trinket (product) ..... e.g. change the price of their trinket from 1 USA dollar to 2 USA dollars which - in effect - reduces the trillion USD in their bank to something less .... To stop this bleeding and get the dollar back on track .... we need to reduce the net diff. between INFLOWS and OUTFLOWS ..... which would lower that 2 1/2 billion nut we are so hooked on .... However, for reasons I will never fathom a republican regime is operating on the premise that ".... deficits don't matter" (Cheney said that someplace on TV I've been told) if true, then this is the true perfect storm ..... benkey has nothing to do with it and probably understands it better than most .... If he takes the rate up then: resultant USA unemployments MEANS less INFLOWS (go back to the top of this post ) and because OUTFLOWS are FIXED we have a NET LARGER DEFICIT than we PLANNED to have thereby requring more selling of MORE DEBT leading to a greater devaluation of the dollar ..... If he does not increase rates : on the surface things are better because no unemployment hit and therefore BUDGETD INFLOWS come thru the door as planned .... the unforseen bad thing though is all world wide goods PRICES will rise in order to deal with the STINKY DOLLAR and we will therefore IMPORT INFLATION .... the net effect of which is HIGHER OUTFLOWS (see top of post) and we're back in the same hot water ... It boils down to this: --------------------- this years defense budget has 24 F-22's in it its a wonderful airplane. I think they cost $400 million per plane (please confirm) I would feel safer with them but I'd rather NOT build them .... because I cannot afford to build them .... If someone else would rather have these planes, fine, but we then we MUST cut spending on something else ..... In closing, You don't have to worry about gold soaring .... just watch LONG TERM INTEREST rates .... their up-ness = STINKY DOLLAR .... as long term interest rates ACCELERATE gold will accelerate faster ..... this has already started ..... and nobody on the planet can control long term interest rates ... as I said, just my dumb ass 2 cents ... I really enjoyed your post and just wanted to offer my tainted perspective on things ... regards, John McCarthy

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