Now that we have a brand new debt deal the economy should rebound right? Well the very next day the DOW Jones average fell 265 points and gold shot up $40 an ounce. Not exactly the type of reaction one would expect from a debt deal that supposedly was saving us from a catastrophic default.
Just as Washington was announcing the new Debt Deal the Bank of Korea announced the purchase of 25 tons of gold over the last two months. This marks the country's first gold purchase in 13 years. Central banks tend to buy gold when they need to diversify their holdings and are not necessarily market timed. Not only has Korea increased their holding recently but so has Kazakhstan, Russia and Thailand.
Why are they increasing their gold holding? Well I think the answer is simple. The U.S. Dollar is heading into very treacherous territory. The debt deal doesn't solve anything. NOTHING!!! The debt ceiling is going up and spending will continue to rise right along with it. To fully understand what the Congress just did, look at this graph provided by the Cato Institute.
Every single Congressman and Senator who says this deal is a step in the right direction is flat out lying to you.
If they start talking about another round of Quantitative Easing (QE3) remember you were warned. This government will continue to borrow, spend and create money until there is no value left in the U.S. Dollar.
Cheers,
Mike
Posts
And let's not forget that the baseline itself is a joke because it presumes no mid-year appropriations. Do the $700 billion TARP and $850 billion stimulus ring a bell?
ReplyDeleteThat's true Ted.
ReplyDeleteUnreal Mike. I've been meaning to ask you if the "cuts" offset the fed spending for the next decade, I guess I have my answer. Incredible!
ReplyDelete@Country Thinker
ReplyDelete“Treasury’s report showed that, through the end of the May, TARP repayments had reached a total of $194 billion, which exceeded the total amount of TARP funds outstanding ($190 billion) by $4 billion.”
Read more: The TARP Money-Back Guarantee - 24/7 Wall St. http://247wallst.com/2010/06/11/the-tarp-money-back-guarantee/#ixzz1U6Y8Fh63
Ted, That interesting. I didn't catch that. Looking at it now I see what you're talking about but all those banks who have now paid back their "Loans" are doing pretty poorly themselves. What do think this means?
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ReplyDeleteof. I say to you, I definitely get annoyed while people think about worries that they plainly don't know about. You managed to hit the nail upon the top as well as defined out the whole thing without having side effect , people can take a signal. Will likely be back to get more. Thanks
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