America’s Monetary Mess

Posted On September 28, 2008

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The title of this blog is the same as that of a book I wrote back in the 80’s when I ran for the U.S. Congress twice. I ran as a Conservative Constitutionalist on the Republican party. The run for Congress really began back in the late 60’s during the first so-called “Dollar Devaluation”  As a trader on the floor of the International Monetary Market in Chicago, I witnessed the crash of the U.S. currency after being unhinged from the chains of the Bretton Woods agreement of fixed exchange rates between currencies. I call it  the so-called “Dollar” because what was trading in those days (and these days, as well) was no longer the dollar that I knew of as a child, which was a silver coin or a certificate redeemable in a silver coin, but rather, a fiat currency known as the Federal Reserve Note.  The real dollar was taken out of circulation in the mid-60’s. There were no dollars to devalue by the time President Nixon got around to declaring the same, there were no silver dollars nor silver certificates in common circulation because Gresham’s law, like the clockwork it wonderfully is, had clicked into action, and all the good money, the gold and silver coins, had been driven out of circulation, and all that was left was that engine of inflation known as the Federal Reserve Note, which, as we point out in the book, is neither Federal, nor is there any Reserve, and it is a bogus Note. (You may order the book, America’s Monetary Mess from the author, L. Sarsoun, at 4750 Decatur Circle, Melbourne, Fl. 32934. Price is one SIlver dollar. Wrap it in cardboard stock, include your name and address).

Anyway, the points I made in the book have come home to roost. We are enduring another crisis created in the halls of Congress, a disaster created by the most criminal of Americans, our elected representatives. These criminals are guilty of misfeasance, malfeasance, treason, fiduciary irresponsibility, and rampant stupidity. And we turn to them for a solution? Not a chance. These folks are so far gone, they haven’t a clue as to what to do. They are like Nero at the fire, fiddling while the U.S. burns. These same idiots have just added more flame to the inflationary fire. If you think gas is expensive at $4 a gallon, just watch what this additional trillion in bogus money will do to prices. Their actions will prompt a hyper-inflation until such time as the credit system in the United States folds up and goes away. The results of inflation are always the same. The increase (the inflating) of the supply of “money” causes increased demand for goods. The result of the increase in demand is that prices rise as a result. Rising prices is not inflation, that is a mistaken conclusion. It is the inflating of the so-called “money supply” that causes prices to rise. After prices start to rise, purchasing media (pm) are drawn out of the system and the usual result is higher interest rates (assuming that the government is not pumping more pm into circulation). The classic example of that was the commodity boom of the late 70’s, when the CRB index rose sharply but drew interest rates higher as well, until such time as speculative money shifted back from commodities to lock in those 15% and higher 30 year long bond rates. The easy money policies of this most recent boom have kept interest rates from rising and doing their job of drawing funds back from the commodity speculation. But inevitably, inevitably, without fail, soon, the day of reckoning will come. It happened in Brazil, it has happened in other speculative inflationary bubbles, it will inevitably happen here. The inflation will come to an end by either a hyper-inflation or a deflationary bust, for during the hyper-inflation, the credit system ceases to exist. No one will lend money if the rate of return is less than the rise in the price of goods. So lending stops, and then comes the deflation. In the end, there is always deflation. We always come back to a settling of the debt, one way or the other. We will hyper and then crash, or we will, somewhere along the way, crash.

Cover your butt. get out of debt. I am shorting the qqqq. I see the Dow under 5,000. Sell.

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