Max Keiser on the manipulation of the prediction market for Obamacare: 



And Max again on the manipulation of the precious metals and treasuries markets.  



Peter Schiff on Paul Krugman's delusions.



And if you're up for a good read, check out this piece by Jon Matonis on the famous "silver spike" of 1980, when the metal climbed to over $40 an ounce (it's now under $20.)

Growing up in Dallas, I remember people mentioning the Hunt brothers and their attempt to "corner the silver market" in dark, hushed tones...  it was always implied that the brothers were these greedy and evil tycoons who wanted to hold the public hostage with a precious metals monopoly. Thankfully the government stepped in before it was too late.

The reality is much different. The Hunt brothers quite rationally expected inflation and feared gold confiscation and were trying to protect their fortune by hoarding silver.

And what a hoard it was:  

Meanwhile, back at the ranch, (the Circle K Ranch in Texas) brother in law Randy Kreiling and his brother Tilmon held a shooting contest amongst the cowboys to find the best marksmen. The dozen best marksmen were hired for a special assignment to ride shotgun on one of the largest private silver transfers in history. The Circle K cowboys flew on 3 specially chartered 707 jets to Chicago and New York where they were met by a convoy of armored trucks during the middle of the night. Forty million oz of silver was loaded onto the planes and they immediately flew to Zurich where they were met by another convoy of armored trucks. The cowboys loaded the trucks and silver was dispersed to six different storage locations in Switzerland. The transfer cost Bunker and Herbert $200,000. The storage costs for the 40 million oz in Switzerland and the 15 million oz still in the US amounted to $3 million/year." (from "H.L. Hunt's Boys and the Circle K Cowboys", January 26, 2004)

The "government" -- or rather the COMEX and CBOT markets -- weren't White Knights, but fearing that the brothers might demand delivery of all those metals they legally owned on paper, arbitrarily changed the rules in mid-game, forcing the brothers to liquidate and the price to plummet.  

It's a great read and probably gives a good preview of the kinds of strange, colorful, and frightening things that might happen in the coming inflation.

The budget deficit is much worse than you've heard, says Bud Conrad of Casey Research:

Yesterday, however, I came upon a surprising measure that is as simple as it is effective in helping to understand just how extraordinary today’s deficits are. The measure calculates how big the deficit is, expressed in “constant” dollars – dollars that have the same purchasing power over time.

Using that measure, the current deficit ($1.4 trillion) is a surprising 260% of what the government deficit was in the worst years of WWII, the biggest war we as a nation have ever fought.

The comparison to WWII is relevant and important, because the effort for that war turned this country completely upside down and saw the government commandeer the levers of industry, for example auto makers and refrigerator plants, to make tanks, airplanes, bullets, and bombs. At its peak, the war effort consumed 90% of government spending.

But there’s a crucial difference between then and today: back then we knew that, in time, the war would end and the elevated government spending would be reduced. Today, however, while the cost of military is a still high 20% of federal spending, the vast majority of our government’s expenses are for non-discretionary items, such as Social Security and Medicare, that aren’t expected to be cut. In fact, they are only going to go higher from here.

It wouldn't be out of place in Vaudeville: China's premier slaps the U.S. Treasury over weak debt performance, then the Treasury tweaks China's nose by allowing the "currency manipulator" letter to gain traction.

Both accusations are right, but it's these sort of economic shenanigans that have allowed a favored few on both ends of the Pacific to profit from China's trade surplus. Ironically, the Treasury and China are money-making partners.

China's Yuan peg has helped it maintain favorable exchange rates with developed countries. Manufacturers build in China and export their products abroad. The profits from this can only be realized as long as Chinese production plus transport costs are less than U.S. production costs.

So it's in China's interests to have the value of the dollar stay high and the value of the Yuan stay low.

U.S. production costs are measured in dollars. In the United States, we control the value of the dollar by buying and selling government debt. The Treasury and the Federal Reserve have been running a very inflationary monetary policy for almost a decade. It's so bad that the Fed stopped reporting our total money supply in 2006.

Our massive government debt issuance has lead to a problem: how do we maintain the value of our currency? The profits from lending to Washington can only be realized as long as somebody is willing to buy the debt.

So it's in the Treasury's interest to have an inexhaustible buyer of U.S. currency -- er, debt. China has been the latest "trading partner" to step up to the plate. China makes, America buys; America prints, China buys.

This elegant quid pro quo is made possible through cooperation between U.S. and Chinese government officials and the banks that extend them credit.

These are the same banks which control U.S. monetary policy via their influence at the Federal Reserve; and which are also voraciously expanding into China. We shouldn't assume Henry Paulson's business interests have left the White House with him. Little has changed in Beijing either.

The squabbling between Wen Jiabao and Tim Geithner should be seen for exactly what it is: squabbling amongst gangsters. Perhaps China fears that the Obama administration will not be sophisticated enough to keep up their end of the business deal? The most likely result is that both parties will stop rocking the boat and get back to leaching off their respective constituents.

 

 

When I'm trying to get away from the Internet and the telephone to get some work done, I often end up in the University library. When in need of distraction, I often look at the old journals. One of my favorites is the London Times Imperial Trade and Engineering Supplement. Considering recent events, the era between 1929 and 1941 are of particular interest.

Between the advertisements for valves, the new wonder metal of aluminum, Vickers airplanes, coal mine ventilators and diesel motors there is a great deal of history and food for thought. In olden times, one could write a report in a general interest economic publication on the health of the local plywood industry, or the national fruit canneries. While this sort of thing sounds like total rot today, it's somehow a lot more satisfying than reading about the latest facebook swindle in Business Week. Personally, I would like to know how the local plywood industry is doing. The gouty old fussbudgets who could write a detailed (and interesting) report on the state of the British paraffin wax industry were actually far more perceptive and less susceptible to "deferring to the expert syndrome" than modern financial writer nincompoops.