Archive for March, 2011

I’ve been inundated with tax season, but decided to chime in briefly on recent news.  A couple of big items from this week alone, Oil today hit a 2-1/2 year high settling in close to $107/barrel, Utah passed legislation allowing the use of gold and silver coins as currency, and the European Union accompanied by their Central Bank decided to raise interest rates ahead of the US Federal Reserve for the first time in history.  All of these items are extremely significant. 

Firstly, Oil has had all kinds of speculation over the past several weeks.  Some have said it is going down because of less demand out of Japan.  Others have said it is going up due to unrest in the Middle East and supply demand issues.  I’ve remained consistent with the opinion that due to inflation, oil is going to $150-200 by the end of this year regardless of what happens in the world.  A couple of weeks ago, oil took a dip down to $98 but here we are again approaching $110.  No matter what governments do, no matter what misinformation national and international media spits out, at the end of the day prices are going up due to inflation.  Again I say- oil is cheap.  It will go much higher than it is now, along with gas, gold, silver, and food commodities.  Silver today flirted with $38/oz and climbing.  I remember when silver was at $6/oz not that long ago.  Watch as these prices continue to take off.  The Federal Reserve and the Federal Government aren’t being completely honest with the American people on our options.  At this point, all options have a negative outcome.  We continue to see “optimistic” reports on jobs and recovery, but I think even the news media is growing tired of faking this so called recovery. 

This week, Utah became the first state in the USA to accept gold and silver as legal tender.  In other words, citizens are now able to buy and sell using gold and silver coins without being taxed for its use.  Gold and silver coins in Utah can now be used like US Dollars, in that people can be free to trade using these coins without penalty.  I think this is an incredibly smart move on their part, and what better way to protect their currency and their future, than to allow the people to trade using real money rather than paper.  We can only hope that other states move to adopt similar new systems using stable currencies.  It won’t be long before US Dollars really won’t buy much anyways.  Dollars continue to decline against every other major currency almost daily. 

The most disturbing recent news is the decision of the European Central Bank to raise interest rates ahead of the US Federal Reserve.  Never before in history has this happened.  Up until this point, the world has followed the Fed on monetary policy.  This clearly signals an economic superpower transition is taking place from the west to the east.  China has raised rates five times since last October to battle inflation, so it is clear that the EU is following suit.  Europe has been plagued with inflation from loose monetary policies locally and from the US.  What does that mean for us?

As other central banks begin to tighten their monetary policies, inflation will all the more surge toward the US.  The Euro was already doing better than the Dollar, along with all other major currencies.  This recent move will simply speed up the decline of the dollar, and will be accompanied by massive inflation.   You must understand, as other nations “tighten” their monetary policies, their currencies gain value/purchasing power.  In this case, these other currencies will continue to rise above the US Dollar, making it very expensive for us to buy their imported goods.  Spoken in southern: “It’s fixin to get real expensive to live over hea.” 

These problems of rising prices are only the tip of the iceberg when you consider our other problems.  I’ve been blogging less and less not only because I’m busy, but I also see that nothing is changing.  Our course hasn’t moved, so what’s there to talk about.  We continue on that train full speed ahead even though we know that the track ends where a cliff begins.  I’ve been speaking and writing about these things for quite some time.  Some ignore these things, some dismiss these things with a laugh, and some attack these opinions as outrageous and impossible.  It was Mahatma Gandhi who said, “First they ignore you, then they laugh at you, then they fight you, then you win.”  Unfortunately in this situation, I don’t want to win.  I’d love to be wrong, and I pray that I am wrong.  It is important that if you are reading this, that you work to educate yourself quickly.  The information is out there and available.  Read back in my blog as well.  Things are happening, and they are happening faster than I had expected or predicted.  If you are able and in position, work with government to move towards alternative currencies like we saw in Utah this week.  If you have families, prepare for difficult times ahead and a decline in our standard of living. 

Don’t believe me- refer to the wise words of Thomas Jefferson:  “I believe that banking institutions are more dangerous to our liberties than standing armies.  If the American people ever allow private banks to control their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property – until their children wake up homeless on the continent their fathers conquered.”

That’s all I have for today.

John F. Haettich- 3/31/2011

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I’m sure most of you are wondering what could possibly happen next.  We’ve seen tragedy after tragedy.  We’ve seen markets go up and down.  The situations effecting our world today have us wondering, what next?  I sent out an analysis on Japan to a few friends today and figured I’d blog about it as well. 

The mainstream news media seems to be set on announcing that rebuilding Japan will be great for their economy.  Talk about misinformation times a thousand.  There is a reason it is called “recovery”.  Let me explain with this example.  You own a village, and you have some savings.  Let’s say your village gets bombed wiping out everything from homes, to sewage, to power.  Everything lies in ruin.  Now you are going to either have to spend your savings, or take out loans to rebuild the village.  Instead of spending money on eating out, entertainment, vacations, health care, education, new agriculture, creating new goods and services, and creating new business, you have to spend your saved or borrowed money and your time on plumbing, electric, sewage, buildings, homes, roads, parks, and basic infrastructure.  You will have to “re-purchase” lumber, concrete, steel, and other building supplies.  Keep in mind, you aren’t building a new village, you are rebuilding a village that you once had.  How does this affect the economy?  

If you are a builder, you will have plenty of work.  There will be many homes that need to be built, so yes, the construction industry will do well- but what about the restaurant industry?  What about the tourism industry?  How about manufacturing, agriculture or healthcare?  The rice fields were wiped out, another industry lost for quite some time.  As for building supplies and components, most of the building material will need to be imported, which will support other economies, but not the economy of your village.  In the end, you will either be deep in debt, or you will have spent a good portion of your savings re-building what you originally had.   My point is this: the catastrophe in Japan isn’t great for the Japanese economy- it has destroyed a large portion of their economy.  It will take some time before their economy merely gets back to where it was much less grows.  Yet again, our media resources are engaged in a mass misinformation campaign. 

Now let’s look at the Yen.  After the quake, the Yen took off even hitting a four month high against the dollar, but why?  Demand for the Yen had gone through the roof, as it was bought heavily on the expectation of future yen demand from firms for the massive rebuilding task that is coming.  The response of Japan’s Central Bank was to pump large amounts of newly printed Yen into the market to “stabilize” the currency.  The term “stabilize” I’m guessing means that they want to keep the Yen pinned to the US Dollar to maintain export advantages- business as usual.  The question the Japanese should be asking- “Is this the best decision for Japan?”  In my estimation, I’d say no.  The Japanese are going to be heavily dependent on imports for the recovery, not exports.  As Japan pumps currency into their system, they are taking purchasing power away from the Yen.  It would be more advantageous for Japan to allow the Yen to rise, as it will make their imports more affordable.  Instead they are devaluing the Yen, driving up the cost of imports for rebuilding these cities that have been destroyed.

Now let’s look at their options.  Japan does have reserves.  They are actually the #2 holder of US Treasuries, second to China, with approximately $885 billion in Treasuries.  The damage toll thus far is around $200 billion and rising, so you might think “why don’t they just sell some of their treasuries to pay for the recovery?”    This is money for a rainy day right?  Wrong.  Japan knows that if they sell off their treasuries, they risk causing the US Dollar to collapse.  We are in a situation where the US Federal Reserve is buying 70% of newly issued treasuries, so if Japan starts dumping treasuries, boy are we in trouble.  This must be frustrating for the Japanese, because their options are so limited.  If they sell treasuries/reserves to pay for the recovery, they risk the fall of the US economy and negatively affecting the world economy.  Their other option is to issue their own treasuries and go into debt.  Regardless, it is only a matter of time before they realize that their reserves are really rendered worthless, because they can’t even sell them in times of need without collapsing the world monetary system.  Oh, what a tangled web we weave. 

On top of this disaster, we are seeing the failure of nuclear energy.  Reactor after reactor is failing, exploding, melting down.  Who really knows the true status of these reactors as the news is so mixed on this.  One thing we do know, nuclear energy is on its way out.  Watch as the world floods away from nuclear energy back towards oil, natural gas and coal once more.  Watch as oil prices continue their rise.  Solar energy continues to lack the battery technology to store it in large enough volumes to feed the needs of the population, and it’s far too expensive at this point.  Wind Energy is a “use it or lose it” energy that lacks the technology to even be stored.  Green energy has quite a ways to go before it is able to meet the energy needs of our country.  This is not rocket science, we need energy and we need it to be efficient and affordable.  Our options are shrinking.  If you are skeptical, please just watch and pay close attention to the energy markets.   

The dominoes are continuing to fall.  Disaster after disaster, we are seeing how fragile the world economy really is.  Japan holds the power to crash the dollar if they so choose, but everything depends on what their priorities are.  They may very well decide to continue to prop up the US Dollar, but what’s next?  As long as fiat currencies are in play in the world, and they continue to be, we will see oil, commodities, and precious metals on the rise despite corrections here and there.  Wealth will continue to be stolen, real poverty realized, and liberty and freedom lost.  Regardless, I am confident you will soon hear the announcement of a QE3, and even a QE4 here in the US creating even more inflation, and maybe even sealing the deal for an eventual hyperinflationary situation.  There is no avoiding it as our government has failed to do their job of simply balancing the budget.  All eyes remain on Japan for the time being, and the rest….I guess we shall see.  That’s all I have for today. 

John F. Haettich- 3/16/2011