Tuesday, October 27, 2009

Peter Schiff: Ben Bernanke = Jack Madoff

This video is about investing in the current climate. The discussion of hyper-inflation spooks me. I've been waiting to get back into the stock market. My pension fund, TIAA-CREF, does not permit commodity or UDN (counter-dollar) investment. There is an international stock fund, though, but no commodity fund.

I missed the rally from May until now but I caught it from Thanksgiving until May. Schiff is recommending international stocks. I agree with his basic analysis. I'm not convinced it's straight up for the stock market, but it's suicide to hold bonds and dollars. I'd rather be in commodities and gold than international stocks. In my personal fund, I'm gradually getting back into gold and commodities and in TIAA-CREF gradually back into international stocks.

Also, I rode the dollar rally out in Euros and lost some money, but it's coming back quickly. In the stock market I'm down about 5-6% since June '08 (less since January '08) because of overly aggressive buying of gold stocks in fall '08, which was against my better judgment. But I was right on principle then and now. The dollar is going out the window, unless you trust the Republicrat Socialists to turn around and raise interest rates. That would cause the depression that is going to occur under any circumstances anyway. You can expect further dollar declines. The Republicrats are in a state of denial, and denial compounds pain.

The cause of these problems is the Federal Reserve Bank. Unless Americans decide to change the fractional reserve approach to banking, there will always be booms and busts. Unless they decide to eliminate the Fed, there will always be accentuated depressions. The Great Depression of 1930-1940 was entirely the result of Fed policy, compounded by dumb government fiscal moves by Roosevelt and Hoover.

The geniuses in the Republicrat Socialist Party are turning the United States into a third world feudal estate. The lords of the manor are George Soros, his Messiah, Barack Obama, and, most of all Obama's, Bush's and Henry Paulson's 12 apostles on Wall and Broad, who have been granted many, many trillions of dollars, not only in the recent "bailout", but via the Federal Reserve Bank for the past century.

You will note that the fundamental principle and theme of all academic and media left-wingers is the claim that Federal Reserve transfers to Wall Street are absolutely essential because of the threat of deflation and because they cannot imagine any other system than one in which large sums of money are counterfeited and handed to hedge fund managers. While advocating the Federal Reserve system, they simultaneously shed crocodile tears about income inequality, which is chiefly the result of the Federal Reserve System. Well meaning socialists, who would not be fooled by con men with their own money, happily believe the Ochs Sulzbergers' nonsensical claims of concerns for the poor, as the ideas that they advocate suck the nation dry.

What is the moral sense of people who fight to preserve a system that causes income inequality, and then claim that they hate income inequality? American universities and the American left are the intellectual class for the new feudalism, dictatorial rule by Wall and Broad and their puppet-king, President Obama.


vakeraj said...

I recently started reading "End the Fed" by Ron Paul. He states that, because the value of the dollar has fallen by 95% since the beginning of the Fed, the government has consumed 95% of the wealth produced by this country over the course of the past century. Is this a valid assertion?

Mitchell Langbert said...

The bulk of the benefit from the monetary creation goes to the following:

-large, leveraged investors (hedge fund managers, Wall street, real estate)
-large corporate borrowers

Additionally, mortgage holders and small borrowers benefit to a smaller degree.

The inflation that the new money causes does not occur at once. Those who get the first dibs on the counterfeit benefit most. Much of the new money has been handed to Wall Street and hedge fund investors such as George Soros. In the late 1980s Long Term Capital Management, an early hedge fund, was lent one trillion dollars, according to Roger Lowenstein in his book "When Genius Failed". These large borrowers, including government but also big business, big real estate, and most of all the financial community have been the chief beneficiaries

You will notice that no one tracks the route that borrowing takes. But it is easy to understand conceptually. Those who buy groceries and gasoline pay higher prices. Those who own stock and real estate (or who speculate in currency in the carry trade or buy whole companies or profit from increased speculation and buying and selling) benefit.

Government benefits and is the cause, but there has been the creation of a new class of billionaire and hundred -millionaire and above hedge fund owners who have gravitated toward Greenwich Connecticut, Manhattan and North Dakota, who have benefited the most individually.