Friday, April 29, 2011

Get ready for (hyper)inflation

Anyone paying attention has heard/read/studied considerable speculation about whether we are experiencing deflation or (hyper)inflation. We wonder what will become of our savings/investments/income. The author of this blog post does more to clarify this issue than anything else I've read. While the "experts" dither and hedge, this guy cuts to the chase. My instincts and understanding, both political and economic, tell me he is absolutely right.

I read his post in a single setting yesterday morning, without reading any of the ancillary attachments (I'll review those later). But the gist of his (long-winded) treatise is this:

The "battle" is not between the bourgeois ("capitalists", or "haves") and the proletariat ("workers", or "have-nots"). That would be a Marxist over-simplification.

Rather it is between "debtors" (the "easy-money" crowd, who profit from "easy" credit, low interest rates, inflation, and debt leveraging -- in other words, modern Americans) and "savers" (the "hard money" crowd, our grandparents, those who hate inflation and low interest rates because they eat away at savings and "real" returns). It is also a battle between the well-connected economic and political "elite" (who wish to preserve their wealth and lifestyle) and the rest of us (upon whom they depend to keep government and civilization running).

The anti-inflationists claim that the "elites" would never allow inflation to get out of hand, "dumping loads of money on our front lawns," as it were, because debtors would then be able to gather hundreds of thousands of dollars in a matter of days to pay off their 30-year mortgages. The "banksters" wouldn't allow that, they say.

But this blogger explains why this is precisely what the banks will do...because the alternative would be so much worse.

While the housing market makes up (if I remember correctly) $9T of the nation's present wealth, this represents but a fraction of the $163T(?) tied up in dollar-denominated assets. In a deflationary economy, with money tight, those assets would drive toward zero value, leaving their owners holding empty bags.

It is far preferable, in their mind, to allow the housing market to inflate (and even get paid off, if possible) in an inflationary economy, than to ruin the world in a deflationary one.

Besides, when the fit hits the shan (indeed, it has already begun) and the people finally acknowledge the tsunami of higher prices and devalued currency washing over their shores, money to pay off mortgages will be shunted to buy bread and pay utilities, rather than mortgages. That $200k mortgage will remain just as hopelessly out of reach to those making $7k a week when they're spending $1k a day on food.

Eventually, prices will stabilize -- even if production ceases for six months or more. This massive "reset" will be a "game changer". Many will come out ahead and many will fall farther behind. Some may even perish. A few will have paid off their debts and will have retained their assets. Others will have lost everything.

The "trick" is understanding how to get to the "other side" of that "reset" intact.

This blogger makes the case that gold is the vehicle that can get you to the other side. A gold coin today buys the same "stuff" it bought a hundred years ago. And it will do so 100 years from now. The value of the fiat dollar moves inversely to gold. You will need more and more dollars -- and less and less gold -- to make purchases from here on out. Even at $1500 an ounce, gold is a steal compared to where it will be after the dollar is inflated to infinity, the economy has imploded, the world has "reset" to another global (gold-denominated) reserve currency. And life goes on (as it will).

This "plan" has been in the works for decades (since at least the 1970's). Sophisticated observers will recognize that (hyper)inflation is the historic and inevitable result of all fiat currencies. As this blogger points out, under these conditions, the "profits" to be made by a homeowner leveraging even a 95% LTV ratio will not equate with that of gold, which will multiply as much as 40X.

The "banksters" know what they have to do. They have quietly been moving to gold for decades. The dollar has been falling inexorably and will continue to fall until all hell breaks loose and the dollar's value -- no longer as a world reserve currency -- will reset. We'll continue to use the dollar, but it will have a lot more zeros, like the peso, tacked onto it. And all our lives will be different.

This is his case (from what I remember reading).

So, what to do?

For reasons explained, the politically connected will bend to the will of the masses and devalue our currency (inflating the economy) to relieve the pressure of all-consuming debt. Those who are highly-levered in real estate will prosper if people can be found to pay the rent. (A BIG if! Housing is now grossly overbuilt and wages will NOT keep up with inflation, making cash to pay rent hard to come by.) Even then, houses and land can be expropriated politically (through taxation and regulation), so even paid-off homes are not entirely "safe" assets.

Gold will shine. It has perdurable value with an infinite upside and little means of effectively being regulated. (No matter how high prices go -- or low the dollar falls in value -- gold will purchase what it's "worth", which remains fairly constant over time.) As they say, "cash is king" when times are tough. And gold is the only "real money" out there.

If you have assets in paper, your paper will become increasingly worthless. Your pension will become increasingly worthless. Your annuity will become increasingly worthless. Only your hard assets (property which you own...and gold) will "sail through" to the other side, leaving you with your wealth intact to begin again under the new regime.

That being said, MAKE SURE YOU HAVE A YEAR OR MORE OF FOOD AND "STUFF" ON HAND. After all, you can't eat gold and you'll be trading it at a pretty price if you wait to buy food when it is scarce (and, thus, precious). What would you pay not to starve?

Have what you need in "stuff" to sustain you for a long time. Also have a means to protect yourself, your loved ones, your neighbors, and your possessions. (Before you buy gold, buy lead! The kind that flies out of the end of a gun!)

And if you have wealth locked up in paper, convert it to gold or other hard assets.

That's what I got out of my reading.

Wednesday, April 27, 2011

1961 B.C.

We're not talking the birth of Joseph of Egypt here, prior to his slavery and rise to power.

No, this involves another erst-while African, the son of a Kenyan, who finally released his birth certificate for all to see, after fostering years of debate, spending millions of dollars, and even putting one soldier in jail to keep it a secret.

And what does it reveal? Only that BHO is, indeed, the Hawaiian-born son of a Kenyan (non-U.S.) citizen and a Kansan (minor at the time), making him an American, indeed (according to our modern interpretation of the 14th amendment), but NOT a "natural-born citizen", as the Founders originally required.

He is NOT, therefore, qualified to be president of the United States.

But who cares? Matters of his origin are the least of his non-qualifications. Even so, his story was foretold long before he was even nominated.

So little do we regard our Constitution now.

Game 3: BYU 18, Trojans 6

The game had 41 plays: 20 in the first half. The Cougars held the ball 20 times (over 7 series), with 10 possessions each half.

Amazingly, the Cougars threw the ball 75% of the time, but completed only 5 of 15 passes (a dismal 33% passing ratio). We ran the ball only twice in the first half: Daniel’s crazy 100-yard run on the first play (0:17) for a measly 25 yards, followed by Caleb’s superb first-down run to the goal line (0:48). Much of that gain was erased, however, when Everett caught his first pass of the season (1:10) and ran the wrong way! The Cougars threw the ball on every possession for the remainder of the first half, with little success.

The most spectacular plays of the game came on defense. After stopping a Trojan rush short of a first down, Daniel appeared out of nowhere on the next play, leaping to intercept a Trojan pass , scoring the Cougar’s first touchdown (4:00). With an almost identical catch three plays later (4:50), Daniel scored again! Having missed both conversions, the Cougars lead at half-time, 12-0.

The Trojans started the second half with a bang, scoring on their first possession with a long run up the middle. Their 2-point conversion, however, was intercepted by Nicholas, preventing a score.

Hanyi had a great run on the next possession (only three runs were attempted the second half), but he cut unnecessarily and was stopped short of the first down (as in Game 2). Trenten caught the next pass (one of seven thrown this half), for a first down. Kyson later faked a pass to run in the Cougars’ third TD (7:30). The 2-point conversion failed and the score was (finally) 18-6, BYU.

BYU's spectacular defense dominated the game.

The Trojans threw only eight times, with no completions and one interception, scoring only once on a running play.

The Cougars could have scored many more times, if passes had not been dropped and open players had not been ignored.

BYU has now beaten every other team in the league, with no losses, allowing only two TDs (and no extra points) in three games. BYU has out-scored its opponents 5 to 1, with a season total (thus far) of 60-12.

Game 2: BYU 28, Bears 6.

This was probably the greatest game of the season...and the most frustrating. There were many spectacular plays! Unfortunately, few were caught on video.

Daniel (#9) scored (1:35) on a misdirection, followed by a two-point conversion (2:10). The fabulous Hanyi-to-Daniel-to-Hanyi hand-off and pass-back (3:10) would have resulted in a score, but Daniel stepped over the line before his throw. (That was missed, as well.)

Hanyi's awesome completion to Nicholas (at #4 position) resulted in another touchdown (also missed on video, at 4:35)...but we do see #7, off in the distance, catching a pass. *sigh*

The half-time score was 14-0. The game would have been much closer but for BYU's excellent defense.

Opening the second half, Hanyi easily would have scored (6:27), with a wide-open field! But, inexplicably, he slowed and turned into the defense, failing even to convert the first down.

Daniel completed a beautiful pass to Kyson (#2 position) for a first down. You can see it all (7:30), no, you can't.

Hanyi scored (8:15). (Surprisingly, some of this play actually made it into the video! This must have been an accident.)

Nicholas intercepted and scored (8:50), the best play of the game. (The cameraman mercifully spared us the carnage by turning the camera away at the last second! Whew! That was close!) Kyson followed up with the two-point conversion (9:10).

Daniel threw into a crowd (10:20), resulting in the Bear's only score (11:05, entirely off-camera). But they failed to convert, bringing the final score to 28-6, BYU.

Sunday, April 3, 2011

A people in chains

Roger Hedgecock succinctly summarizes America's greatest priorities: Cut federal spending, repeal and defund Obamacare and secure the border with Mexico.

Elsewhere I read that the federal government now funds upwards of 40% of some state's budgets, taking more and more from the people and making the people even more dependent upon federal largess.

We are warned of economic tyranny in the Book of Mormon. Wicked King Noah expropriated 20 percent of his people's wealth each year to finance his palaces, prostitutes, and priests. U.S. federal spending is now over 40% of GDP (gross domestic product). What they couldn't raise by taxes, they have borrowed. Our people have elected leaders who have bankrupted U.S.

Ironically, the present occupant of the Cherry Blossom Throne has started another foreign war, even as our own borders (as in King Noah's day) are overrun from the south. 

The Book of Mormon (see Mosiah Chapter 11) itemizes King Noah's crimes as follows:
  • He changed the laws (affairs) of the kingdom.
  • He put down old leaders and consecrated new ones, who supported his ideology.
  • The new leaders were lazy, didn't work, and were supported by taxing productive citizens.
  • These new leaders were idolatrous and spoke flattering words to the people.
  • The people subsequently became idolatrous, too, following after gold and silver.
  • The king initiated many expensive construction projects to engage and distract his people.
  • Even as the people were attacked and looted (in small numbers) by invading Lamanites, the King insufficiently protected his people and the borders of their lands.
  • The people nevertheless boasted of their military strength.

Sound familiar?

Our "king" has raised up czars, only 5% of whom have ever worked in the private sector. Our "queen" has hired dozens of courtesans to entertain her beck and call, at great expense to the taxpayer. These are but figure-heads of the treacherous cabal who now inhabit Washington, D.C. and the legion of sycophants who suck off the government teat everywhere. They dine sumptuously and vacation frequently, costing us billions. Our "king" has directed hundreds of billions of (largely borrowed) federal dollars to construction projects in every state, erecting monuments to his own magistry. Even as our southern borders are over-run from time to time (by "Lamanites" even!), our "king" does little or nothing to stem the encroachment, pillage and slaughter. Instead, we blow the hell out of those we deem "enemies" in foreign lands, relying upon our superior technology as the world's greatest "superpower". We wallow in pride and idolatry.

When King Noah turned his armies against the people of God (Chapter 19), "the lesser part began to breathe out threatenings against the king, and there began to be a great contention among them." Those who opposed the king (and government) were sentenced to death by King Noah's followers. Only a minority of the people (the righteous, productive part, no doubt) were dissatisfied with the status quo. The unrighteous majority (part of the ruling class, and beneficiaries thereof) labored to keep the king in power -- and the rest of the people in servitude.

Today the "ruling factions" are called unions and government employeesGovernment workers now outnumber construction, farming, fishing, forestry, manufacturing, mining and utilities workers combined. They now use the color of law to force citizens to pay their inflated salaries and benefits. I am one of those beneficiaries (though, arguably, among the lower minions). While I hardly make enough now to get by, many (in the private sector) earn significantly less than I do. My union uses dishonest and coercive tactics to retain power and maintain the gravy train for its membership -- at the public's expense.

Why didn't more people complain in King Noah's time? They were either on the government dole (and beholden to it), they were distracted by sin, or they were too busy laboring to pay their bills and taxes. With what little free time they had, they didn't follow politics or investigate federal expenditures. They wasted their energies with harlots (as did their leaders) or they focused on their families and worthy personal concerns (as did the righteous). Meanwhile, their government exploded...then imploded.

When King Noah found himself at the point of a sword, threatened with death, he turned his people's attention to an invading foe from the south. (Shemlon was south of Nephi. See proposed map of present-day central Guatemala.) Thus distracted by war, the king's people continued to support him and his policies. But only for a while. They eventually "fired" him. Literally.

Game 1: BYU 14, Irish 0

We won our first game! The Cougar defense was overwhelming, limiting the Irish to one first down and no score. BYU scored on its first play (about 55 seconds into the video), with Daniel Carter (QB) handing off to Caleb Fisher (HB), who ran the distance. The 2-point conversion was completed by a hand-off from Carter to Hanyi Jon (FB), running right. Carter scored again in the second half (about 7:15), also with a run to the right.

BYU failed to complete a pass (having never practiced passing). I attribute BYU's success to using the same formation each play, building from there, with subtle misdirection.

Cougars are 1-0 for the season.