kidmercury

As I mentioned yesterday, I've started blogging daily on my trading site. I am now blogging, doing web design, programming, marketing, bookkeeping, and god knows what else. Phew! Don't feel too sorry for me, though, I still get to go to the beach daily. Today I went three times (short trips each time, but still....I have no right to complain about anything, ever).

Anyway. I'm too tired today to think too much about an original post, so I will recycle a chart I posted on my trading site. It's a chart of the daily price of gold over the past nine months. Highlighted on the chart is the fact that the price range is consolidating. Often, this type of consolidation precedes a breakout. I'm not sure why that is, I'm sure there's a reason, but the idea of consolidation preceding a breakout is very common amongst active traders.


At the same time we are seeing stocks rallying strong. Lots of folks in the US think this means the bad economy is over. I mean, that's what Barack said, so it must be true, right? LOL. Right.

No, a rally in the stock market doesn't mean jobs were created, or that value and wealth are being created and distributed throughout the economy. All it means is that the Federal Reserve, the privately owned central bank that has a monopoly over the creation of legal currency, printed a lot of money and gave it to their rich friends at Goldman Sachs and in the military industrial complex. These folks then turned to their money managers and said, "Hey! Turn this into more money!" The uneducated money managers, which is most of them, used this as an excuse to buy stocks. The educated money managers, on the other hand, tried to persuade their clients to stay out of stocks -- but when the market is rallying hard people feel like they are missing out, and clients threaten to take their money elsewhere unless their money manager starts investing. Alas, they shall come to learn what falls upon those who succumb to greed.

But in any event, there you have it: money was printed and it was used to buy stocks. The end result, of course, is that the US dollar continues to weaken (because of all the money that was created, even though unemployment is still rising, so production is not matching this increase in money supply, and hence there is more money chasing the same or fewer goods and services, which causes the currency to get devalued). A weaker dollar means imported goods become more expensive, and since most goods are imported, this means cost of living rises. Unless, of course, you own stocks. So what's really happening is a transfer of wealth from those who don't own financial assets, particularly stocks, to those who do. Of course, this is nothing new; the Federal Reserve system is designed to be unfair, and that is what it is.

But while the Federal Reserve system is unfair, there is no cheating gold. The reason kooks love gold so much is because it is "nature's money" -- it is what becomes money when government doesn't butt its uninvited ass into the picture and say "hey, this stupid paper whose supply we control is what everyone has to use." And the real way to create social change is to regain the ability to create a fair economy where all have a more realistic shot at achieving financial independence.

Of course, the rally in the stock market is not one I think will last. Come October, let's see what happens. Cyclically, the market tends to do poorly in October -- think of October 1929, October 1987, October 2008.....crashes each time. Will it happen again this October? I wouldn't count it out. Ultimately, though, the US economy as we know it is on its last legs; it is in need of major structural reform.

Because this post is about folks getting suckered into the stock market, the song for the post is "All Day Sucker" by Stevie Wonder.