02/24/11 Paris, France – We were quoted in The Wall Street Journal last week. “Gold is a bet against the Fed,” we said.
Gold is now firmly over $1,400 an ounce. The correction seems to be over.
Frankly, we were disappointed. We were hoping for a deep correction that would shake out the speculators and discourage the Johnny-come-lately investors.
Didn’t happen. Instead, the price barely went down at all. Less than 10% (from vague memory). Hardly a correction.
We wanted lower prices so we could buy more. Because, if there were ever a sure-fire, under-priced wager here’s one: betting that the Fed will err.
You can understand the power of that bet just by taking the other side for a moment. Who, in his right mind, would bet that the Fed won’t err? Thanks largely to the Fed and other central banks, the crisis that began 4 years ago with the bankruptcy of subprime lender Countrywide Financial was never resolved. Instead, the problems were largely increased. The private sector still has far too much debt. Now, the public sector is headed for bankruptcy too. It is only a matter of time before new crises arise and intensify.
Ben Bernanke has never given the slightest indication, hint or wink to suggest that he has any idea of what is really going on or that he understands how an economy really works. At every point over the last 5 years, his analysis has been incorrect. His predictions have been wrong. And his policies have made things worse.
You want to bet on Ben Bernanke? Yes, thanks…we’ll take that bet. We’ll take your money!
Was there ever a problem so intractable…or a situation so awful…that government planning couldn’t make worse? Here’s the latest. With food prices soaring, the feds move into the market.
They need to go back and read the Old Testament. An ancient Mubarak in the land of the pyramids was faced with famine. But he had the good sense to save up grain when it was cheap…and release it to the people when it was dear. These morons are doing the opposite. A pox on their houses! May their beer be always flat!
Feb. 21 (Bloomberg) – Governments worldwide will increase their role in global food markets and may boost stockpiles and subsidies or impose trade curbs to head off the protests that have rippled through the Middle East, commodity traders said.
“Greater political intervention in food matters is only to be expected,” Alan Winney, chairman of Emerald Group Australia Pty Ltd., said in an interview at a sugar-industry conference in Dubai. “Governments will be careful to take preemptive measures to prevent increases in food prices,” said Winney.
The higher costs of wheat, sugar and dairy products sent the United Nations’ World Food Price Index to an all-time high last month. The jump has contributed to democratic revolts in Tunisia and Egypt, as well as other Arab nations. Saif al-Islam Qaddafi said in a televised address Libya is “not Tunisia and Egypt” after thousands demonstrated in the city of Benghazi.
Regards,
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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Be sure the gold you buy is physical and not paper representation of gold.
Gov making things worse. Isn’t that what they are supposed to do? At least, in IN and WI they have figured out a way to get rid of some of their legistors. How we in AR do the same? Fox took the Huckster off our hands. I wonder if they would be willing to take anymore of our gov officials?
Bernanky is barely wrong and this “inflation/deflation” thing is just a nonsence.
What it is all about is REDISTRIBUTION of material ressourses. That is all. Naw “to inflate” or “to deflate” in order to redistribute wealth is just cheaper and easier than send armed troops in the houmes of the citizens like it was done by bolsheviks, by instance. The job FED has to do is definetely not to give kick-start to economy, or care for wellbeing of “american citizen” or other nonsence like that .
But to redistribute. And even if Mr.Bernenky perfectly understand the economy he has to do his job. Period.
And another thing: if you make one effort to understand something it is often helpfull if you have seen something like that bevor. Most americans have read about some crisis only in the books/newspapers. So it is hard to understand some thing you never have seen befor. So where is the crisis? In US? Europe?
You want to see crisis? Fly to Egipet. No food, no money and angry mob in the streets. So it was in Russia, and probably in Argentina. Here in US it won`t be that bad.