This video is over a year old, but I don’t think any of the fundamentals have changed. There is a funny point in the video when he talks about how he became an adviser to Eric Sprott before formation of Sprott Physical Silver Trust (PSLV). He says it took them a year to obtain the $1 billion worth of the physical silver which the basis of the PSLV. On the other hand, he said it took no time at all for SLV to obtain 30 million oz of silver. He stresses, then, that SLV is great for increasing awareness in silver as an investment and it is fine for trading a silver position, but no one should see it as their basic silver position.
Month: July 2012
Monty Pelerin: It’s the numbers, stupid
Monty Pelerin shared some comments and a video which explains why the United States government is going to collapse economically. This is why the new Obama ad, in which President Obama says that he will tax the wealthy to “pay down our debt” is utter mendacity. This video shows that the United States Federal budget cannot be balanced. It is mathematically not possible without some maturity. Going after US expats around the world will not solve the problem. But we can be sure that as long as the USA cannot get its fiscal house in order, the government will continue to demagogue against expats.
It’s the numbers, stupid, by Monty Pelerin
Most people have no idea of the unsustainability of government spending. The path which the government blindly follows ensures a complete and total collapse of the US. What has happened in Greece (and things will get much worse there) is exactly what will occur in the US. A complete and total economic collapse is inevitable.
The reasons for this ending and its inevitability are explained in this short (5 minute) presentation by Hal Mason in an email that has been circulating. The simplicity of his presentation allows understanding for even the economically illiterate. Simple arithmetic is sufficient to understand the impossibility of our current path and our inevitable ending.
This short video should be watched by everyone, including those not yet old enough to vote. It should be shown in every high school and college classroom. Anyone that cannot understand this presentation should not be allowed out without a guardian.
It’s the numbers, Stupid and the people who elect the corrupt, self-serving politicians in Washington who continue down this road to destruction.
The greatest derivative fraud of all: The US Dollar
An article by Bruce Johnson at the American Thinker, “Are All Securities Created Equal?, questions whether the bundling of securities and derivatives is really “capitalism”. His contention is that bundled derivative products are too many steps removed from where wealth creation takes place and critics should not blame “capitalism” for what happens.
I responsed with the following comment:
An honest market where derivatives are sold is good for capitalism, because it creates a bridge between those who have capital (savers and investors) and those who need it (businesses). Stocks are derivatives: they are certificates of paper that represents parts of companies. I sell stock options. These are derivatives of stocks whose trade is based on an underlying stock position. Options provide an opportunity for market participants to reduce their risk–by selling positions, I take on the risk of others at a premium.
The problem with the mortgage CDOs is that they were packaged liar-loans that the lenders who made them knew the borrowers could never pay back, and so they bundled them and sold them in order to avoid their own bankruptcy. This is a sign of systemic corruption in the US mortgage industry: banks, brokers, borrowers, and bureaucracies are all corrupt.
The current United States form of capitalism is on its last legs, as the Federal Reserve kicks the can down the road of the greatest derivative fraud of all time: the US dollar. It used to be a derivative of gold, then it became a derivative of the “full faith and credit of the United States”. Since that isn’t worth bucket of warm spit anymore, the dollar itself is a fraud.
I have a saying every time one of my many purchases from China stops working: The Chinese pretend to give us products that work, and we pretend to give them money that’s worth something.
Dan Mitchell on why extra-territorial corporate taxes makes the United States uncompetitive world-wide
Dan Mitchel explains cogently why US extra-territorial taxation penalizes American businesses and makes it impossible for them to compete on a level playing field with foreign companies. He doesn’t even touch on the subject of why US international taxation of individual US citizens living outside the borders of the United States. This penalizes American companies for hiring US citizens overseas, not to mention how it destroys the lives of US citizens abroad. On that, read Roger Conklin. Hat tip Isaac Brock Society.