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From the Desert John Mauldin, Grant Williams, Peter Shiff and Rick Rule

Big Al
February 25, 2013

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Discussion
22 Comments
    Feb 25, 2013 25:43 AM

    John is SO RIGHT, as long as growth of GDP exceeds the deficit, we can hang on to allow inflation to effectively reduce the debt.
    He missed one thing, however, THE OFF-BUDGET ITEMS.
    The deficit is HOPELESSLY MIS_CALCULATED by the government. They don’t use generally accepted accounting practices.

    Feb 25, 2013 25:48 AM

    Agree cfs.

    Big Al

    Feb 25, 2013 25:03 AM

    Mauldon is saying that the US debt problem can be fixed but the government is the problem that is not being fixed. Neither wishful thinking nor “ifs” are going to fix these problems when elected and appointed officials depend entitlement thinking of their supporters in a democratic system. Because mathematics eventually determines the outcome it is likely that the US will either fall apart soon like Peter believes or later after going through tyranny to the bitter end.

    Feb 25, 2013 25:11 AM

    Come the revolution, politician’s pay will be fixed relative the the average national wage AND there will be TERM LIMITS.
    Eventually democracy will be made to succeed, but first teacher’s tenure must be abolished and educational standards have to be measured. Maybe schools even have to be taken out of the hands of government; instead of providing yet another example of government failure.

      Feb 26, 2013 26:57 PM

      Bravo cfs!

      Big Al

    Feb 25, 2013 25:41 AM

    Peter Schiff comment about the distinction between wealth and having a claim on wealth is a foundational understanding.
    In the end you want the thing you need not a claim check for the thing.
    You want to have what is being measured not the ruler.
    Until they find a recipe for dollar soup ultimately I want what is on the grocery shelf not what I hand the cashier.

      Feb 25, 2013 25:28 PM

      Dennis: Well said.
      Interference in the price discovery mechanism is what fiat money supporters are defending which is why they hate the idea of a gold standard. Because debt problems are not being solved and only getting worse, the defenders of fiat money are moving towards a single world currency where a single entity decides how trade and debt are balanced. In the case of fiat money it is the SDR at the IMF being debated, but in order for consensus of all the G20 to agree it will require something very different from the existing dollar based settlement system. I doubt very much any agreement will be anything like a dollar based system governed by a Euro type politics, more than likely it will be something basic and simple that everyone understands and has, like gold. James Grant has explained this for years and people are beginning to understand even if they are kicking and screaming or willing.
      The world is already moving towards gold, central bank buying, BIS and IMF repricing tier one capital, Basel accords and the list goes on.

        Feb 25, 2013 25:06 PM

        Be your own central bank.

          Feb 25, 2013 25:49 PM

          DITTO THAT!

      Feb 25, 2013 25:01 PM

      John Mauldin has usually been a proponent of the muddle through economy, whereas Peter Schiff is expecting a collapse.
      However, so far, it’s been muddle through, more or less. The collapse in 2008 wasn’t quite big enough, though it has done huge damage – to the people, not to the rulers, who have benefitted from bigger government as they also did in the 1930s depression!
      I think the US dollar may be on an uptrend for several years, not because of any intrinsic value but due to tremendous weakness in the Euro, Yen and Pound, which make up about 80% of the denominator of the USDX dollar index. That would especially be true if one or more of those other regions has a hyperinflation. In the case of trouble in those regoins coming first, assets may move in to the US dollar instead of moving into gold, for instance, as long as the purchasing power of the dollar is neutral or increasing in those other regions of the world.
      So I can see that it could be possible for gold to be weak or rangebound for several years, unless there is a dollar crisis, which could in fact come at any time due to US creditors going on strike as they actually should. Meanwhile, Obama is getting away with it.
      The wild card might be that China might get enough gold to start becoming a reserve currency in its own right and force the US dollar to take joint first or even second place.
      John M is also too sanguine about the US oil reserves and shale oil/gas. Five years ago, we heard about nothing except Canadian tar sands, Have they revolutionised Canada’s economy? Not really, because they don’t get a lot of money for that heavy oil. Shale might also turn out to be a nice passing fad. Oil and gas are a lot cheaper in the USA that in Europe right now so the US businesses and gov’t are benefitting right now, but it doesn’t show up in spectacular GDP comparisons re the rest of the world, at least not yet. I can’t see the US becoming a net oil exporter – don’t they consume about 20m barrels/day? Oil production would have to exceed the 1970 peak by a mile to achieve that. Not possible, I think.

        Feb 26, 2013 26:02 PM

        Some really good points, Silverbug!

        Big Al

      Feb 26, 2013 26:58 PM

      I do agree, Dennis M!

      Big Al

    Feb 25, 2013 25:34 PM

    I sensed an insecurity from a member of the panel.
    He reminded me of a college Professor who although was very smart had some overbearing need to always be the smartest person in the room.
    There are worst faults. The panel would have been more productive limited to those with which Al was familiar.

      Feb 26, 2013 26:03 PM

      Interesting point Dennis M!

      BigAl

    Feb 25, 2013 25:50 PM

    ONE MUST DO EVERYTHING POSSIBLE TO PRESERVE THEIR WEALTH IN VENUES OF GLD & SLVR, OIL….THE DEBT PROBLEM CANNOT BE FIXED, NOT IN THE NEXT 10-15 YEARS, IF THEN. IF WE BALANCED THE BUDGET WITHIN THE NEXT 5-7 YEARS, THEN WE WOULD NEED TO RUN A SURPLUS OF $1 TRILLION PER YEAR, USE IT TO PAY DOWN DEBT, REDUCE INTEREST AS IT INCREASED, ETC. TO DO SO IT WOULD HAVE TO BE CONTINUAL FOR THE LEAST OF 10 YEARS TO MAKE A DENT IN THE DEBT. WE ARE LOOKING AT AN IMPOSSIBLE TASK. AS FOR THE DOLLAR, THERE IS NO TRUE VALUE AS LONG AS THE DEFICIT CONTINUES, AS IT WILL, THE CURRENCY WAR WILL ESCALATE AND THE DOLLAR WOULD BE A MINOR CURRENCY IN THE WORLD. TO SAY OTHERWISE IS FOOLISHNESS! JOHN MAUDLIN IS WRONG, BASED ON THE ONGOING DEFICIT PROBLEM INCREASING, NO REAL JOB GROWTH,,,,THE COMING ‘DEPRESSION…WHATEVER THAT WILL BE” IS COMING. IT IS AS REAL AS THE NOSE ON OUR FACE. SPENDING, INCREASED DEFICITS, MORE AND MORE DEBT WILL CONTINUE, SO HOW DOES ONE PROPOSE THAT PRINTING MONEY AND DEBT HELP US SOLVE THE PROBLEM.

    “simply said”
    wyn

      Feb 25, 2013 25:14 PM

      Hey Wyn — That sounds like a good Ph.D. thesis. (sad grin)

    Feb 25, 2013 25:45 PM

    AL……You sound very tired my friend….you need a long vacation…….take a month off and let the boys handle the show…….The black swan will not show up for a while, there still is to much slop in the market….and world ….. the pope is being replaced, the dollar is still king, and the muppets are still in congress….so, I think it is safe for you to take a month off……

    Feb 25, 2013 25:07 PM

    I haven’t listened to the whole track, but there is a sense that these guys, like Bernanke, are in over their heads, like policemen looking for evidence of a purse snatching on the scene of a murder. Notice the absence of discussion about bypassing the SWIFT system. Other nations are motivated to take initiative because they aren’t sensing the kind of leadership in Washington that is needed to grapple with really big and complex and ugly problems caused by really bad people doing really bad things. The situation cannot be resolved merely by coverups, manipulation, politicking and can-kicking. America needs to take the bull by the horns, and that includes restoring rule of law AND LOCKING UP THOSE RESPONSIBLE.

    It must be terrifying to work in Washington these days. “Keep a paper trail, and watch your back.”

      Feb 25, 2013 25:21 PM

      Lore,
      What happened to the ethic of resigning from a position when the position required you to act against your principles.
      There was a justice trial attorney who resigned do to the Black Panther voter intimidation case but other than that nothing.
      Do we lack principles.
      Do we prioritize pay over principles.
      In the end a resignation prior to compromising yourself is a great career move!

    Feb 25, 2013 25:48 PM

    There is a rumour that you can’t become a top executive in certain big banks without demonstrating lack of conscience by screwing someone else and getting away with it. I sense that the problem reaches critical mass and then becomes irremediable without systemwide shakedown. For example, it would be interesting to see how many people associated with the syndicate are either bought or blackmailed in some way. It’s probably a majority of the people in positions of power down in Washington. Bear in mind too that psychopaths feel no guilt, and their dirt tends to stick to the people around them. Once there is enough dirt, everybody becomes scared to make the first move. Like an abused spouse, the whole organization “learns helplessness.”

    It’s not easy to walk away from a job, no matter how rotten, when you have bills to pay and mouths to feed. On that note, some here might enjoy the movie The Company Men starring Ben Affleck (2010). It’s about coming to terms with the New Normal in the world of work.

      Feb 25, 2013 25:31 PM

      We all have our own cross the bear but first we need to pick it up.
      Too many of us completely ignore any responsibility.
      It is as if the universe is centered on each person who never even ponders it.
      Too much self-esteem and too little merit.

    Feb 26, 2013 26:29 AM

    Schiff 10-Maulden 0