<>
|
|||
Nuff saidRichard Russell
Ah the irony -- yesterday Fed chief Alan Greenspan warned about a lower dollar and he warned about the budget deficits. Here's the man who has created more paper than all the preceding Fed chiefs in history going back to 1913 when the Fed came into being. And now the "Maestro" is warning about a declining dollar! What did he think would happen if he kept grinding out dollars by the trillions? Did he think the more dollars he created, the stronger the dollar would become? In a most interesting front page article in today's Wall Street Journal, Greenspan is discussed in detail. Writes the Journal, "Mr Greenspan has a complicated way of reconciling his job with his economic theories. In an ideal world, he believes there would be a gold standard and no central bank." Yeah, I know that's what Greenspan really believes. So how does he justify his job and the whole Federal Reserve system? Seriously, he must say to himself, "It's a fraudulent system, but it's all we have, so I'll work with it, and maybe work it to death." Sad, really sad. But Ego always seems to win. When Volcker quit the Fed in '87, they asked the humble Mr. Volcker what he liked best about the job of Fed head. Said Volcker, "I liked everybody calling me 'Mr. Chairman'." Nobody receives more bows and toadying then the Fed Chairman. Congressmen and Senators scrape before you, Presidents seat their wives next to you, you have airplanes and limos at your disposal, special tennis courts, fancy dining facilities, trips anywhere you like. It's the single best job in Washington, and nobody audits the Fed and nobody questions your authority or how much you spend. No wonder Greenspan loves the job. Who wouldn't? A full page article in today's
Financial Times headlines it this way -- "Speculators
have very little downside risk -- they are going to continue
selling the dollar." Question -- Will the declining dollar help the US trade deficit? Probably not, because the Chinese have pegged their currency to the dollar -- thus, the renminbi will decline with the dollar. It's Europe who will be hurt by the declining dollar, and probably Japan, and, of course, Japan has been buying dollars by the carload. Also, Americans themselves will be hurt by the declining dollar, since the fading dollar will drive up the cost of everything sold in Wal-Mart and every other massive mart. But wait -- all is not lost. Finally, finally the common man has a way of protecting himself to some extent against the predation of the Fed and the wildly-spending US government. The protection I'm referring to is the new easy access to gold via the ETF that began trading on the NYSE yesterday. Gold finally being distributed to the victims of inflation and tax confiscation, the common man. To me, that settles one fear -- the fear of another government confiscation of gold. With Americans now free to buy gold coins or gold ETFs, it would be unthinkable and probably impossible for the government to confiscate gold again. Furthermore, the more widely gold (even in ETF form) is distributed, the more politically impossible it becomes for the US government to institute another confiscation. Why is gold rising now? One
reason -- George Bush is a spending machine, and the market has
taken note of this. Since Bush's re-election, gold has risen
near 6 percent. Richard Russell Richard Russell began publishing Dow Theory Letters in 1958, and he has been writing the Letters ever since (never once having skipped a Letter). Dow Theory Letters is the oldest service continuously written by one person in the business. He offers a
TRIAL (two consecutive up-to-date issues) for $1.00 (same price
that was originally charged in 1958). Trials, please one time
only. Mail your $1.00 check to: Dow Theory Letters, PO Box 1759,
La Jolla, CA 92038 (annual cost of a subscription is $250, tax
deductible if ordered through your business). |
