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To: RetiredNow who wrote (59649)	6/4/2002 12:40:53 AM
From: bambs	Read Replies (4) \| Respond to of 77397

old fed quote from 1935 "The Fed simply cannot be isolated as the cause of our economic problems. It is not all-powerful. It's overall objective is to maintain an adequate rate of economic growth, low levels of unemployment and reasonable price stability. But its principle job under present condition is to supplement fiscal policy. The fiscal problem continues to be one of heavy deficit financing, and the Fed, whether it likes it or not, is required to provide adequate reserves to the banking system in order for the government to finance its needs, even when that is inflationary." page 321 this quote's if from the fed chairmen Eccels around 1935's. I'm loving this book...helps to sort out lots of things in my head. explains how the fed uses the discount window and repo's in order to ensure that treasury auctions go well...that all the government paper is always bought and interest rates remain stable...and at a rate that is being targeted. Clearly, all though this statement is about 70 years old. It applies today..the rules that the fed operates under haven't changed. the government is now bust. the debt is climbing every year. the deficits are only going to get larger and at some point down the road they will have just forgive there own debt. perhaps the fed will out right buy t-bills themselves at a closed auction with no interest rate. there-by allowing the government to refinance parts of it's debt with no interest charge which would eliminate interest expense help to get ride of deficits and insurmountable national debt..perhaps that will be a way out...thing is ..it don't matter...the government has to spend. the fed must print money to meet those needs...it will be inflationary...and as foriegn holders of us dollars (investors and nations holding as a reserve currency) wake up to what is really going on here..there will be flight out of the us dollar or at least serious inflation...mostlikely in silver in gold..true stores of value. when the US dollar dumped the gold standard it was the reserve currency of the world. that event was a big blow to the dollar. The Saudi's and OPEC weren't about to sit back and sell oil for paper. quickly the price of oil went up 4 times. gold spiked in a few years from $35 to $875...less then 8 years it went up 25 times. 25 times the $250 bottom. is $6250 / oz. don't think for a minute that this can't happen. another point about 1972. when Nixon finally dumped the gold standard it was because the US couldn't meet the claims gold from foreign holders of dollars. Up until 1972 the US was supposed to guaranty the paper US dollar with gold. anyone could come and exchange $35 us dollars for 1 oz of gold. Well...in 1972 enough foreign holders of US dollars did that to force them to break they tie...to break the promise. at $35 an oz in '72 the US had about $18 billion in gold. The foreign claims on gold totaled $38 billion ...more then double the US gold reserve. The US basically said screw you! The paper you have is no longer convertible into gold...it's also important to remember that the $38 billion was just those that had made claims...think of what would have been claimed if people knew the Gold standard would be dropped in a few years...not even counting individual and corporate foreign investments in US dollars, just reserves held by other countries amounts to $1.4 trillion ish today. you can then add a couple trillion t-bills held just buy individual Japanese people...etc etc etc...the numbers are insane... just as inflation when crazy then and the dollar tanked and gold spiked...it will happen again...people will soon come to realize what we already know. much of the central bank gold has been leased and sold to give the appearance of strong currency's and tame inflation. Reality is...everyone has been convinced that gold sucks and it's a terrible investment. Well...as it becomes clear that it's a good investment it will attract more capital. It won't take much to get the ball moving. All the gold stocks in the world are currently worth about the same as McDonalds. So, think about it...what would you rather own...all the unmined gold in the world or McDonalds. Don't forget either that even after this massive wash out in dot.coms yahoo ebay and amzn combine to equal near all the gold companies in the world. CSCO is worth 3 times them all. GE 7.5 times them all. Nortel on the verge of bankruptcy and after hitting $2 as share today is still worth about the same as NEM the worlds largest miner. Amazon.com is worth 1.5 times NEM...Dell (a frigging pc distributor) is worth about double all the gold companies in the world. i could go on forever with crazy comparisons. 40 billion ain't much...there a few people in the world that personally have net worth's over 40 billion. in the week of sept 11th the US government printed 280 billion. 40 billion is nothing. it's peanuts. at the peak yahoo was worth 140 billion. csco, msft, ge and intc all had market caps of about 500 billion. the nasdaq market cap was 6 trillion. the nyse stocks about 26 trillion. 40 billion is pocket change. many hedge fund mangers personally manage well over 100 billion dollars. so many people are waiting for pullbacks...less then 1% of the public is invested at all in the gold sector. in 1980 when gold was over $800 about 10% were. Understand, this shit is going to run for at least 5 - 10 years. Until the US government comes clean and figures out what they are going to do about inflation and massive deficit spending. well, that's my rant for tonight... going to bed, Bambs