Nostalgia

I started buying gold 3 years ago when it was still below $1000 an oz. Since then it has gone up to $1730 (today's price). I have most of my money in silver though. 3 years ago it was below $14, and now it is about $34.

Throughout the past 2 years, I have been trying to tell people about the history of monetary systems - not because I want to turn people into investors, but because I believe this is an essential knowledge that people need to have to protect their future generations' or their own savings and wealth. We are in a period of human history where there is massive inflation across the globe, and I expect such an episode to recur again in the future.

I have been trying to convince people that gold/silver is not a bubble. But the cries of a bubble is really big. One day, people are going to look back at $1000 (or $1730) gold and $14 (or $34) silver with nostalgia, and they will not believe that they could have been snapped up at these price levels.

In the interim, I expect prices to fluctuate up or down sharply as more and more short-term speculators come into the gold and silver market. Speculators don't create a trend; they jump onto a trend. This gold and silver bull trend has been going on for about 12 years now, and they will end one day at very high prices. That might be the time to sell then, unless maybe the world got back into some form of gold or silver standard. Till then, it'll be a veryyy patient wait.

The real statesman

watch this obama, if u really want to change america. here's a real statesman who educates people and changes their lives. 

How many people talk of a politician who changed their lives, made them study history, and read books on Mises, Haye

k, Rothbath, Austrian economics, and libertarianism, and voluntarily go to incredible lengths to spread his message? And inspired locals and foreigners alike to come in voluntarily to urge him to run for presidents, and raise funds and campaign for him?

Which politician warned about the real reasons behind terrorist attacks, and predicted the financial crises, and dares to take on the financial and military establishments?

A quick search of "Obama incredible" and "Ron Paul incredible" on youtube shows obvious results on whose supporters really believe in each politician's messages.

Boom and busts in US in the past 2 decades

Jin's report on the previous 2 bubble busts in the US. A good study for those who wants to understand where economic booms and busts come from, and that stimulus and bailouts WILL NOT work. The booms and busts in the past century (not the subject of this short report) show the same patterns which I am presenting below.

Refer to the link for the numbers: http://www.federalreserve.gov/monetarypolicy/openmarket.htm#2008

Here's a summary:

  

Alan Greenspan, the supposed 'great maestro' of the Federal Reserve, printed a bunch of money out of thin air, thereby lowering rates from 8% in july 1990 to as low as 3% in 1992. This started the housing and stock market boom. He tried to increase rates incrementally, up to 6.5% in May 2000. Of course, this pricks the stock market bubble. The stock market fizzled out and culminated in the big bust in 2000-2001. 

To save his buddies and help George Bush, he again printed a whole bunch of money out of thin air, thereby lowering the rate to 1% by June 2003. This whole new bunch of money went into speculations in real estate (although I think its roots can be traced as far back as 1992). The Americans went on a GIANT consumption binge - borrowing, importing and consuming foreign products much more than what the Americans themselves can pay with exports. We saw people buying multiple homes and renovating them, in the hope of selling them to someone else. This wild speculation was further fuelled by the moral hazards of Fannie and Freddie, entities created by the Federal government to encourage home-buying.

Alan greenspan tried to increase interest rates by 0.25% every 3 months, from around early 2004 onwards, reaching 5.25% by June 2006. This action starts to prick the housing bubble. 

After taking over from Greenspan in Feb 2006, and towards the end of 2006, Bernanke should have noticed the real estate bubble about to burst. So he promptly lowered rates. He appeared in the media numerous times to assure everyone that everything is alright. The real estate bubble burst in late 2007-early 2008, although AFTER the bubble had already started to burst, Ben Bernanke was still reassuring everyone that everything is alright. (a video here for your viewing pleasure: http://www.youtube.com/watch?v=9QpD64GUoXw)

To save his buddies and help Obama, Bernanke printed a crazy whole new bunch of money out of thin air, thereby lowering the interest rates to 0-0.25% by late 2008, and had remained at that level till TODAY! He tripled the Fed's balance sheet from $900 million to close to $3 trillion. Expect massive inflation as the magic money works its way into the economy.

We see a pattern of booms and busts here, which is really the creation of the Central Bank. This 0-0.25% rate is ushering in the FINAL and BIGGEST bubble of them all --> the US government bond bubble/the USD currency bubble. Just like how the magic money flowed into the stock market in the 1990s, and how the magic money flowed into the real estate market in the 2000s, this new magic money is flowing into US government bond at a massive amount. The government is borrowing like never before. In 2013 and 2014, they have more than $5 trillion in debt repayment. We should see a big crisis, with investors dumping bonds and the USD. Some other events may happen in the interim which may take people's attention away from the US, but the end result will not change.

When we hear central bankers talk about exit strategies from the stimulus, they are lying. There's no exit strategy without a big collapse. Of course, maybe Bernanke's exit strategy is to exit and flee when his term is up for renewal in jan 2014.

Basel III and gold

Gold to be rated as the so-called tier I capital in Basel III in Jan 2013. Conspiracy theory ??

http://www.meridianca.com/fileadmin/PDFs/TheSecretReturntotheGoldStandard_BrianHicks.pdf

The road system

Insofar as govt wants to monopolize and manage the road systems, will it be better if they build double/triple layers of roads on top of each other and increase road tax, instead of simply charging COE? This way, at least they will be providing more services in return for road users' money, just like how a free-market will do. Or how about layers of cable-car-like structures, with people owning their small personal cable cars (modify them to look nicer)? 

How about opening up the road systems to private enterprises to manage and compete with each other? After all, some countries have this system of private ownership of roads. And back then during the industrial revolution, american private enterprises built water canals that criss-crossed the US for steam-ships, using private funds. The free-market works in transportation too, just like how it works wonderfully in the tech sector, where there's minimal govt intrusion.

Why education costs keep going up

classic. the answer to why education costs keep going up.

Prof says gold is a bubble

nice.. guy secretly recorded prof's and TA's responses to his question. The TA claimed that gold is in a bubble (the wrong part), but yet said that there is not enough gold to go around because the price is too low (the correct part).

It's

 not that there is insufficient gold for world trade. It's that the price is too low for trade. The same is true back then towards the end of the gold standard, when ppl claimed that there isn't enough gold. Unknown to them, it's because the central banks refused to allow their currencies to depreciate vs gold (and hence let gold prices go up) as a result of money-printing, so that there will be 'enough' gold for world trade.