Check out my review and comments on Harold W. G. Allen's book, In Search of Reality, http://www.thepurplemuse.com/id44.html.  The book has three distinct parts, Scientific Reality, Religious Reality, and Social and Economic Reality.  Mr. Allen challenges the status-quo in each part of his book.  I agree with some of his thinking, disagree in some areas and don't have the scientific training to fully evaluate 60 percent of the book.  Check out my review of this very unique book.

TPM

There are many new forecasts that extrapolate the current US deficit and debt situation into an extremely bad economic scenario for the US.  The fundamental assumption is that oil will stop being priced in US dollars.  The forecasts assume oil will become priced in other currencies such as the Yuan or an international basket of currencies.   The forecasters are developing what are effectively financial doomsday scenarios for the US, based on a US dollar collapse as an vehicle for international trade.

If you follow the logic of these forecasts it all seems rational except for the fact that there is no US counter punch assumed in the doomsday scenarios.  What will the US do to counteract the impact of the actions of foreign nations?  The only asset the US government owns that can possibly be exchanged for oil or existing US debt held by foreign governments and banks is gold.  There are no other assets that can be moved from one country to another easily and can be easily valued in world markets. 

I believe that the US will be forced to either exchange gold for oil, exchange gold for US debt or at least partially back the US dollar with gold so the US dollar can continue as a viable international trading currency.  Despite its naysayers gold is the world's reserve currency and has been for thousands of years.  Nothing has changed other than man's failed attempts at establishing fiat money systems.  All fiat money in world history has ended up worthless at some point in relation to initial values.
 

One way or another the US will be forced back on the discipline of the gold standard.  The US government and Federal Reserve will hate it.  Economists will be so upset!  However, reality will prevail.  Gold is real money.

Alan Greenspan wrote the following in an article in 1966.  Greenspan knew what he was doing was wrong when he was Chairman of the Federal Reserve.  Greenspan sold his soul for the power that came to him as head of the Federal Reserve.  Here is the link to the entire article, http://www.financialsensearchive.com/metals/greenspan1966.html

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves." - Alan Greenspan 1966.

I suggest that everyone take appropriate action to protect themselves.

TPM

The American people have had a number of buckets of very cold financial water thrown in their face in recent months.  If an American is now half way awake they fully appreciate that our nation is in uncharted financial waters where there is no simple outcome.  The nation's financial trajectory is unsustainable.  Government spending must be cut dramatically in all areas, including entitlement programs, DoD and discretionary programs or taxes must be dramatically increased or the US dollar must be devalued against other currencies, precious metals and all commodities (substantially increasing food and energy prices at a minimum).  It is likely that our future will include all of the above to some extent. 

The final outcome will not be pretty and will result in a reduction in average US living standards relative to other nations.  The changes in our living standards will be a direct result of the failure of our federal and state governments and the Federal Reserve to operate responsibly over the past 30 years or more.  The American people allowed their government to operate irresponsibly and didn't act soon enough to prevent the eventual outcome.    Americans were seduced by unsustainable living standards fueled by debt and government promises that can't be kept.  The US credit card is just about tapped out.

All the liberals/progressives need to stop screaming about the cut backs for their do-gooder programs.  Americans must become more self reliant.  The nanny state is in for major belt tightening.  Conservatives need to get real about DoD and Homeland Security costs.  The US can no longer afford the police force for the world.  The discretionary area of the budget needs to shrink dramatically.  Federal funding for lots of programs must be slashed or ended.  The US may need to be more libertarian in its thinking about life style oriented issues so we can eliminate government law enforcement costs directly related to life style.

There is no avoiding the eventual outcome.  We need to be adults and accept reality and get on with taking corrective actions.  The sooner we act the less painful it will be.  The longer we wait the more painful the national restructuring will be. 

Do you need a bucket of water thrown in your face?  

TPM

The Republicans and Democrats are firing barbs back and forth over the 2012 budget and having extensive debate on how to manage our huge debts.  The debate is all over cable news.  President Obama has abdicated leadership on this issue and the Republicans are not yet willing to step forward to lead. 

The President's bipartisan debt commission provided a solid outline of an approach to deal with the ever expanding deficits and national debt in its report to Congress at the end of 2010.  However, neither the President nor the Republicans are standing strongly behind those recommendations.  Our national leadership on both sides is failing to address our nation's fundamental financial problems.  Will our political leaders eventually stand tall and implement a restructuring of the US government and its programs to deal with our debt?  I seriously doubt that any material improvement will be made until our politicians are forced to do so by international interests.

Will the international interests that are financing the expansion of US debt continue to participate in the debt ponzi scheme that is the current financial plan of the US government?  The international leader that refuses to allow his/her nation to continue to participate in the ponzi scheme and implements a hard currency/gold approach to building their financial reserves will become the political leader of the world.  Once a leader of a major nation tells the rest of the world that they are fools for participating in the US ponzi scheme, the rest of the world will be forced to follow the leader.  The international leader that acts decisively against the US debt ponzi scheme will become the most powerful person in the world.

The only question is when this event will occur and which leader will make this momenteus decision.  The US is edging ever closer to the date the world's largest ponzi scheme will come to an end.

TPM

I just finished reading Cowboys Full - The Story of Poker by James McManus.  Cowboys Full is a great book that is a terrific read for all poker fans and history buffs.  McManus does a great job telling the story of the origins of poker from its earliest beginnings and its impact on major events and personalities of American history.  In many respects the USA has been a giant poker game throughout its history and remains so today.

McManus provides a good summary of the history of the World Series of Poker and  provides insight on poker's legendary players and events.  Poker, a game now played all over world both on-line and live, is another example of how American culture has impacted people on every continent.  McManus also discusses many of the recent issues that have impacted poker including the recent on-line cheating scandals and the Unlawful Internet Gambling Enforcement Act.

Cowboys Full is a great book.  Enjoy it.

TPM

The Obama administration has released its proposed 2012 budget plan according to media reports.  The plan doesn't come close to putting a dent in the annual trillion dollar per year deficits the US is currently experiencing.  The Obama plan is advertised as saving over a trillion dollars over 10 years, a minimal impact change.  The Obama administration and the Democrats continue to get high on the US federal government debt drugs they have been taking for decades.

The Republicans haven't offered a real alternative at this point.  The new Republican leadership is all talk and no action to date.  I have been very disappointed by the new Republican leadership so far.  It appears they want to play politics instead of directly addressing and solving the spending problem.  I assume this situation is driving the
Tea Party backed Republicans in the House and Senate crazy, but I haven't heard any Tea Party leaders criticize the Republican leadership, yet.

Time is almost up for both Democrats and Republicans to get their Federal government spending act together.  Do we need to establish a true third party to solve our nations fiscal problems and get the US back on track?  Neither the Democrats or the Republicans appear to have the integrity and guts needed to get the job done.

TPM

Check out the list of poker rooms where I have played at http://www.thepurplemuse.com/id38.html.  How does my list compare with yours?

TPM

President Mubarak of Egypt is no longer President.  After a false start yesterday the announcement of his resignation occurred earlier today.  I have listened to enthusiastic academics talking about a positive future for Egypt now that the people have been freed from Mubarak's rule.  There is no doubt that Mubarak's departure from office could turn out very positive for the Egyptian people from a civil liberties perspective and that is extremely important.  However, I don't see how Egypt's fundamental economic problems, outlined in yesterday's blog, get fixed by any form of government.

It is very likely that the events of the past month are simply the first of many future expressions of frustration by the Egyptian people as they struggle against the natural economic forces that are at play.  There is not enough food produced in Egypt to feed its people and not enough exportable goods and services to pay for the needed food imports.  The problem is compounded by a signficant annual population growth.  How will Egypt deal with this fundamental problem?

TPM

This morning it was announced by the media that Egypt's President Mubarak will resign tonight.  This will be good news for the protesters that have been asking for Mubarak's resignation for the past several weeks.  The Egyptians will need to determine exactly how their new government is formed and operates.  We all hope the Egyptian people receive the basic freedoms they are demanding. 

Later developments - It turns out that President Mubarak didn't resign tonight.  The political changes that were made in Egypt appear to be minimal.  The protesters are very unhappy with this turn of events after expectations of Mubarak's resignation were created earlier today.  This is not good for anyone.  Read the rest of my original blog on this topic.

However, no matter what happens the fundamental economic problems that exist in Eqypt today will continue unabated.  Www.zerohedge.com published an excellant article on the problems in Egypt on February 9.  There is no way forward for Egypt that works for its growing population.  Look at these fundamental economic parameters published by www.zerohedge.com.

"Here are a few quite relevant statistics about Egypt (hat tip to an email from reader Mark O., with credit to Dr. John Coulter) to which I have added a few items:

The relentless math:

Population 1960:  27.8 million
Population 2008:  81.7 million
Current population growth rate: 2% per annum (a 35-year doubling rate)
Population in 2046 after another doubling:  164 million

Rainfall average over whole country:  ~ 2 inches per year
Highest rainfall region:  Alexandria, 7.9 inches per year
Arable land (almost entirely in the Nile Valley):  3%
Arable land per capita:  0.04 Ha (400 m²)
Arable land per capita in 2043: 0.02 Ha
Food imports: 40% of requirements
Grain imports: 60% of requirements

Net oil exports: Began falling in 1997, went negative in 2007
Oil production peaked in 1996
Cost of oil rising steeply
Cost of oil and food tightly linked

The future of Egypt will be shaped by these few biophysical facts -- a relentless form of math that is hardly unique to Egypt, by the way -- and it matters very little who is in power. Given the choice, I would not want to live there, nor in any other country that has fostered or permitted such reckless population growth beyond what the country itself can sustain. "

It doesn't matter how free the Egyptian people may become.  Egypt can't produce enough food to feed its people.  Egypt has nothing of value to export to pay for its food imports.  Tourism appears to be the only potential source of significant income growth and it doesn't seem likely that tourism can grow large enough to make a difference.

We should expect that Egypt will become more and more dysfunctional in the future as its population growth creates more and more people living in poverty.  There is no government on earth that can solve the fundamental problems Egypt faces.

TPM

Recent court decisions have determined that parts of Obamacare are unconstitutional.  A number of states are in the process of requesting the Supreme Court to rule on the constitutionality of the law enabling Obamacare as soon as possible.  I absolutely agree that the Supreme Court should take this case on and tell the American people if Obamacare is consistent with our Constitution.

Some people are concerned that the vote will be 5-4.  A 5 to 4 vote puts tremendous power in the hands of the final person that makes their decision.  If the vote is 5 to 4, either way, it demonstrates that the Obamacare law is flawed and can't stand a proper legal test.  No law should be passed by Congress that has a 5-4 vote in the Supreme Court strictly on constitutional grounds.  This is a completely separate issue from the policy intent of the law. 

It appears that Obama and the prior Democratic Congress overstepped their constitutional authority while trying to create policy.  There is no doubt that the process of creating the law was one of the worst in Congressional history.   The law needs to be overturned in its totality by the Supreme Court and the Congress should start over.

There are some very legitimate policy issues that Obamacare attempts to address that only a small percentage of Americans  would argue against.  Obamacare is an additional entitlement that millions of people will receive at at time when governments at the federal and state level are essentially bankrupt.  The Executive and Legislative branches of our government must deal with totality of taxation levels and all forms of spending (entitlements, DoD and other government spending) as a package and create a balanced approach.  The health-care entitlement should be part of the package that is evaluated.

I doubt that any of our current political leaders have the guts to explain the whole picture to the people and make solid decisions on a fully integrated course of action.  There are no true LEADERS in our political system.  We have a bunch of unimpressive political hacks running our government and leading our country down a road to disaster.  This is not a new storyline.  It is the continuation of US political leadership failures of recent decades. 

How much pain will it take for the tide to turn in our country?  When will the pain be so great that the politicians are forced to act in a logical and constructive manner.  it appears it will take a lot more pain than we have experienced so far.

TPM

I encourage everyone to visit the web site of FutureMoneyTrends.com,  http://futuremoneytrends.com/Trend_Videos.html, and watch their 6 minute video, Gold This Decade.  This excellent video provides a real time update for my article, The Case For Gold, presented on this site.  One of the key points made in the video is that "gold is the money of kings" and "debt is the money of slaves".  The US government, the Federal Reserve system and the big banks have been enslaving the citizens of the US since the gold window was closed by President Nixon in 1971.  You can make the case that the government has been enslaving us since FDR and the Congress confiscated all the gold in the US in 1933 and then devalued the US dollar by 40 percent in 1934.

Don't let our politicians and bankers led you down the path to personal destruction and become a slave to their will.  Keep an independent mind about money and finance.  You must fight back to protect yourself and your family over the long term.

TPM

Everyone should read Bill Gross' most recent post, Off With Our Heads!, on the PIMCO web site. Bill gives us his insight on the long term financial impact of the deficit and debt build up in the US.  The bottom line is that our government and the majority of the people don't fully appreciate what the long term impact is of the debt build up to our standard of living. Here is the link, http://www.pimco.com/Pages/OffWithOurHeads.aspx.

TPM