Follow the smart investor Jim Rodgers
Posted by Frugal on October 17th, 2008
There are so many things that I want to blog about, but with things happening in a lightening speed, I simply cannot get to them.
I think Jim Rodgers’ opinion sums up and represents my opinion very accurate:
Jim Rodgers has been extremely successful in investing, and he has called the start of the commodity boom correctly.
Bailouts are terrible. After the bailout bills were passed, I was so disgusted by it. It should have been a 4 page document, but our “beloved” Congress added some 400 pages, worth of some 150 billion dollars for their lobbyists and special interest groups. We, as a nation, are literally dying and drowning in debts. Unfortunately, Ron Paul never made it to the ballot, since the general population of USA is not smart enough to see through all the games being played by both Democrats and Republicans. And yes, there will be inflation, and more inflation, and more high inflation. The course of the road is already set, and we, the people of Unitied States, will suffer collectively for our ignorance and inaction, and all the great sins commited by Wallstreet, hedge funds, and the politicians against us.
The world is going to so different 15 years from now. But I hold my highest optimism for the world in general, that we will all come out of this mess scathed or unscathed, reconstructing a better world after going thru the dark valley.
The latest news on Federal Reserve, injecting $785.4 billions of liquidity. What average people don’t understand is the last short paragraph:
…the total balance sheet at the Fed expanded to $1.8 trillion from $1.63 trillion last week.
Before all the crisis, I recall the Fed balance sheet was about 0.8 trillion. Now it’s at 1.8 trillion, with 1 trillion newly minted US treasury bonds floating out there. Is that clear enough?
By the way, I read a recent spooky article from DailyReckoning about US mint. DailyReckoning articles are usually way out of mainstream, but this article is the real truth: US mint has the “same” unchanged working stock of inventory of gold since April 2006! I was able to google and found another similar article elsewhere, but dated earlier, indicating that they have the exactly status report since about 2003, but I can’t find it anymore and put the link here. Using archive.org, I was able to look thru the old reports. What the authors of DailyReckoning didn’t realize that was that US mint actually have the same statement of September 30, 2008 earlier on September 2005, and not just April 2006. If anyone can find some earlier history, please add it to the comment section.
I don’t know who can balance their own checking account to the exact last cent every month and every year. But that’s what US mint is reporting since April 2006 for their balance in gold. I think probably someone does NOT want to update the report anymore for fear of lying to the public. Zero updates can always be attributed to negligence rather than dishonesty.
The chart from safehaven.com shows clearly that US mint cannot possibly run out of refining capacity for minting because back in 2000 for Y2K scare, the sale was some 3X to 4X higher. What is the truth behind all the physical shortage in precious metals, one may wonder?
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October 17th, 2008 at 1:14 pm
Sorry to see you broke below $1mln net worth, hang in there.
October 17th, 2008 at 8:33 pm
I would like to make a couple of points. First, I agree with you, we will survive this not because we’re special human beings, but because we’re Americans and it is hardwired in our collective DNA to resist government. Now I know we vascillate from one extreme to another, but the fact is that by and large American are NOT dumb, they’re brutally efficient at minding their own business. What most people take for American stupidity is in fact a cultural mindset of international indifference, for lack of a better term. In spite of a few very loud big mouths, most Americans don’t care. They are know they don’t know, and most of them just want to be left alone.
This recovery effort spurred by the federal government, where-as our cultural brethren in Europe are already fully under way destroying their currency. Those intellectual Europeans are so brutally efficient at being economically destructive. And in America we ebb and flow and ponder wheither it is governments business to intervene in the markets, the Europeans aren’t even debating this fact, they are more then ready to lie down and surrender to the state, no questions asked. Their cultures are rife with war and the need to surrender to the collective.
I think the possibility that we will have a VERY severe recession with a spate of significant inflation is very possible, but I think due to a significant percentage of Americans who both distrust and disrupt government activities along with the fortunate status of being a reserve currency is going to buttress this event significantly.
My greatest worry, and with an economic crisis I think is becoming increasing unlikely, is that we will in a fit of idiotic hubris, think that getting us out of this mess involves going to war. I’ve heard so many economist cite WW2 as leading us out of the depression, I think that absurd fallacy has yet to work itself out of our conscience. Britain won the war and it was economically devastated, not to mention Japan and Germany, how good was war for them? War being an economic stimulating event is for the most part, the “broken window fallacy” on steroids.
The economy is telling us something, the government like everyone else, believes that Americans are too stupid to understand the truth, so They’re using smoke and mirrors to keep us placated, that would be severly underestimating us as people and as a country. The government needs to level with the people, let them know that what stares back at them in the mirror is the TRUE cause of this and also happens to be the solution.
Americans have many values unlike anywhere else in the world. Those values include such things as un-pretentiousnous, honesty, independence/freedom,justice,acceptance of individualism and most importantly minding our own damn business.
I think the real problem aside from economics are values. Values always precede economics because what is economics but an attempt at an ideal system of valuation?
We’ll muddle through this and I agree, we are going to be a very different looking country on the other side, BUT we’re going to like what we see.
October 19th, 2008 at 8:18 pm
yea i generally agree with rodgers as well
funny to hear him talk since he always sounds so agitated and angry haha
-Jay
marketfolly.com
October 24th, 2008 at 7:45 pm
I agree with much of what Rogers espouses, but not everything. Early this year he was heavily pushing his advice to get out of the US — getting out of US equities, as well as the USD, since the USD will be severely debased. He was advocating investing in foreign currencies and many emerging market stocks. His theory was that a severe US downturn would largely be contained within the US, and the rest of the world would be largely decoupled from us. Well, today it looks like Rogers’ “decoupling” theory is totally wrong.
Seems like everyone is hoarding US dollars to shore up capital to be defensive during the anticipated bad times. Every other asset class is plunging in value relative to the USD. US cash is king!
Anyone have opinions on how long our current deflation scenario can last? And what signs to look for before putting cash back to work in other investments?
WilSense
October 27th, 2008 at 1:59 pm
From what I have been observing and reading, inflation trend will come to the US when the dollar starts going down, not due to commodities incl. oil, the slowdown took care of it. This is currency impact and not so much worldwide inflation. It will hit precious metal too making them trade back to years ago values.
Amit