Perhaps the best Money Matters Update ever written. A MUST read. Jan 5, 2009

Marc's Notes:

The index of signed purchase agreements, or pending home sales, dropped 16 percent as Americans waited for a first-time buyer tax credit to be extended, the National Association of Realtors said today in Washington. This is a prelude of an article I am writing for the UNION this very day. The article details the stimulus and how we are now a nation of addicts- addicted to stimulus government money. Without it, the economy falls back into heavy recession. Every indicator that shows positive is a direct and sole result of stimulus money. Withdraw the stimulus and back down we go. There WILL be an end to how much money the government can create and keep pouring into the economy at some point. Where and when that point is reached is the million dollar question. Will foreign investors pull the plug first, or will some rogue country start selling dollars one evening to a stunned world the morning after? Or will Washington finally realize there is NO AMOUNT of money they can print to pay off all the accumulated debt and finally capitulate in its attempt to ward off the inevitable. Who knows? But what we do know is what they are trying has never succeeded. Never. This is not my opinion. This is an historical fact. There has never been an economy rescued by government funding. Maybe temporarily, but once critical debt levels are reached; there is no stopping nature’s correction of excesses. What is that level? A magic percent of GDP. (Everything we sell and service in the entire nation totaled up).
At this moment total debt to GDP in the United States is 98 % of GDP give or take. The ONLY time this was higher was in WW2 to fund the war in 1945 at 121 %.  Nations smaller then us have experienced currency collapse at anything approaching 70 %. That we can approach 100 % is because we have the reserve currency of the world. Our currency is used for trade world wide and right now there is no currency strong enough to takes its place. But a new reserve currency or facsimile thereof is being discussed by the IMF. Perhaps a basket of currencies which might include gold. We will see. The good news in all of this is gold will probably re-emerge as a valid means of measurement. It always does. It has represented its anchor qualities throughout time as paper currencies experienced what they always experience. Eventual destruction, though the abuse and greed of governments. What we are seeing is nothing new. Even our founding father THOMAS JEFFERSON said: “I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] and they will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
Did you read what he said? Centuries ago. How can we refute such a statement from such a man, describing our current situation in such detail? It is almost frightening. That the past can move so convincingly into the present is eye opening to say the least. This should be a wake up call to all of you. What we are seeing is NOTHING NEW. Jefferson knew this. But generations forget previous generation’s mistakes. The mistakes of man are repeated, over and over, by subsequent generations. This is what we are seeing today. Jefferson’s warning remains valid to this day, and has never been more applicable. So the question is, what do we do?
The powers at be will not capitulate nor change their conviction that they can print their way to prosperity until they are FORCED TO. Nature ALWAYS triumphs, as she IS the nature of things. She is the natural order of things. Nature cares not of mans intentions. What will happen WILL HAPPEN. You cannot thwart the natural way of things. Markets WILL correct, they will heal themselves, and without mans intervention. In fact it IS mans intervention that tries and prevent natural forces from occurring. But they WILL occur. Which means our attempt at stimulating a recovery is futile. The markets will correct. It may take more time. The government can delay the correction, but not stop it. That’s why I KNOW what will transpire WILL transpire. History will be our guide. The end is ALWAYS the same. A year from now, 2 years from now, or 10 years from now. Unless the government stops this debt creation to try and solve a DEBT problem, the US dollar will COLLAPSE. It is inevitable.
Nature demands it, history confirms it.
What to do:
A listener said I don’t give solutions. He obviously is not following MONEY MATTERS. Here is what HISTORY says MUST be done. Not me, not US COMPTROLLER David Walker, not Ben Bernanke, nor Warren Buffet, not President Obama, nor anyone else who ignores history. History dictates a HANDS OFF policy. Let nature do what it does best. Correct excesses, purge debt, purge mal-investment, clear out the rot in the system, let failed companies fail; let those who made bad decisions reap their just desserts. It may sound cruel, but it MUST happen to save this nation, indeed the money printing nations of the civilized world. There can be no other solution. There can be no other outcome.
Buy gold, silver. Keep growing your gardens. Buy some foreign currencies. Buy some stocks (yes), buy some contrary funds, keep money in countries that respect your privacy, be armed, be self sufficient, get out of debt, get some cash, keep most of your money safe, (See the Dream Portfolio) get economically educated, be aware, keep your friends and family close, develop local relationships and help your neighbor do the same thing. Be compassionate, help those in need and stay healthy so you can help others that may not have access to this information. After all, it’s about US, you and I and your fellow man. Isolate yourself as much as you can from prying governments but stay involved. Write letters and lobby your politicians for sensible change, not create more debt. And above all, secure your finances to protect your family and loved ones. (See previous updates).

We still have the right to secure our future. Even though those governing us make mistakes, they CAN learn, they can be awakened. Do what YOU can to improve our situation, our future, our heritage both as individuals and as a nation.
That’s all for now. I hope I have made you think. At least a little.
Money Matters airs this Thursday at noon, PST on the greatest station on earth. KVMR FM.
Marc

PS: I would like to thank Clare for giving me the inspriation to pen this update. Without her, I would never received the insight needed to put these words down on paper in the manner of which it was written. Thank you my little one.