kidmercury

1. Money supply is decreasing (at least M2, one measure of money supply, is....MZM is likely decreasing as well, though I don't know for sure). As we've discussed before, all money is loaned into existence (i.e. money = debt). Expansion of the money supply thus requires expansion of debt; paying off debt in turn decreases the money supply.

2. The reason money supply is decreasing is because there are fewer loans to consumers. The US government though is still busy going into greater debt to bail out banks and keep wars going. So, what is really happening is that the money supply for the consumer economy is shrinking, but the money supply for the bankers/military-industrial complex is increasing. Fascism at its finest.

3. The dollar is strengthening. I didn't think this would happen but gold and silver are falling. Fear not, still not time to sell gold and silver. While I doubt they will raise rates, if they do, that will probably be my cue to exit gold and silver. The dollar rally still looks like it has some room to go.

4. US equities have had two consecutive big down days. We could be gearing up for a repeat of October 2008, in which the dollar rallied hard and US equities fell sharply. If this does happen, it's your chance to buy gold at a lower price.

5. Still, though, the only real way to fix the economy and strengthen the dollar is to reduce government spending. That of course seems extraordinarily unlikely, which is why gold and silver are still where it's at.

6. As a result, what I think is most likely over the next few months is a milder version of the second half of 2008. The dollar will rally, but I don't think it will rally as much as it did last time, nor do I think gold will fall as much as it did last time. US equities though could fall quite steeply, in my opinion. Of course in the big picture we are still on the path to dollar collapse, but my guess at this point is that it is going to take a few more years. There are pro-US dollar forces in the market that are quite strong and have proven themselves quite capable of delaying economic reality quite a bit.

7. Unemployment is going to be high until all these bad businesses are allowed to fail. The market needs to correct itself, government intervention that stops this process from occurring only makes things worse.

8. Real estate will continue falling. Not a time to buy yet, if you are buying as an investment. Though I consider it quite likely that the days of real estate as a sound investment won't be coming back for a while (at least a decade). Of course you may want to buy a house for the old-fashioned reason of needing a place to live.

Ultimately, though, the story is the same: monetary policy is basically a weapon used by the ruling class to impoverish everyone else. Class warfare, the inevitable by-product of what happens when you don't have sound money and capitalism (many people incorrectly blame our current problems on capitalism; not true. We live in a fascist society. Capitalism = limited government, sound money, and free market competition; fascism = corporations using government as a weapon to protect their business against competition and to give them an unfair advantage -- i.e. bailouts).

Tomorrow I'll breakdown class warfare in greater detail to show how it all happens. As you'll see it takes criminals to make class warfare happen, but it also takes ignorance. A lot of it.