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Curious?… to find out what I am talking about? Read On… Congress shouldn’t be allowed to do this! Not only am going to include the TIME magazine article, I am including the actual link to the bill itself, the press release version. The coming runaway Inflation Train and what to do to protect yourself! Read Below…Good Investing! – jschulmansr
First Here are the links…
Source: Time Magazine
“Madness is to think of too many things in succession too fast, or of one thing too exclusively” — Voltaire
The American Recovery and Reinvestment Bill of 2009 should be required reading for every citizen from billionaires to the average person. It was issued by The Committee On Appropriations and is the road map for the $825 billion that the Congress and Administration intend to put into the U.S. economy to jumpstart the economy out of the recession.
The most important part of the document may be the description of how the country was dragged into the worst economic period in its history. ( See pictures of the Top 10 scared traders.)
At the beginning of the bill, the authors write: “Since 2001, as worker productivity went up, 96% of the income growth in this country went to the wealthiest 10% of society. While they were benefiting from record high worker productivity, the remaining 90% of Americans were struggling to sustain their standard of living. They sustained it by borrowing … and borrowing … and borrowing, and when they couldn’t borrow anymore, the bottom fell out.”
If that analysis is true, then two other things must be accurate. The first is that the cause of the recession was Americans becoming overextended in their use of credit. The other one, which is a consequence of the first, is that if the government can facilitate future consumer borrowing, the economy will be righted again in short order. That would mean that more complex methods of solving the problems of the recession, such as spending money on infrastructure, would be unnecessary. It would be simpler to take $825 billion and make it available for home equity loans, enlarge credit card lines, and auto loans.
But, the authors of the bill are not willing to follow their own logic, so they have crafted another plan. The first assumption of what the program will do, and among the most important of its goals, is only mentioned in passing. “This package is the first crucial step in a concerted effort to create and save 3 to 4 million jobs.” This is a little twist on what is being said in public.
The general assumption about job creation under the program is that it will add 3 to 4 million jobs. But in the introduction to the bill the assumptions about job loss are laid out quite clearly: “Credit is frozen, consumer purchasing power is in decline, in the last four months the country has lost 2 million jobs and we are expected to lose another 3 to 5 million in the next year.”
The mathematics of the two sets of employment analysis taken together would show then that no new jobs would be created. The three million or so jobs which will be lost in 2009 will simply be replaced by three million new ones. The jobs lost late in 2008 will not be replaced in this program, leaving a two million job deficit Joblessness will stay at about 7.2%
Other than those details, the money will be well spent.
The states need help, and the federal government means to provide it: A sum of $79 billion in state fiscal relief will be provided to prevent cutbacks to key services
After the plans to help the states, cut taxes, and provide new infrastructure for the nation, the programs get a little off track.
The bill means to spend $44 million to repair the U.S. Department of Agriculture’s headquarters. About $400 million will go to repairing national monuments in Washington, which are somehow considered essential to national infrastructure.
Additionally, Congress plans to pay out $200 million to provide financial incentives for teachers and principals to do their jobs better. Another $100 million will be used to establish a set of grants to provide $100 to local governments and nonprofit organizations to remove lead-based paint hazards in low-income housing.
Perhaps the best investment in the bill is for $80 million to ensure that worker protection laws are enforced as recovery infrastructure investments are carried out. In other words, there will be a police system set up to make sure that no one with a new job working on national infrastructure with money provided by the government will have his or her rights violated.
The bill calls for over one hundred programs which Congress plans to enact. These include addressing problems as diverse as community block grants, upgrading the forestry service, bridge removal, and NASA research funding. The remarkable thing about the legislation is that almost every program is ill-defined and subject to broad interpretation and a wide variation as to how it might be enacted.
In a sentence, The American Recovery and Reinvestment Bill of 2009 will have to build a bureaucracy larger than any ever created by the US government in order to manage its many parts.
The first sentence of the bill reads “The economy is in a crisis not seen since the Great Depression.” If it requires all of these plans to get America back on the road to recovery, the process will take a decade.
— Douglas A. McIntyre
For constant business updates, go to 24/7wallst.com.
*** My Cure for the coming runaway inflation train? Read below…
I think this one may be a shocker to many…that gold is going to be much higher at the end of 2009 than it is right now. I think it will take out its highs just above $1,000 an ounce and will head for at least $1,250 an ounce. (Gold is presently trading around $853 an ounce.)
When I was a stock broker, I hated gold. To me it was the dumbest investment on the planet. Of course I worked as a broker when gold was in a multi-year bear market.
But the more that volatile booms and busts have caused the need for more government intervention, the more of a believer I’ve become in gold.
Let’s look at several of the dynamics that have helped to form my view for gold in 2009.
South Africa is home to some of the biggest gold mines in the world. In 2008, their gold output shrank as exploding input costs caused them to close some of their most expensive mines. (Produce less of the metal and the speed of the supply shrinks which helps to support the price.)
This has been one dynamic that has helped to support prices in 2008 and that has kept gold in an 8 year bull market. Even in 2005 and 2008 when the dollar rallied, gold still held its ground. This shows a lot of strength for the metal since the dollar and gold largely trade somewhat opposite of each other (being that gold is denominated in dollars and when the dollar is rising, it tends to calm the fears for the currency which typically dulls the demand for the precious metal).
In fact, had it not been for tons of hedge fund failures and liquidations, I think gold would actually be much higher than it is right now.
Helicopter Ben & Obama will do their part to help gold out!
With the credit crisis in full swing, the Fed has responded by turning on the printing presses at full speed. This enormous increase in the money supply (which is temporarily clogged up in the banks) will eventually be unleashed on the economy. Once this happens, you will quickly see deflation erased and we may actually move into a period of hyper-inflation.
Why would I go so far as to think that? Heck, the Obama administration may print as much as a few trillion dollars to help out the banks according to former central banker Volcker.
We’ve also got another stimulus package coming within weeks according to the Obama administration.
Another reason why I feel that a huge bout of inflation will return is because of interest rates. If you’ll remember, Congress got pretty harsh with Alan Greenspan for taking rates down to 1%. They even went so far as to accuse him of causing the recent bubbles in the economy, which he denies.
Well, if the “1% cheap money” inflated things into the stratosphere, what do you think will happen with Ben Bernanke’s interest rate range of 0% to 0.25%? Could you say it would have any less of an effect? No, it will have an even greater “bubble effect” in time as the cheap money actually is released out into the economy.
Tomorrow, I’ll continue with “Part 2” of this “gold story”… So stay tuned!
by Sean Hyman
Get ready for the “economic pipes” to be unclogged and for a tidal wave of inflation to head our way!
I assure you that Obama’s economic advisors will be the “drain-o” that gets the pipes unclogged. When this happens, the Fed knows that it will have to “mop up” this excessive liquidity in the financial system.
However, here’s what I predict will happen: The Fed, while it wants to be a forecaster of the economy really just ends up becoming a “responder” after the fact to what’s going on in the economy. Therefore, between the time that the Fed starts to see the inflationary signs in the economy and starts the process of draining the excess liquidity from the economy, it will be too late. The hyper inflationary effects will already be in play. They will be “late to the ball game” yet again.
When all of this starts to happen (and possibly a bit beforehand), savvy gold investors will sense it coming and will buy up gold ahead of time…positioning themselves like a surfer that gets out ahead of the coming wave that will propel him forward.
The Fed will do its best at that point to drain the money supply and hike rates, but there are delays from when they start to act and when it actually starts to effect the economy. This “lag time” will cause a huge return of inflation in a big way that will propel gold ever higher and will eventually dilute the dollar as well.
You see, when there’s more of something in existence, it begins to hold less value. So as the money supply is quickly increasing, the dollar will eventually feel the effects of it. Remember, there’s that delayed “lagging” period which is why it hasn’t already been felt even now.
However, as sure as the sun is coming up tomorrow…it’s coming. So get prepared ahead of time. For, the key to successful investing is to buy just ahead of the massive move. This requires an investor to “think ahead”. You can’t just see what’s happening at present and prosper like you should in your investing. It requires one to be “forward looking” and thus “forward thinking”.
When all of this unfolds, investors will buy gold (which is essentially exchanging their dollars for gold) as they seek safety, liquidity and an “insurance policy” against runaway inflation.
Gold production will continue to shrink and Central Banks will hold onto their gold in 2009!
So with the economy deeply damaged, unemployment claims hitting almost 600k as of this writing, there’s not going to be a huge incentive for investors to sell gold. That’s why gold has only come off of its top by 17.9% and stocks have been 40+% off of their highs on average. You can see its underlying strength just in that fact alone.
Also, remember that gold supplies will continue to tighten in 2009 just as they did in 2008. Why? Africa’s production of gold sank 14% which was the lowest levels since 1899. That’s serious! But it’s not just a South Africa story. U.S. gold production fell 2% last year. While China (which has now become the world’s biggest producer of gold) had their production rise 3% last year, the “net” result collectively among all countries is a net slowdown in gold production.
Central bank selling in gold was down a full 42% last year. And you’d be an idiot of a central banker to sell a bunch of gold in 2009 with the U.S. and global economy still hobbling along. Therefore, you can count on these guys not adding to the selling.
Therefore, get ready to buy gold, sell dollars and buy foreign currencies like the euro and especially the Aussie dollar which is greatly helped by rising gold and other commodity prices.
Most of the increase in gold and selling of dollars may come more in the 2nd half of the year than the 1st half due to the delayed effect of Fed policy and as the Obama administration starts to get its feet wet in tackling the economic woes.
But be aware and watch for the change just in case it happens even a bit sooner than I think.
Gold consolidates its multi-year gains as it catches its breath and prepares to run “ever higher” in 2009!
2009 Gold Outlook
How To Invest in Gold in 2009
By Luke Burgess
Monday, January 5th, 2009
The investment markets are yielding to the fact that the global economy will remain weak for the better part of 2009.
As a result, investors will continue to seek safe havens.
Under normal conditions, these safe haven investments would include land and real estate. These assets have intrinsic value; or in other words, their value will never fall to zero. But with falling prices, investing in real estate is out of the question for most people right now. And there’s little doubt that investors will look elsewhere for safety against financial crisis.
The best safe haven asset in the world right now is still gold because it is never considered to be a liability.
And we believe that safe haven investment demand will drive gold prices during 2009. With this in mind, we would like to present a broad overview of Gold World‘s 2009 gold outlook. But before we get into that, let’s review what happened to gold prices in 2008.
Gold Was One of the Best Investments of 2008
In March 2008, gold prices hit a record high of $1,033 an ounce as the gold bull market entered its seventh year of life. This was followed by a normal 18% correction, which drove gold prices back down to $850 an ounce.
Gold prices subsequently rebounded and were once again closing in on the $1,000 level in mid-July. At the same time, however, the fundamental and psychological effects of the slowing housing and credit markets were just beginning to devalue significantly the investment markets across the board.
As a result, many long gold positions had to be sold in order to cover losses from investments in other markets. Over the next several months, this forced selling pressure pushed gold prices down.
Gold prices were also held down during the second half of 2008 as the U.S. dollar enjoyed a +20% rally. Foreign governments, institutions, and banks began buying the U.S. dollar, which despite a legion of problems continues to be the world’s most important reserve currency, as a hedge against domestic economic turmoil.
These factors contributed to a significant drop in the price of gold, which officially bottomed out for the year at an intraday low of $683 an ounce in October 2008.
Gold prices have subsequently bounced off of the $700 level as major selling has dried up, and fresh buying has come into the market.
Despite three 20% corrections and serious deflation in the market, gold exited 2008 with a positive 5.4% gain for the year. Although subtle, this gain outperformed every major equity index and commodity in the world. Here are just a few examples…
||Percent Change During 2008
This made gold one of the best investments of 2008.
And the 2009 gold outlook looks just as strong.
Despite a bit of downside in the immediate future, we expect gold to have a stellar year.
Global economic turmoil and deflation will undoubtedly continue to influence gold prices in the near-term. A short-term pullback in gold prices from current levels to $800—maybe even a bit lower—before a recovery is not out of the question. However, we expect gold prices to break new records during 2009.
For our current perspective, we expect gold prices to reach as high as $1,300 during 2009, which would be a profit of over 50% from current levels.
Gold prices in 2009 will be supported more heavily by supply/demand fundamentals than in the previous years of this gold bull market.
As we’ve previously discussed, during the third quarter of 2008, world gold demand outstripped supply by 10.5 million ounces. This deficit was worth $8.5 billion and was the largest supply/demand deficit since the gold bull market of the 1970s.
Official 4Q 2008 world gold supply/demand figures will be calculated and reported later this month. Gold World will report them to you when the data is released.
In the meantime, though, all estimates suggest that there will be another very large deficit in world gold supplies from the fourth-quarter, with investment demand continuing to drive the market.
We expect that a continuing surge in investment demand could push gold prices as high as $1,300 at one point during 2009.
There will likely be a bit more volatility in the gold market in 2009 as more and more speculators come into the market. It is likely that the gold market will experience three or four price peaks (selling points) during 2009.
How to Invest in Gold for 2009
As we expect a near-term drop in gold prices as a result of continuing deflation, we are advising our readers to hold off on any physical gold buying for the immediate future. As previously mentioned, gold prices could dip back down to $800 before recovering again.
Nevertheless, we expect 2009 to be another great year for gold investors.
Luke Burgess and the Gold World Research Team
Tomorrow we’ll check on what’s the latest on the Obama eligibility issue.
Be Blessed and Remember: Dare Something Today Too!