Jim Rogers Says, Gold Will Hit $2,000 and USA Will Lose Status As The World’s Reserve Currency

Good Time To Buy Gold

Good Time To Buy Gold

Famed investor Jim Rogers is “quite sure gold will go over $2000 per ounce during this bull market.”Rogers’ confidence gold will continue to rally stems from a view the U.S. dollar is on its way to losing status as the world’s reserve currency.”Is it going to happen? Yes,” Rogers says. “I don’t like saying it [and] I’m extremely worried about it but we have to deal with the facts. America is not getting better [and] the dollar is going to be replaced just like pound sterling [was].”Rogers didn’t offer a timetable, and it’s likely gold would exceed $2000 per ounce if the dollar were to lose its reserve status.Still, “I wouldn’t buy gold today,” Rogers says. “I think I’ll make more money in other commodities, which are cheaper,” as discussed in more detail here.Among many others, Rogers is “worried about the fact the U.S. government is printing huge amounts, spending gigantic amounts of money it doesn’t have,” the investor and author says. “People are very worried [and] skeptical about paper money [and] looking for places to protect themselves. The best way is to buy real assets. [That] has always protected one during currency turmoil, and it will again.”

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Marc Faber Is “Highly Confident” the Future Will Be Very Bleak: See Video on Tech Ticker – Yahoo! Finance

“The future will be a total disaster, with a collapse of our capitalistic system as we know it today, wars, massive government debt defaults and the impoverishment of large segments of Western society,” Marc Faber writes in the September issue of The Gloom, Boom & Doom Report.A statement like that pretty much speaks for itself, but it’s a bit more complicated than appears on first blush.Faber has been bullish — especially on commodities and emerging market stocks — for some time now and believes the current global recovery trade will last another two-to-three years, as discussed in more detail in a forthcoming clip. But he has major long-term concerns about the dollar’s long-term viability given rising U.S. deficits, massive unfunded mandates and the fact “we have a money-printer at the Fed.”This combination will eventually lead to runaway inflation, wholesale debasement of the dollar, and a major lowering of living standards for most Americans and many Europeans as well, says Faber, who is “highly confident” in this grim prediction.

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Decade of The Great Depression

A Short Summary:

It is August 1939 and Americans are still recovering from the Great Depression–the worse nightmare that has ever happened to the United States. For the last ten years, since 1929, this country has experienced total economic collapse. Who could have imagined that this would happen in our modern industrial world?

The Wall Street stock-market crash of 1929 signalled the beginning of this Great Depression, even if it did not actually cause it. Ten years have passed and this economic depression has had devastating effects on most people in this country. Production fell sharply. Unemployment went through the roof. No one had much money, so purchasing declined. Thousands of businesses and hundreds of banks have closed.
We are a country of small farmers, but farmers everywhere have gone into bankruptcy. People lost their jobs, homes, and savings, and now many depend on charity to survive. In 1933, more than 15 million Americans–one-quarter of the nation’s workforce–were unemployed.

the-great-depression-homeless-man

The Real Unemployment Rate is Closer to 16.5%

Reuters

1930-depression-bread-line-in-nycBy Pedro Nicolaci da Costa

NEW YORK (Reuters) – When economists tell us the current U.S. slump could never turn into another Great Depression, they all point to one thing: one of four Americans was out of work in the 1930s.

But since the definition of joblessness has changed over the years, this expert assessment might be too rosy.

As many as 25 percent of Americans were unemployed during the days of bread lines that symbolized the Depression, but that figure is more than three times the current 6.7 percent unemployment rate, the economists say. Even the most pessimistic estimates only foresee the rate rising barely above 10 percent.

“We are in a very, very different place than the U.S. economy was in the 1930s,” James Poterba, president of the National Bureau of Economic Research told a recent Reuters Summit.

Or are we? Figures collected for Reuters by John Williams, from the electronic newsletter Shadowstats.com, suggest that, while we are not there yet, the comparison is not as outlandish as it might initially seem.

By his count, if unemployment were still tallied the way it was in the 1930s, today’s jobless rate would be closer to 16.5 percent — more than double the stated rate.

“I expect that unemployment in the current downturn, which will be particularly deep and protracted, eventually will rival, if not top, the 25 percent seen in the Great Depression,” Williams said.

He and other critics have one particular sticking point with the current way of measuring unemployment: the treatment of discouraged workers.

Under President Lyndon Johnson, the government decided individuals who had stopped looking for work for more than a year were no longer part of the labor force. This dramatically decreased the jobless rate reported by the government.

“Both part-time workers wanting full-time work and discouraged workers tend to make the unemployment rate lower than it would otherwise be,” says Robert Schenk, professor of economics at St. Joseph’s College, Indiana.

The latest report, due on Friday, is expected to show another month of more than half a million job losses in December, and a jump in the unemployment rate to 7 percent.

However, some economists, including Kenneth Rogoff at Harvard University, now say joblessness could top 11 percent. Under Williams’ methodology, that picture might look much more like the Great Depression.

(Reporting by Pedro Nicolaci da Costa; Editing by Kenneth Barry)

Financial Doom – Current Best Sellers

MSN Money

Go ahead and read those apocalyptic books on the economy if you like a good scare. But be sure you recognize fiction when you see it.

By Jim Jubak

If fairy tales express our deepest fears, then investors must be on the verge of a psychotic breakdown.

The current crop of financial gloom-and-doom books carry titles such as “America’s Financial Apocalypse,” “Financial Armageddon” and the comparatively prosaic “The Coming Economic Collapse.”

Any way you go, it means the end of the world (the end of the financial world, anyway). And that’s scary. Really, really scary.

But we need to remember that while fairy tales may reflect real fears, they aren’t reliable guides to how the world works. That’s true whether the main character is named Snow White or Ben Bernanke.

Sigmund Freud, Carl Jung and Bruno Bettelheim all theorized that we read fairy tales about evil stepmothers, parental abandonment in dark woods and child-eating witches to help us express and then cope with our darkest fears.

The psychological value of these tales, in this theory, lies in the formulaic, repeated return to archetypical fears in what the reader knows — even a reader as young as my 6-year-old daughter — is a fiction. It also helps that, unlike real-life horrors, these tales usually have happy endings.

This current crop of financial-disaster books should be read the same way — as financial fairy tales that represent our darkest financial fears and then allow us to cope with those fears by offering up happy endings in the form of investment strategies that can fend off disaster.

So what are investors’ deepest fears right now? Continue reading

Why This Crisis is Still Far from Finished

Financial Times

Why this crisis is still far from finished

By Mohamed El-Erian

Published: April 24 2008

During the past few weeks we have seen a growing number of market participants predict an end to the dislocations that erupted last summer and claimed victims throughout the financial system and beyond. While their predictions are understandable, they are premature. The dynamics driving the disruptions are morphing and may again move ahead of both the market and policy responses.

The optimistic view is based on two distinct elements. First, that the de­leveraging process is reaching its natural end as valuations stabilise and institutions come clean about their losses and raise capital; second, that a series of previously unthinkable policy responses have been effective in restoring liquidity to the financial system.

Both views have merit. Financial institutions, particularly in the US, have recognised the scale of the problem and are taking remedial steps. Just witness the recent round of capital raising by Citigroup, Merrill Lynch, JPMorgan and Wachovia. At the same time central banks in Europe and the US have opened up their financing windows, expanding the size of the financing, the range of institutions that can access it and the list of eligible collateral.

Yet, consistent with what we have seen since last summer, the dislocations are entering a new phase. As such, bold reactions on the part of policymakers may, once again, prove to be too little and too late.

Persistent financial dislocations have now caused the real economy to become, in itself, a source of potential disruption. During the next few months there will be a reversal in the direction of causality: the unusual adverse contamination by the financial sector of the real economy is now morphing into the more common phenomenon of recessionary forces threatening to undermine the financial system.

Economic data in the US have taken a notable turn for the worse. Most im­portantly, the already weakening employment outlook is being further undermined by a widely diffused build-up in inventory and falling profitability. History suggests that the latter two factors lead to significant employment losses.

Pity the US consumers. Their ability to sustain spending is already challenged by the declining availability of credit, a negative wealth effect triggered by declining house values, and a lower standard of living as the result of higher energy and food prices and a depreciating dollar. Job losses will accentuate the pressures on consumers, leading to income declines and a further loss of confidence.

While the financial system has taken steps to enhance balance sheets, they speak essentially to addressing the consequences of excessive leveraging and imprudent financial alchemy. As such, the nasty turn in the real economy may fuel another wave of disruptions that, this time around, would also have an impact on mid-size and smaller banks.

It is thus too early to declare the end of the turmoil that started last summer. Instead, during the next few months we may witness a new phase of dislocations, led this time by the real economy. The blame game will intensify; political pressure will continue to mount; momentum will build for greater and broader regulation of financial activities within the banking system and beyond.

The focus will also be on the reaction of policymakers. Here the outlook is mixed. The good news is that the crisis is now moving to an area where traditional policy tools are more effective. This is in sharp contrast to the situation of the past few months, where central banks were forced to use instruments that were too blunt for the purpose at hand.

But there is also bad news. The sharp slowdown in the US real economy will occur in the context of continued global inflationary pressures. As such, the Federal Reserve’s dual objectives – maintaining price stability and solid economic growth – will become increasingly inconsistent and difficult to reconcile. Indeed, if the Fed is again forced to carry the bulk of the burden of the US policy response, it will find itself in the unpleasant and undesirable situation of potentially undermining its inflation-fighting credibility in order to prevent an already bad situation from becoming even worse.

It is still too early for investors and policymakers to unfasten their seatbelts. Instead, they should prepare for renewed volatility.

The writer is co-chief executive and co-chief investment officer of Pimco. His book, ‘When Markets Collide: Investment Strategies for the Age of Global Economic Change’, will be published by McGraw Hill in June

The Price for Food and Fuel Will Only Go Up

Prepare for Tough Economic Times

Excerpts of Post:

“Our problem is a toxic U.S. dollar. Printing funny money steals from the poor and middle class.”

“As long as the Fed is allowed to wield its power at will, the prices for food and fuel will only go up.”

“Some are calling for gold and silver to go over $2,500 and $200 an ounce”

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Why the Rich Get Richer: Robert Kiyosaki

Most of us are aware of the sacrificial slaughter of Bear Sterns. Some people call it a bailout, but I call it a handout — a government handout to some of the richest people on Earth, paid for by American taxpayers.

It’s the survival of the richest, and the poorest be damned. There’s something dismal about a society that operates by those values.

The Economy on Life Support Continue reading