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Monday, February 16, 2009
Obama's Stimulus
The $800B plus stimulus package has been passed by Congress and will be signed tomorrow by President Obama.
I have read a number of overviews of the bill and watched a number of debates on the bill. A high percentage of the
bill appears to be social engineering of Democratic policies rather than true economic stimulus. The Democrats
have decided to put in place new major spending programs and describe them as "stimulus". This is not
a big surprise. The Democrats don't have a clue about the long term damage they will do with this bill and
the spending programs that are likely to follow.
To be fair the Bush administration and Republicans
in Congress were lost in space for the most part during the past eight years on economic and financial management issues.
The US monetary system and economy are being gamed by all of our politicians for political purposes. Our country will
pay a horrific price in the end for the gross fiscal mismanagement by our government.
We hope logic and rational
thought will prevail at some point in the future. Don't hold your breath waiting. It may take a few years.
TPM
10:40 pm
Sunday, February 1, 2009
DJIA to Gold Ratio Update - Beware of the Long Term Impact of the Stimulus Program
On November 22 I wrote a blog and an article titled Economic Stimulus in 2009. Both included
a discussion of the history and potential future direction of the ratio of the Dow Jones Industrial Average (DJIA) to
Gold. In November the ratio was approximately 10 to 1. During the past two months the ratio has quietly
moved to about 8.7 to 1. Gold, the ancient measurement of wealth, is gaining relative strength against the value of
30 of the biggest and strongest corporations in the US and the world (some of the big guys are not so strong
at the moment and AIG was replaced by Kraft Food after its demise). Please read my article to get the background on
the discussion.
The US Congress is working through an economic stimulus program in the range of $800B.
The political types are arguing over what kind of stimulus is best and the Democrats in the House and Senate can't agree
what to do yet. President Obama appears to be trying hard to give the Republicans some points as part of the Senate
bill and ultimately the Senate-House Conference process. Obama is acting like any other politician in these circumstances.
Like all of our major national leaders Obama does not appear willing to deal with fundamental problems.
No politician wants to deal with the reality of the world we now live in. A world with high quality communications from
any location on the planet to any other using a mix of wireline, wireless and satellite communications when combined
with an advanced global transportation infrastructure (ships, airplanes, railroads and trucks along with associated ports,
distribution centers and management systems) has created a global labor competition that no one wants to fully discuss
in public. The US must directly address this issue and fundamentally change our whole approach to economic development
to deal with the world as it is now and will be in the future, not as it was in the past.
While the politicians"work
hard" to hand out future markers on the wealth of our nation by issuing more and more fiat currency, the markets
are speaking, albeit very softly. The DJIA to Gold Ratio is likely to scream out to the world financial markets
its distaste for fiat currency and our current approach to economic management before this process comes to an end.
Please study the issues, learn the truth and defend your personal interests.
TPM
6:21 pm
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