Servias Ministries Blog

I recently returned from my annual trek to the beach at the Alabama/Florida border.  It provides me with a “boots on the ground” view of the economy.  I-10 was busy on the July 4th weekend as usual.  On the other hand, the beach traffic thinned out dramatically by Wednesday, a sign of the economic times.  Wait times at restaurants were lighter than 2008-2009.  Last year the BP oil spill caused us to change destinations.  We did experience some minor oil splotches while in the water but were easily removed with my wife’s survival kit.  People are cutting their vacation costs in half and are eating out less.

It is clear that the economy is still suffering and the For Sale signs along the coast are plentiful.  Those who bought 2nd homes on the gulf coast are now trying to unload them.  The good times of vacation rentals may be near an end.  New condo construction is way off, only 1 currently being built in the area.  Foreclosures are being advertised on the banners following the airplanes that fly past us while on the beach.  What encouragement!

Treasury Secretary Timothy Geithner is now voicing what we already know, tough times are ahead for many: http://news.yahoo.com/geithner-says-hard-times-continue-many-150523958.html 

Since his buddies, the investment bankers, were complicit in the meltdown, I am surprised that he is being called on as a point man to describe the current conditions.  As millions of Americans are expected to be saddled with the unbelievable debt that was racked up in part by following the paradigm of the high leverage era, the CEO’s of the investment banks took bonuses that would even make Bernie Madoff look like an altar boy.

We continue to move toward the cliff at breakneck speed as the average American focuses on the Casey Anthony trial in Orlando that has little to do with the future of America.  Gold is moving toward my initial $1,600 target as Ben Bernanke tried to surprise everyone with his next quantitative easing #3 (QE3).  Why don’t we call it Patriotic Printing 1 (PP1) so we can salute each time we hear about it?  It looks to be getting nastier out there while the loudspeaker in the local grocery store blares out: “Poop clean up needed on aisle four”.

The Biblical Law of Weights and Measures requires that you don’t change a “measure” to allow you to take further value from a contract than the original agreement.  If you don’t like the inflation number, then redefine it downward.  That will save the government money since the CPI determines raises for Social Security recipients.  No official inflation, no cost of living increase.

See:  http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201106211841dowjonesdjonline000414&title=change-to-inflation-measurement-on-table-as-part-of-budget-talksaides

In a few days QE2 (Quantitative Easing 2 by the Federal Reserve) will end.  This situation is likened to a high wire act over Niagara Falls on a windy day with gusts up to 40mph.  With Greece in meltdown and other European countries not far behind, the U.S. is also running close to the edge.  In a recent OpEd piece, Larry Summers (former economic advisor to Obama) wrote that we need more spending and stimulus to get us out of this second dip of the “recession”.  It seems to me that giving a drunken sailor another fifth of bourbon would not sober him up.

401K’s may be the target of the government.  The Federal Government needs buyers of its debt and who better to buy it than its own citizens, whether voluntary or by force.  There is substantial value in those 401K’s and the government has its eyes on them.  In one stroke of the pen, your 401K could be comprised solely of U.S. Treasury Bonds probably named “Patriot Bonds”.  Be sure to salute the flag if and when that day comes.

The eyes of Americans have been blinded by Our Heavenly Father.  As a nation we have been lulled into believing that the Federal Reserve can bail us out of our macroeconomic crises.  Our greed and arrogance as a nation has brought us to this threshold.  Only the mind of Christ can pull us out of the fire.  Being led by the Spirit of GOD is the solution to our problems but only those who willingly embrace HIS Love will be qualified to take on this mantle.  Let me explain.  What is the one quality a treasurer for the Kingdom of GOD must have in order to properly manage and distribute funds?  Love.  Why?  Love overcomes fear and greed.  Those twin sisters manage to corrupt the process of ministering to mankind.  You can have 30 years’ experience in financial management, a PhD in finance and accounting, but if you do not have Love as your primary motivator you will fail at the position.  The current system has plenty of bright people running things.  However fear and greed are the prime motivators and have brought us to this threshold without any solution other than severe pain.  The middle class is in the crosshairs and it doesn’t look good.  We don’t need another revival, we need an awakening!   

For those who have followed this blog over the years, you know that I believe gold & silver to be your best “insurance” against economic calamity.  We saw the parabolic rise in silver this year only to see it retreat to the $35 range, a normal market response.  The underlying gold and silver stocks took a beating due to what I believe is a focused effort to shake people out of their positions.  The bull will buck you off because that is what he does.

Last night’s network news finally reported on the meltdown happening in Greece.  The unrest is not new but the average American is not exposed to ongoing economic calamities occurring around the world.  Therefore his investments do not reflect the volatile realities of this interconnected planet.  In the past, we have relied on the government to protect us from uncertainties just as a shepherd protects his flock.  A shepherd will sacrifice himself for his sheep but that is not the case of those in power.  Self interest prevails.

What are we to do?  We must focus on what will have value after the smoke clears.  If one looks at monetary history, the only monetary units that have survived men’s cunning devices are gold and silver because they cannot tinker with their value.  Greed and fear have no power over those metals since they do not have any inherent liability attached to them.  Gold and silver as well as land are primary assets.  Gold and silver ETF’s (Exchange-traded funds) are secondary assets with claims against the actual metal.  Gold & silver stocks are tertiary claims against the metal.

Owning gold and silver bullion is the safest of the three and you don’t have to worry about man’s performance.  The other two have performance requirements attached to them so you must consider management’s track record and trust that they will continue to do the right thing.  Gold and silver stocks provide the investor leverage for higher returns to offset this risk.  Owning some of all three may not be a bad idea.

As long as gold & silver prices are at these levels, those companies who mine the metals are making money.  As quarterly and annual reports come out, investors will get interested in the moneymakers and will push the price up.  As the turmoil increases around the globe, the price of gold has the potential to go up to $12,500 in USD and silver has the potential in the $600 range.  Those mining shares would rocket up with them.  If we enter into a global depression that might reduce the price of these metals, would you rather own gold & silver or hold pieces of paper manipulated by man?

These are interesting times!

Is ignorance bliss?  Unfortunately, I think not.  During the last recession I wrote on the “W” type recession that called for a double-dip recession.  As always, the government did not acknowledge the severity of the recession until it was over thus keeping the populace ignorant of the facts.  That downturn was called the “Great Recession”.  The Fed pumped hundreds of billions of dollar into the economy to bring it out of the downturn only to find that it was not enough.  True inflation is running at 10% and we are making .1% on our savings causing us to lose money as savers.  Where else can you put your money at zero risk?  The safe havens are gone and inflation has an insatiable appetite to eat up life savings.  The stock market has inherent risks and if there is a meltdown, it will take the price of the good stocks down with the bad.  Why?  When leveraged investors start losing money, they have to sell some of their good positions to raise cash to offset those losses.  Thus we have a roller coaster ride.  Additionally, large investment banks short gold and silver stocks to push down their price then buy them back at a cheaper price.  They have been playing that game for decades.  Gold and silver stock prices will be lifted by their ongoing profits at the current underlying metal prices.  They are making money hand over fist and the market will wake up to that fact and send their prices higher.

The United States has been the world’s unpaid policeman.  We are now involved in four war fronts.  As a member of NATO, we are spending a higher percentage of our GDP than the other member countries according to the retiring Defense Secretary Robert Gates.  The rest of the developed world has had a free ride for this “police” protection and I expect that to stop before long.  I am sure that this topic has been discussed behind closed doors and that may be one reason why other countries have not yet dumped the U.S. Dollar.

When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco’s Bill Gross told CNBC Monday. See: http://www.cnbc.com/id/43378973  The mainstream press is finally starting to report what we have been yelling from the rooftops:  America’s got a serious debt problem.  We cannot continue on this path and must change immediately.  Pain will come, the question is “How much?”.  Personal resources require management and expenditure.  The bigger the house, the bigger the resource requirement to maintain that house.  Each of us starts out life not needing much then we go through the phase of wanting everything and ultimately we return to not needing much.  It is that second phase that is disastrous.  My next door neighbor, a widow of a doctor, just had an estate sale.  What a lot of stuff!  She lived in that house for over 10 years by herself and had more “stuff” than a household of eight.  Simplify now while there is demand for your excesses.  “Get lean and mean” as the saying goes.

The next 10 years will be the most interesting time of America’s history, let alone the world’s history.  The culmination of greed and fear will bring forth a decision from mankind.  I trust that the blindness to the revelation of Love will come to an end.  Men will no longer attempt to control the masses but will work together to solve the problems created by centuries of greed and entitlement.  May Our Heavenly Father help us all.

Disinformation is false or inaccurate information that is spread deliberately with intentions of turning genuine information useless.  On one of the morning shows, the reporter interviewed a representative with U.S. News and World Report who just completed a study to rank the top 20 diets in effectiveness.  In the interview, the word that jumped out at me was “disinformation”.  Notice that the media does not want to use the word “Lie”.  Once again, the media is deceiving the populace with deceiving words.  I discussed the use of this word with my wife and we both agreed that Americans were clueless of what was happening to them.

Politicians have become masters of disinformation.  Businesses run a close second.  Truth in advertising was once a cornerstone in Federal regulation.  Except for the ingredients list on packaged foods, truth is hard to find.  Even those lists don’t tell the real story of what we are consuming.  Do you think that the current system really wants to win the war on cancer or just perpetuate the current infrastructure?  The signing of the National Cancer Act of 1971 by then U.S. President Richard Nixon is generally viewed as the beginning of the war on cancer.  Forty years later and the war rages on!

I recently hired a subcontractor to do some exterior work at the house.  His first commitment was “two weeks”.  During the target week, he could not be reached.  Finally the next Monday he answered his phone.  “I’ll be there on Wednesday.”  On Wednesday, “I’ll be there on Friday.”  Had he not been the expert for this particular work, I would have cut my losses and sought other avenues.  Once he completes the job, he won’t be back.  Lies, deception, manipulation, and innuendo promote an illusion that all is okay.

Federal Reserve Chairman Ben Bernanke told us this week that the economy was improving.  Using manipulated numbers, the economy can be made to look wonderful… unless you are unemployed or trying to buy food with the same budgeted amount as last year.  You will notice how OPEC is now committing to produce more oil at the same time of Bernanke’s remarks.  What a coincidence.  This economy continues to show structural cracks and Our Heavenly Father only knows how long those in power can sustain the deception.  We must continue to listen to Our Heavenly Father for guidance.  The media would have you believe that a pig with lipstick is no longer a pig.  Oh by the way, disregard the “oink” sound.