Richard Russell 01 (May 08 - Dec 14)

[winston]

Many years ago I came up with the expression, "Inflate or die." I felt this described the US's attitude toward economics – that was true 20 years ago, and it's even truer today. By the year 2020, the US will have a national debt probably approaching $20 trillion plus a lot more in unfunded liabilities that won't show on the books.

By that time the dollar will in all probabilities no longer be the world's reserve currency. That will mean the US will have to earn its money, rather than print it. There's no way in the world that the US is going to earn the kind of money needed to pay off or even reduce its enormous debts. What's the answer? The answer will be – "Inflate or die," and the US will, as usual, resort to inflation.

I've wracked my brain trying to think of another way out of America's debt predicament, and I can't think of another way. The way will be – inflation, and a lowered standard of living and the pain that goes with inflation.

– Richard Russell

[winston]

I've said this before, but I'll repeat it – the whole system of fiat (paper) money is the greatest fraud ever perpetrated on the American people.

Our defense against this "counterfeit" money is, and always has been, Constitutional money – gold and silver. Federal Reserve Notes (currently termed "dollars") are a blatant lie.

Today, rising gold is dragging that lie out into the open. Ultimately, the truth will out.

Rising gold is shouting the truth – "gold is money, Federal Reserve Notes are a lie and an abomination."


– Richard Russell, Dow Theory Letters

[kennynah]

well...this fraud has been around since 1971....it is such an old "lie"...it's become an accepted "truth"....
try buying fish using your gold pendant at sheng shiong.... sure, gold has an intrinsic value... it is just not a common currency to replace this fiat/"bluff" phoney money....for that matter, not just the dollar is considered fiat...just about all currencies, including Euros, Pounds, SGD, RM, RMB, JPY, Rupees, Baht, etc...are all printed money.... fiat money is no more than a commodity whose value is simply determined by the demand and supply of it...

[winston]

TOL:-

We are moving towards E-Money now...

In Japan, you can use your mobile phone to buy a lot of things. In HK, the Octopus Card can also be used to buy things..

When we dont use paper money any more, does that mean that the amount of money in circulation cannot be expanded any more ?

[winston]

The dangerous secrets of the Federal Reserve
From Richard Russell in Dow Theory Letters:

The Fed created $2 trillion of assets and debts to rescue banks from their incredible stupidity and almost certain bankruptcy. American taxpayers, to whom the Fed is beholden, have no idea how the money was spent and who the money went to, and they want to know who and why.

The Fed's answer is that US citizens have no right to question or audit the Fed. The arrogant (or frightened?) Fed is resisting all requests for an accounting or an audit.

On his second day in office, President Obama, in a letter to ALL agencies wrote, "Transparency promotes accountability" because "information maintained by the federal government is a national asset. My administration is committed to creating an unprecedented level of openness in government."

So why not audit these arrogant or terrified bastards at the Fed? What are they hiding? What are the "dangerous secrets" behind the Fed's reluctance to reveal its activities?

I hate secrecy -- unless it's necessary to protect the US in time of war. Behind secrecy is almost always evil or corruption. Case in point, VP Cheney screaming that it is "outrageous" to investigate the CIA's torturing ("enhanced interrogation") of prisoners.

"Enhanced interrogation," "quantitative easing," when the government resorts to euphemisms, you know that there is evil or something the government wants to hide behind the expressions.

[kennynah]

so they say...fed reserve bank is in reality a private bank...and as such, has no responsibility nor accountability to the general public... look at them as if they are a legalized money lender with the powers to print fiat money...and suddenly, it isn't so confusing anymore...

they prosper when market disintegrates, when economy enters depression.... it is only during such distressed times, that they acquire undervalued assets, and lend to large institutions and banks at their terms...

some conspiracy theorists even go so far as to suggest that the fed reserve bank intentionally create those dangerous economic bubbles via their unscrupulous employment of monetary policies..

[winston]

Richard Russell (Dow Theory Letters): Stock market rally is tired

“I’m studying the daily chart of the Dow below. RSI appears to have hit the overbought area (70) and has turned down from there.

MACD has three declining tops with the blue histograms about to turn negative. The thin red line above volume has been steadily declining, indicating a contracting of volume as the Dow climbed.

All this gives me food for thought. The rally is tired. But far more important, is the rally topping out? We should know over the coming two or three weeks.”

Source: Richard Russell, Dow Theory Letters, September 24, 2009.

[winston]

Why politicians and bankers hate gold
From Richard Russell in Dow Theory Letters:

Currently, the talk is of "exit strategies." Strategies to undo the damage that the Fed has done. But the Fed isn't finished yet. And the story hasn't been told in full. What happens if a fed-up world decides to exit the dollar? Oil is priced and sold in dollars. What if the oil producers decide that they want a different currency. What happens then? The questions are endless.

The problem -- you can't save the real world with fantasy money. When too much fantasy money is created, knowledgeable people turn to real money -- gold. Which is why central bankers fear and hate gold.

When the world turns to gold, it is turning away from the fantasy ("counterfeit") currency that the central banks create. This terrifies the bankers, whose power comes from their ability to create "money" out of thin air.

[winston]

Why you must own some gold now
From Richard Russell in Dow Theory Letters:

If the dollar continues to decline and gold continues to advance, at some point people will ask themselves, "Am I crazy because I'm holding all these dollars. Maybe I should hedge a bit and put about a tenth of my cash into gold."

( So why must it be between Cash and Gold ? Why not buy US Farmland, Commodities, Corporate Bonds, Equities, Diamond etc ? )

This kind of thinking has not yet rubbed off on most Americans. It hasn't because Americans have grown up with the idea that the dollar "is sacred." Americans grew up with dollars, their parents grew up with dollars. The dollar was always money and could always buy wanted items.

Only oldsters like [me] remember working for $18 a week and buying a loaf of bread for a dime and renting a three-bedroom apartment in Manhattan for $325 a month. Like the frog in the pot, Americans have grown up with inflation. They're used to it. So who needs protection from the fading dollar?

Americans don't believe they need protection. What's happening hasn't sunk into their brains yet. But as the decline in the dollar accelerates and as it makes the newspaper columns, they will "get it." At which time the gold market will gather strength.

So better to buy gold and gold shares now -- rather than wait a year or two from now for a correction.

Great events, earth-shaking events, often begin just as hints.

[winston]

“I take the action of the stock and bond markets this week (and particularly today) very seriously. Extreme caution is advised. The primary trend of the market is bearish, and the secondary trend may now be turning down,” said Richard Russell (Dow Theory Letters) on Friday.

After equities’ seven month climb, stock markets certainly look vulnerable for a decline. Two downside reversal days - on Wednesday and Friday - would seem to indicate that stocks could commence a pullback to work off the overbought condition, allowing fundamentals to reassert themselves.