Gold, The Protests on Wall Street and Operation Twist

My email box is almost always full of posts from readers that want to know when the government is going to go back on the gold standard. I am sorry to say but they just don't get it. We have had a gold standard and all the government did was print more dollars than there was gold at the “standard” fixed rate. Excuse me Dr. Paul but gold is not money! Money is whoever is in charge of the system says it is. The sad truth is we need political reform, not some gold standard. Those whom keep yelling “fiat money” think money is a store of value. It has never been. Gold should float freely so it can be bought as a hedge. Why on earth would you want to hand it back to the government? Additionally, these ideas that unless money is 100% backed by something real is utter nonsense. To create a system they purport you would have to eliminate credit, borrowing and banking. Let me use this hypothetical. Suppose I have a $20.00 gold piece and I deposit it in your bank. Then I go back and borrow $20.00 in gold. W both have ledgers showing $20.00 but there is just one coin. The point is that all credit leverages the money creating a fiat system constructively. To create a world where money is an IOU on a one for one basis, there cannot be any credit whatsoever. Gold is a hedge. The last thing we need is for the government getting their dirty hands on it. For now, in gold, it will take daily close ABOVE 1822 to signal a new bull market and that a level of support is in place. On the other hand, a weekly closing below 1605 or a daily close below 1577 will signal a renewed bear market. The “Occupy Wall Street” movement is going national! The movement lacks clear direction. Some signs say jail the rich while others seem to be demanding an end to capitalism. This is the problem when the market manipulators own the SEC, CTCF, the courts, the press and the Congress. The powers that be are not about to arrest the primary dealers who sell their paper for them for they fear they would not be able to borrow money. The primary dealers are the financial crack dealers that have Washington hooked. This movement is now turning to target Goldman Sachs and Congress. This is going to get very interesting as the signs the protestors carry say “Leave the brokers alone – they are not Wall Street.” The protestors, no matter what dogma they spout have an absolute right to protest no matter who disagrees with them. If they are not free to speak, then no one is. The New York City Police Department (NYPD) is a shining example for the whole world of just how corrupt New York City really is. Many foreigners have commented that what should be expected when Bloomberg is the Mayor and his business is servicing Wall Street. Just as bankers donate to politicians, J.P. Morgan Chase has been rumored to have donated an unprecedented $4.6 million dollars to the New York City Police Foundation. If true, this was the largest gift in the history of the foundation. Let's assume the NYPD will defend the bankers to the bitter end. It's a shame that the market manipulators have given Wall Street such a bad name. The Panic of 1969 was called Black Friday because they dragged the bankers out of their offices and hung them on Wall Street. It was not about shopping! The whole thing can get very ugly, very quickly and this is precisely why I have always been against market manipulators. They give everyone else a bad name. They will destroy society for a quick dime. They reason for the hatred of Americans in general and the corrupt court system in New York is destroying the world financial system to protect the banks. Before I take my leave, I wanted to touch on “Operation Twist”. In my opinion the greatest problem we face is skewed domestic analysis. The majority of analysis seems to always just talk about the USA as if we were the only country in the world. It is flattering to attribute the decline in the 30 year mortgage rates to Operation Twist but frankly this was not the only stimulus. The only reason rates declined was because this was the trend. It was not artificially created. Herbert Hoover said “Capital acts like a loose cannon on the deck of a ship in the middle of a typhoon.” Europe is in brain dead mode - still trying to just bailout everything and hope that through the night no one will notice. They hope that when the sun rises they will be able to get back to growing their way out of economic decline. Given this plan is there any wonder that capital is fleeing the EU. You'd have to be crazy not to move your money out of European banks and put it into the USA right now. The capital inflow increases supply of money and helps to lower rates domestically within the USA. If capital was fleeing the USA, there would be no way rates would further decline regardless of what the Fed does. In truth, if the Fed did not do Operation Twist right now, it would be paying artificially higher rates of interest than the market would dictate. Too many expect the dollar to collapse and argue the opposite position. They are looking at the USA in isolation. The lack of federal bonds in Europe left the individual state debts the reserve assets in Europe. Can you imagine if every state debt in the USA was federal and he banks relied upon it as reserves? Make no mistake. The dollar will decline. It is just not time yet. After Europe and Japan goes into meltdown then capital will turn against the USA. Everything has a time and a place. We must revise the monetary system now! We are running out of time.