Benson's Economic
& Market Trends
Taking a "Holiday"
from the Dollar
Richard Benson
December 9, 2003
America is supposedly the land
of liberty, justice and opportunity for all. Yet, Americans have
been forced by governmental policies to be bearish on the dollar
and pro gold as a means of protecting precious savings and capital.
However, since we have positioned
our investments to take advantage of a falling dollar, we continue
to be stunned and extremely thankful that every major player
that affects the dollar market is taking the actions necessary
to lead to a massive dollar fall. The Federal Reserve is at the
top of the list to thank because they have been dedicated to
sustaining consumption by re-inflating the stock market and facilitating
the housing bubble. The US trade deficit could never have reached
a sustained 5% a year without this monetary boost.
In addition, the Fed has pledged
to the speculative community to keep interest rates below the
rate of inflation for as long as it takes to get inflation and
the economy roaring ahead. Of course, pegging short-term interest
rates below the rate of domestic inflation, and at a rate below
the interest rates our trading partners offer, is like daring
a child not to eat candy. Money is beginning to pour out of the
US and out of the dollar. Thank you Santa Greenspan!
As a "Dollar Bear"
we also need to be grateful to the federal government. In our
post World War II life, we have never seen such a rapid shift
from surplus to deficit. In fact, just as a tax cut might go
into effect, there seems to be another bill or two to help raise
spending or cut Treasury revenues. After the third massive tax
cut, $87 billion for IRAQ and $400 billion plus for a Medicare
prescription drug program, we still have plenty of time before
the next election for more "Treats from the Public Treasury."
With a Republican President and Congress, there is a great temptation
to buy votes with future taxpayers' money. Given human nature
in an election year, we feel confident that no matter how strong
the economy and tax receipts may be, the federal deficit will
rise.
As a Dollar Bear we remain
particularly grateful to our neighbors who continue to purchase
homes with 5% down and with easy credit offered by Fannie &
Freddie. That same homebuyer can then go out and buy a new Sport
Utility Vehicle with $4,000 cash back used to make the mortgage
payment. Without falling for the Fed's easy money "buy now,
pay later" economic recovery plan, the US could not possibly
run a massive trade deficit and zero savings at the same time.
Indeed, it is rare in economic
history that both the consumer and the federal government have
run massive deficits at the same time; perhaps it is the first
time in history that this has occurred!
We are especially indebted
to Wal-Mart this Holiday season for "nuking" Main Street
in so many small American towns and for "carpet bombing"
American factories in the countryside. Wal-Mart offers a clear
vision of a future America built on offering American and immigrant
workers a "slave labor" type job with no health coverage
or real benefits. Without gutting American factories and changing
our economy away from production to importing and consumption,
foreign central banks wouldn't have any reason to finance the
US budget and trade deficit.
A special thanks must also
go to the foreign central banks of the world, particularly those
in Asia, for stepping in to monetize the US Treasury deficits.
Without their buying of over $500 billion a year of US assets
to keep their currencies from rising, we would not have the ability
to build up short dollar or long gold commodity and foreign currency
positions to fully take advantage of the market opportunity.
The foreign central banks' willingness to subsidize major speculators
like George Soros, Warren Buffett, George Templeton and millions
of small investors, is clearly amazing! The losers will be the
taxpayers and citizens of those countries with participating
central banks, along with Americans who remain in the dollar.
The more dollars bought by foreign central banks and
the longer the US runs these Trade and Federal deficits, the
bigger the fall in the dollar!
The US is running the most
irresponsible trade and budget policies in memory while the other
major economic powers seem set on running policies, at their
own considerable expense, that enable our continued lack of responsibility.
In keeping with the Holiday
spirit when gifts are given and then immediately returned to
department stores the day after Christmas, we would be delighted
to get on to the holiday gift list of the world's central banks;
however, this would truly be a gift worth holding on to.
Happy Holidays!
Richard Benson
December 9, 2003
President
Specialty
Finance Group, LLC
Member NASD/SIPC
2505 S. Ocean Boulevard
- Suite 212
Palm Beach, Florida 33480
1 800-860-2907
eMail: rbenson@sfgroup.org
321gold Inc
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