As We Stare Into The Abyss Of A Great Depression, Let Me Ask You: WHO WAS RIGHT?

This is actually the concluding paragraphs of an article I wrote yesterday, but I thought the question merited its own title:

Let me ask you something. I’ve said repeatedly that Barack Obama – the president of God damn America and the symbol of God’s wrath on this nation until this disgrace leaves office IN disgrace – would lead us into a Great Depression with his reckless and depraved spending. Meanwhile, Obama, the Democrat Party and the left said that Obama would lead us unto a glorious recovery.

I’ve been pointing out since December 2008 right after Obama was elected that we would be staring into the abyss of a Great Depression due to this evil man’s failed policies. I pointed out in that article that the Great Depression began with a market tank, followed by a series of failed liberal-progressive policies that were like sugar for a diabetic; at first things seemed to get better, and then we had the real crash. You look at what I wrote in that article and tell me that we aren’t right on schedule.

We have the worst economy since the LAST time a failed socialist ran it into the ground in the 1930s. Surprise, surprise.

Let me point out that as early as October of 2008 I was pointing out the FACTS that CEOs “went as far as to say that “some of his programs would bankrupt the country within three years, if implemented.” Let me point out that I pointed out that same fact again in February 2009 after Obama’s foolish and wicked policies started taking shape.

Who was right? And who has been totally full of CRAP from the getgo?

Conservatives have been right again and again and again and Democrats have continued to demonize us even as their own failed policies have kept failing just like we said they would.

Why didn’t Obama’s stimulus plan work?  Because the government sucking money out of the productive marketplace and squandering it has NEVER worked.  And so surprise surprise, a little over a year after Obama’s destined-to-fail Keynesian spending binge was implemented, economists acknowledged that it had failedJUST LIKE WE CONSERVATIVES SAID IT WOULD TO ANYONE WHO WOULD LISTEN TO REASON.  And about that same time investors were starting to scream that Obama was pathologically anti-business.  But liberals said “We don’t need no stinkin’ business.” 

History repeats itself when fools don’t pay attention to it.  And America in 2008 was a nation of fools.  We elected a man who represented the policies that created and sustained the Great Depression.

And as I’ve been warning over and over, we’re going to pay dearly for it.

Don’t get me wrong here. We’re going to have a sucker’s rally at some point. BECAUSE THERE ARE A LOT OF STUPID PEOPLE.

Democrats ran both the House and Senate since the November 2006 elections when unemployment was 4.6% as Nancy Pelosi and Harry Reid and the Democrats took over Congress.  Most Americans have no idea whatsoever that the LAST budget that Republicans passed (and I note that it has been 833 DAYS since Democrats have bothered to pass a budget) had a deficit of only $161 billion dollars.  Democrats have since utterly skyrocketed our reckless deficit spending into the trillions of dollars.  And all the while they have done nothing but blame and demonize Republicans.

I made a point in an article I wrote recently:

Now, let’s just say for the sake of argument that you were watching the Democratic National Convention in August of 2008 and came to the belief that the mainstream media coverage was so blatantly biased and dishonest that Barack Obama was going to win the election. And you had a vision of the sheer smackdown that would happen in this “God damn America.”

So you made an appointment with your portfolio manager and told her you wanted to cash out all of your stock holdings so you could put your investment nest egg into silver and gold.

What do you expect your portfolio manager would say? Do the words, “This is a big mistake. Trust me, the stock market is not going to collapse. The average gains of the stock market invariably outperform gold indices. Blah blah blah.” The bottom line is that if you pull your money out of the fund she manages, she’s not going to get any more of your money.

Well, the fool who did that would have bought all kinds of silver at about $13 an ounce and gold at about $825 an ounce. And that fool would have more than doubled his money while everybody else lost their shirt, then got part of their shirt back if they played the game right, then lost their shirt again.

I describe that individual who bought silver and gold because he truly believed Obama would be a total disaster who would create a second Great Depression and put America into food riot conditions (and see I was saying that after the Obama victory in November 2008).

And so “the fool” bailed out of the economy of the most evil man who has ever led this country and bought the only thing that made any sense to buy if he was right.

And who was right?

“The fool” who bet against Obama bought gold at $825 an ounce and that same gold is worth over $1,700 an ounce as of COB Monday.  That fool bought silver at about $13 an ounce and that same silver is worth nearly $40 an ounce Monday.  Then that fool went to bed and woke up this morning and saw that gold was saying good morning to him at $1,770 an ounce.  And silver was down slightly from the previous day so he’d only tripled his money from the day he bought the stuff by the pound.

Who was right?  The fool who bet Obama was a fool or the downgraded president who has now been factually proven wrong a ten thousand times times ten thousand times???

[Update, 8/9/11]: The above was written on August 8 and pulished early this morning; what follows is written in the hindsight of the market rebound today.

Well, I knew we’d get a sucker’s rally, and we sure got a sucker’s rally today.  After plunging to its sixth worse loss ever, the Dow rallied to its eleventh greatest gain ever.  I didn’t think we would see such a rally so quickly and I certainly didn’t think the Fed would throw this kind of a hail Mary pass by announcing that already rock-bottom interest rates would remain the same for two years.

Obama and his teleprompter showed up yesterday and neither one of them had any plan or any clue as to what to do. Fortunately, I suppose, Ben Bernanke DID have a plan. It’s not QE3, but it’s kind of like a QE3; basically, by enabling the banks to borrow money at near zero percent interest, banks (which were absolutely CLOBBERED in yesterday’s bloodbath) can make a ton of money by loaning that same money at a higher interest rate.

This was virtually the only trick the Fed had left.

The risk of this dramatic and basically UNHEARD of two-year freeze on rock-bottom interest rates is summed up in a very short paragraph expressing the concerns of the three Federal Reserve heads who voted against Bernanke’s aggressive move:

“Fisher and Plosser have warned repeatedly that the Fed risks stoking inflation or another asset bubble by keeping money too easy for too long.”

This seems to be the right point to state that we haven’t had dissent at the Fed since November 1992.

So why do the three Fed heads disagree with this policy?  Basically,  they understand that the artificially low interest rates created by the Federal Reserve are a rigged game.  The co-owned Federal Reserve, banks, and Wall Street firms benefit from the policy, while people who are trying to save money lose out because the artificial interest rates simply do not honestly reflect the weakening dollar and the rising prices we are clearly seeing all around us.  It amounts to a tax on savers and a subsidy for spenders.  Here’s an article on that gimmick by a writer pleading with Bernanke to allow interest rates to reach their market equilibrium well before his ploy today.

And artificially low interest rates also clearly increases the risk of an asset bubble (e.g., that’s what blew up our economy in 2008 with said “asset” being real estate) because it incentivizes people to increase their debt load far beyond what they can afford.

Ultimately, what Ben Bernanke did was kick the can down the road.  Because in two years (hint: AFTER Obama is up for re:election) we’re going to HAVE to see a spike in interest rates that will absolutely slaughter both the bond markets AND the stock markets.  We always selfishly think that whatever crisis we have now justifies setting up an even worse crisis later, just as we always foolishly believe that in a couple of years we will have developed the will to embrace tough choices that we clearly don’t have the will to face now.

A year ago now I pointed out that:

An increase in the money supply is rather like an overdose of drugs. And in this case the effect of the overdose will be hyperinflation. Basically, the moment we have any kind of genuine recovery, our staggering deficit is going to begin to create an ultimately gigantic inflation rate. Why? Because we have massively artificially increased our money supply beyond our ability to actually produce real wealth, and that means that money will ultimately be devalued. There’s simply no way it can’t be. If simply printing money solved financial problems, the government could just mail everyone several million dollars, and we could all retire. The problem is that more money chasing a limited supply of goods simply pushes up prices higher and higher without doing anything to solve the underlying economic problems. If we have a recovery, with increased economic activity, there will be increased demand on the money supply, forcing an upward climb in interest rates as a means of controlling the currency. And then we’ll begin to seriously pay for Obama’s and the Democrat Party’s sins. Paradoxically, the only thing preventing hyperinflation now is the recession, because people aren’t buying anything and therefore aren’t competing for those limited goods.

What I am essentially saying is that the government’s constant monkeying around has created a dilemma: as long as we remain in recession conditions, things will continue to suck as we slowly grind along.  But if we actually start to experience a real recovery, we’re going to very quickly get a crippling punch in the gut as the interest rates we’ve been holding down for FAR TOO LONG begin to rise in an out-of-control manner.  I’m not talking about “politics” or “economics” when I say this: it is simply the grim reality of physical math on a balance sheet.

The Bernanke move will ultimately hurt us badly.  Just not today.

Meanwhile, nothing else has changed.  The horrible fundamentals of our economy and the greater world economy are still just as horrible today as they were yesterday.  Europe’s sovereign debt crisis is still spiralling out of control. with France and England joining Italy and Spain as being both broke and “too big too bail”; and nothing whatsoever about our ravaged and dysfunctional economy has changed in any way, shape or form from the moment that the market began to take off after the Fed announcement.

In explaining its move today, the Fed wrote:

Information received since the Federal Open Market Committee met in June indicates that economic growth so far this year has been considerably slower than the Committee had expected. Indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed. […]

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, downside risks to the economic outlook have increased. […]

Which is to say that 1) Growth has been “considerably slower” than expected; 2) Labor market conditions have deteriorated substantially; and 3) Household spending has “flattened” (actually it has tanked); and 4) The housing sector remains depressed (and is literally more depressed than the Great Depression).

Anybody who believes that today’s Fed action or the stock market’s immediate reaction to it is simply a fool. The very reason the Fed even resorted to this dramatic and risky move was because things truly suck, and are expected to remain terrible until at least 2013.

The Fed, essentially in desperation, is now going to attempt to force bond yields to remain low while trying to keep stock prices high – which they define as “price stability.”  This entire process will in fact virtually REQUIRE the Fed to do a QE3 (which they did not feel they could do now because it was far too early after just-ended QE2), according to analysts from CNBC.  And the Fed is simply not worried about inflation at this point because they think they have bigger fish to fry.

When they get to the QE4 point – which QE3 itself will guarantee just as the ending of QE2 itself guaranteed QE3 - they will simply forgive their own debt and the system will run amok until it completely crashes due to hyperinflation.

I know I make all this sound so cut and dry that, if I’m right, any fool ought to be able to see what I’m describing and avoid the pitfall I predict.  And so it is easy to conclude that I simply can’t be right. 

I don’t doubt that the thinkers at the government and the Fed and Wall Street who are making these ruinous decisions are well familiar with the history of hyperinflation (e.g. the Weimar Republic or Africa); and they know the dangers of their policies.

But there’s another attribute these decision-makers have in addition to their pathological refusal to accept responsibility when they can kick the can down the road and make the future pay for their actions now instead; and that attribute is hubris.  Which is to say they reason, “Yes, that problem always happened before when a government did what we’re doing now, but we’re smarter.  And we have computers.  And so what happened to everyone else who did what we’re doing now won’t happen to us.”

And the thing about computers that has always been true is garbage in, garbage out.  The economic models these thinkers are plugging into their computers are filled with preconceptions that are in fact basically the same preconceptions that failed so wildly in the Weimar Republic.  And it doesn’t matter how many digits to the right of the decimal point your computer can calculate; when your assumptions are wrong, your model will turn out wrong.

By the way, “the fool” who bought so much gold was quite happy today.  That is because there is no point saving money, and the only two basic options are to risk your money in risky equities or to buy gold; so gold will continue to increase in value, baby.

They talk about “fool’s gold” (iron pyrite), which fools think is real gold.  But real genuine gold has the property of revealing fools in another way: consider that gold has spiked twice since 1970: during the misrule of the fool Jimmy Carter and now during the misrule of the fool Barack Obama:

What I said back in May seems to remain true: “Everyone But Obama And Obama’s Fed Knows That Prices Are Rising Drastically.”  And given our massive and wild market fluctuations the picture I provided in that article continues to describe Obama’s roller coaster economy:

As an American Thinker article correctly predicted shortly after the national disaster a.k.a. the Obama victory in 2008: “Hang on, this will be a rough period ahead.”

Who was RIGHT?

[Update, 8/10/2011]: Oh, oh.  It looks like that wild roller coaster ride is going DOWN the steep track again.  The DOW was down 520 points – more than erasing the gains from the previous day and putting the kibosh on the television talking head narrative that we were about to enter better days because the Fed had saved us.

I didn’t know we’d go up 430 points yesterday on the Fed’s hail Mary.  I didn’t know it would tank 520 today on the most radical market roller coaster in my lifetime.  But I know that Barack Obama will fail and bring America down with him unless the people stand up and STOP HIM.  This is God damn America now under Obama.  And God damn America is going to go down hard unless we stand up and repent of the evil that is the Obama agenda.

And that “fool” who bet that Obama would wildly fail is thrilled with his bet that Obama would ruin America, with gold soaring to over $1,800 an ounce today.

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One Response to “As We Stare Into The Abyss Of A Great Depression, Let Me Ask You: WHO WAS RIGHT?”

  1. Do Thi Lam (@ulamdt) Says:

    Thanks for the sharing! ^_^

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