Will the U.S. dollar go back to the Gold Standard? In Utah, yes.
Knowing that the U.S. dollar is collapsing around them, the Utah House of Representatives passed a bill back in March recognizing gold and silver coins issued by the federal government as legal tender.
Finally, some fiscal sense that I can sign up for.
And now innovative businessmen are beginning to spin off businesses around this ruling. They want you to store your gold and silver coins in their depository and they would then issue you debit cards that you can use to pay for your purchases up to the limit of the value of the coins.
But those kinds of news events are few and far between. What we see these days are just shocking and appalling signs of the next financial leg down coming.
There are a couple of things that have occurred in the past 48 hours that make me cringe and shake my head wistfully.
The first is the news conference by President Barack Obama about the economy. In a joint news conference with German Chancellor Angela Merkel, Obama dismissed fears about a double-dip recession.
What this reminds me of (in a different context) is the now infamous “Mission Accomplished” speech that President George H.W. Bush gave after the initial assault on Iraq. History has proven that it was very premature and naïve of him to declare victory so quickly and underestimate the challenges that were ahead.
It also reminds me of the bone-headed, arrogance filled trip that the then Treasury Secretary Henry Paulson and Ben Bernanke made to China in July-August 2008, where they were strong advocates to China about the financial genius of America and how the Chinese needed to adopt the financial creativities of Wall Street. They criticized the Chinese banks for being conservative and urged them to follow America’s examples. We know how that ended in September 2008.
I believe that President Obama has been sipping the Kool-Aid that Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke are serving. If they ever leave their ivy towers and walk down Main Street in midsize towns across America, they would realize how hard it is to get a job these days, or how hard it is to make ends meet, leave alone saving for retirement.
What Wall Street celebrated as "recovery" is all about to unravel this summer and we will see panic as the reality of the lack of real recovery sets in.
And this will lead to rather alarming and crazy policy decisions like QE 3.
For all those new to this class, QE stands for quantitative easing and this will be the third time the Federal Reserve will feel compelled to "help" the markets.
Insanity: doing the same thing over and over again and expecting different results – Albert Einstein.
Need I say more?
This summer, we can expect Wall Street to float lower as a best case or fall dramatically as the worst case. We will see a rather lackluster summer. And with housing continuing to plummet this summer and unemployment creeping up, we will see the government getting increasingly desperate. This will compel the Federal Reserve to energize their printing presses and we will see the birth of a brand spanking new bailout package.
And that will be the beginning of a new wave of an easy-money fueled stock-market rally. But you will see the U.S. dollar plummet and commodities soar. Lest you forget, the debt ceiling debate will be taken to the brink of disaster before the politicians stage a comeback and "rescue" the country. This game will also contribute weakness to the U.S. dollar.
My suggestion is to enjoy the summer, don't pay attention to the antics that are about to unfold and begin to steadily but surely divest out of the U.S. dollar if you haven't already done so.
Buy currencies, foreign stocks and hard commodities.
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