Money Matters Airs Tomorrow! Update June 2, 2010

Marc's Notes:

The trouble with governments is that they always get larger. Governments throughout history have expanded until they can expand no more due to the cost to maintain them. Most governments start out with good intentions with central planning evolving around national security and law enforcement not covered by the states. Mediation between states is also a function of a national government as well as breaking up or managing monopolies. But as forecasted by many before us, as soon as the public learns it can vote in the candidate that promises the most from public purses, the Democracy begins to self destruct. An originator of the Constitution said “ Gentlemen, I give you a Democracy, if you can keep it”.

It was also said we would not be destroyed by invading foreign armies but destroyed from within.

 

Read this article:http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=12243:bernanke-fiddles-while-us-burns&catid=47:us-commentary&Itemid=132

It tells it like it is>

Simply put, as soon as the government begins down the road of helping people socially, democracy is doomed. People fail to understand governments cant socially help one without robbing from another and as soon as you do that, you begin to take away incentive for people to produce and encourage people to live off the fruits of others. I know that not helping people sounds cruel, but by doing it, you disembowel the very root of mans drive- the drive to succeed because you keep what you produce.

A Biblical verse is “Reap what you sow”.  It also says “If thou shall not work, thou shall not eat”.

I am not saying NOT to help those truly in need such as the mentally retarded or severely handicapped, but what we see now has gone way beyond that. I see people walking around that appear healthy but collecting disability. Welfare recipients are not required to work for their money. Unemployment insurance pays out billions to able body people, as does food programs, work programs, school programs- you name it programs. Grants dole out billions more, as do subsidies, assistance payments and millions of other “programs’  that bleed off the public purse strings. Close to half Americans now don’t pay income tax. 30 million Americans now get food stamps. And how many more are on Social Security, Medicare, Medical and God knows what else. There’s probably some of you reading this that are saying “Hey wait a minute, I use Medical, the hell with Marc. He’s trying to take away MY payment”.

And that’s the problem, everyone gets used to free money, free help, and no one wants to have their check eliminated. Its called MORAL HAZARD and COMPLANCENCY. And even you and I are guilty of it. But think about it for a minute.  YOU NOR I NOR ANYONE except the severely disabled and those TOTALLY ENCAPABLE of working should get ANY HELP from the government. That’s simply NOT THEIR JOB nor was it created to be their job. We have just become used to thinking IT IS THEIR JOB to take care of people and that is NOT their responsibility. ITS YOURS. Their job is to simply GET OUT OF THE WAY and make sure everyone is ALLOWED to pursue their own happiness, and KEEP WHAT THEY EARNED.



Meanwhile the government itself, who is supposed to serve the people BECOME the people. It grows larger by the day. Public salaries are now higher then private ones. Social programs and bailouts are common place. The frugal are asked to pay for those that are not.

And to pay for it all, they print money and borrow it from you. WHIICH IS the reason no one can afford anything anymore and the reason PEOPLE call for government help!  The very call to take care of everyone is the reason the government grows,  under the auspices of they need to help people.  Honest governments cant grow and pay for themselves thru taxation fast enough, so they must invent a check kiting scheme like the FEDERAL RESERVE and similar institutions to be able to create money from nothing, causing inflation, which causes prices to rise, which impoverishes more people. Because an economic fact is that wages, what you get paid, never rise as fast, the common man falls behind, which makes more people need assistance, and more social help, which the government answers with more money printing therefore causing more inflation, driving even more people into the poor house. No one realizes this is how the whole game works so they just do more of the same.

The Federal Reserve makes interest on the money it creates from air, so it peddles debt, much like a drug pusher, and for proof of that, look at the debt we the people are in and the country as a whole. Trillions of it, and accelerating.  See how it works?  

And if you believe the recovery, just look at the debt we amassed in this so called recovery. 3 or 4 more trillion of new money printed and given to the banks and everyone else. We in turn get only a few hundred billion in growth. Sure it looks like a recovery, but look where the money came from. We borrowed 4 trillion to get half a trillion in growth. Not a good return on our money that’s for sure. It also tells you that when the government stops its spending, the recovery dies. It’s the old game of print to stay alive, only we are doing it at a faster and faster rate just to keep from falling. IT CANT LAST. And it wont.

Keep an eye on the debt levels. If the FEDS ever talk about raising rates or pulling back stimulus, your “recovery” will die.  We have boxed ourselves in. The rock and hard place I have been ranting about for 5 years now.  INFLATE OR DIE is the road we are on.

There will be no significant rising of rates by the FEDS, only the market will do it by force. Inflation will follow soon. But first expect more bailouts, more job packages, more unemployment extensions, more money down the rat hole. DEFLATION will reoccur with prices of everything falling again. The FEDS will answer with more money printing, more debt.

I don’t know if what the markets will do tomorrow but a pattern of lower highs and lower lows is materializing in the DOW. This is typical of a market weakening. Look for brief rallies followed by more 100 plus point plunges. The line in the sand now is DOW 10,000. Much like our bowling ball scenario, it will bounce off the 10,000 mark multiple times until it cracks through to the downside. The EURO problem will not go away easily, mid east tensions mount and the oil spill will not make things any better.

GOLD:
Those holding a lot of physical metal might offload some coins around here for a quick vacation or whatever. Gold will go lower if the DOW does. This 1200 level might be a good time to lighten up. If you don’t hold much however, add on pullbacks. You will need it to defend against inflation.

REFINANCING:
Those looking to refinance may not see lower rates. You might consider pulling the trigger now. Rates COULD go a tad lower but not much. Historically they are about as low as they can go. They went lower and will go lower with a DOW plunge. Look into it. If you need a reference, email me.



Upcoming show:
Barring any market crash, I will finally cover health care on tomorrows THURSDAY show. June 3, 2010.

Lets hope the markets hold together so I can do a “normal” show!

All for now,
marc





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