I decided to split off my postings of economic links from Jim's Thoughts, so that I can get that topic back to what it was intended to be, a place for me to post trading ideas and thoughts I had that I felt could be of interest to the readers.

This topic is where I will post links to various economic articles, for those that find them interesting. If you want to read (or post) articles about the unfolding debaucle, this is the place to look. If you are a short-term daytrader or swing trader and have zero interest in the economy, you can now just read Jim's Thoughts and not have to wade through this type of dicussion.

At best I think this material only has a direct effect on longer-term plays, the bigger swings that make up the major legs of the bull and bear markets. I follow this stuff for that reason, and because I want to have a handle on things, if that is even possible in this era of lies and deception, so that I can make decisions on life issues.

For example, as I posted in the commentary on the website and discussed with many people well in advance, this was something that wasn't hard to see coming. I saw many people who told me as late as Oct 2007 that 'this thing is about to 'break out' to the upside, and that Dow 20,000, and then much higher, was 'just around the corner' '. The type of articles I am posting discuss the type of information that helped me form the viewpoints I had back then.

If this is far from over, as I suspect, we are in a similar postion now as back then. With the rally that is unfolding right now the talk is the bull is back, the bottom is in, and we are set. I'm not so sure. So, I try to weigh up all the factors and not get too sucked in by the hype. To that end, I will post things here I find interesting.

When the SHTF I think all those who are holding USD are going to look back, empty-handed, all their life savings gone, and wonder why they did nothing. I'm not recommending anyone buy anything, but I am saying everyone should do their due diligence, and look over all their options, and never say something isn't possible, especially where politicians and banksters are concerned.

http://lonerangersilver.wordpress.com/2011/06/20/living-through-a-currency-devaluation/

Interesting.

http://www.gold-eagle.com/editorials_08/weytjens062411.html

Focus especially on the last line. I have said since day one of this crisis (actually before the crisis started, but when it was obvious to me it was coming) that the Euro would end as a currency not too long down the road, and probably the entire EU. Right now my belief is the odds are mathematically indistinguishable from 100% that this will come to pass. We'll see.

http://www.spiegel.de/international/europe/0,1518,770673,00.html

Very interesting articles Jim and something that I have also been thinking about. There no deubt in my mind that unfortunately the dollar will continue to lose it's value over time.

I'm actually in the process of opening an FX account with OANDA and they allow to select the currency you want for the account. The options are US Dollar, Euro, British Pound, Swiss Frank, Japanese Yen, Australian Dollar, Singapore Dollar and Hong Kong Dollar and I'm wondering how I should go about selecting a stronger currency for the long term.

Some of this is obvious and common sense like the dollar losing value with the current massive U.S. debt and printing machines and the situation in Europe is probably very similar but a lot of this is very complex and way over my head such as trying to grasp the fundamental and economic outlook on currenceis and countries, this is not something that I feel confident in, so any suggestions or ideas on how to select the best currency would be appreciated and I'm sure that many in the group would benefit from a discussion on this issue as there is been a lot of talk about the dollar going down the tubes but not much on what currencies would be stronger and more stable over the long term. Our trading/investing profits could mean very little if the dollar loses most of it's value in the coming years.

Currently with the Australian Dollar you can get 4.5% in interest

This is an extremely complex topic, one I could write (and have) endlessly on. There are two important points to consider, relative and absolute currency strength. The DX is a relative strength indicator of the dollar compared to a basket of other currencies, mostly the Euro. The analogy is the basket is falling off the Empire State building, and is in free fall. All fiat currencies are going down fast. This is evidenced by the price of gold at or near all-time highs in all the major currencies, not just the dollar.

Now, within that free falling basket, the currencies jockey for relative position amongst themselves, as they 'competitively devalue', a total losing game they all play. One devalues by overprinting, and the big corps have a small advantage at the cost of savers and the middle class (rising prices for them are traded for more sales for the big multinational corps), for awhile. Then another devalues and steals the advantage, and then another does this, and so on, as they race to a zero value for their currency. Since the FED in 1913 the absolute value of the dollar has declined something like 98%.

So, right now the dollar is winning the race, in the basket, to the bottom. But all fiat currencies (all currencies in the world today are fiat) are racing to an absolute value of zero at the same time (the basket is falling off the Empire State building). So, if one switches to another fiat currency, all they are doing is hoping to pick one that devalues a little slower than the dollar. It's still a very, very bad game. I believe we are in the end stages of all fiat currencies going to zero.

Bottom line, if you look at the situation around the world (read the article that I will post following this post), all major countries are deeply insolvent, and in my opinion their currencies are completely valueless. Insolvency doesn't mean there must be no value, but we are talking (based on data I think is reliable) that there is about $1.6 quadrillion in derivatives out there. Perhaps there is $50-$100 trillion in total world 'money supply'?

You can see how there are promises, as far as derivatives, for way, way more 'money' in total than there exists in the world. But, thought of another way, this money we hold is a promise for a redemption for goods or services at a later date. They printed tons and tons of promises, and keep printing more and more of them, yet the goods and services, if anything, are shrinking. More promises for less goods (by some, that is the very definition of inflation), and the bottom line is, all these promises can't be redeemed.

They only seem to hold their value because few are redeeming. Like, the FDIC insures over $5 trillion in deposits, yet their insurance fund is in the hole right now. If everyone went to the bank tomorrow (or even a small percentage of the people) and asked for their money, the entire system would collapse, as it became clear the insolvent banks don't have basically any of this money.

It's similar with the money, the goods they 'represent' (the Federal Reserve Notes actually represent government debt) aren't there. As long as we don't ask for them, everything is fine. As soon as we do, the jig is up. So, all the fiat currencies are shot, worthless, it just hasn't come to light yet in hard terms. I think precious metals, hard assets, and commodities are the only things that have any chance of holding value. All fiat currencies will be 'reset' at some point, perhaps soon, and likely without warning.

In the meantime, as a trader, it is hard to buy something at a new all-time high. If one goes into the Aussie dollar, the Swissie, etc., one is basically buying at (or near) an all-time high. Every time I do that in a trade I get hammered. So, one gets a higher rate of interest, but they take on a tremendous risk on a repricing event. It can't be assumed all repricing events will always be for a weaker dollar.

The dollar is the world's preferred carry currency right now, and the amount of carry is unfathomable. Not only that, the percentage of dollar bears is ranging from 97%-99%. That is extreme. If anything around the world causes any kind of unwind and a rush into dollars the dollar index could rise very rapidly for a sustained period as they unwind and need to buy dollars at any cost.

Yes, one could join the fray and cover the dollar position by selling out of the held currency and buying back into dollars, but an entire year's interest plus more may be lost even in a quick conversion. Any hesitation could lead to a much bigger loss. So, for now, if nothing changes, one might lose less in a strong currency right now, but things change, and sentiment is very extreme now, so is it a good idea to buy an issue at its all-time high with sentiment at extreme extremes?

As a trader I have a problem with that. And it doesn't end there, because commodities have been run to extremes, and we may have some deflation issues come up, so buying into hard assets right now may also wind up being an exercise in top calling. This is a very tough time for making decisions. They have the system so messed up right now... Just some thoughts, and as always, they're all just my opinions.

This is worth the read. It really points out what is happening, and how the world is evolving into a total elite controlled banker cartel world where we are all just slaves.


http://theautomaticearth.blogspot.com/2011/07/july-4-2011-serfdom-day.html

Thanks Jim for sharing your thoughts on this issue. I think you hit the nail on the head, simply put right now it's just a very difficult time to be making decision regarding this stuff and finding good solution to this problem.

And like you mention some of the things that will hold their value better long term may not be a good time right now as many of these markets are at all time highs. I just hope that we can all have enough time to figure this out and position ourselves to be able to survive what's ahead for us in this financial crises.

I forgot, I do have another hero to go with Ron Paul and David Stockman, and that's Nigel Farage. Here's his latest:

http://www.zerohedge.com/news/2013-04-17/farage-unleashed-you-are-common-criminals