Servias Ministries Blog

Yes, that is how much the U.S. deficit is growing.  How long can this continue?  Ronald Reagan wanted smaller government.  Since then, government  has grown to the point where the generated deficit cannot be sustained much longer.  We are at a crossroads now.  Taxing the entrepreneurs will only reduce economic expansion and increase unemployment.  John Kennedy and Ronald Reagan inspired Americans to dream big at a time when many were discouraged workers.  “The people perish without a vision”.

The potential cuts in the future currently being discussed is simply slowing the deficit growth, not resolving it.

Swiss financial journalist Myret Zaki: “The collapse of the American dollar… is inevitable. The world’s biggest economy is nothing but an illusion. To produce $14,000 billion of nation income, the United States has created over $50,000 billion of debt that costs it $4,000 billion in interest payments each year.”

“They (U.S.) can expect a very long period of austerity, which has already begun. Forty-five million Americans have already lost their homes, one third of the population is out of the economic system and is not spending, while a number of states are bankrupt. There is nowhere prosperous anymore. Everything is built on debt.”   See: http://www.swissinfo.ch/eng/Home/Archive/Dollar_faces_extinction.html?cid=30012940

Proverbs 22:7 The rich rules over the poor, and the borrower is the slave of the lender. (ESV)

Slavery is a reality whether it be to a lender or “stuff” that has been accumulated over the years.  How many times do you move those things when looking for something important?  Being a slave to debt & stuff keeps you from focusing on serving others and being a blessing of Love.  This is true for a nation as it is true for an individual.

The 411 (information) on 2010 tax realities is as follows”

You and I pay our “fair share” of taxes.

General Electric did not pay any: http://www.nytimes.com/2011/03/25/business/economy/25tax.html

You and I have no say in how our taxes are spent.  From a practical standpoint, Washington is shielded from the taxpayer.  There is so much data and information withheld from us for the “greater good” that we are unable to properly vote issues and political offices intelligently.  The Tax Code is so complex, only tax professionals can use the code to their benefit.  Large institutions lobby for special breaks that the general public is never aware of.  Last week’s negotiated spending cut was equivalent to a rounding error.

I believe that “fair share” means everyone pays a similar percentage of their gross income.  Currently lower income families pay nothing but use a greater portion of public assets and resources as a percentage.  There are many cases of welfare assistance where the recipient simply works the system.  Subsidizing laziness is not the solution to growth and prosperity.

The term “fair share” is really getting old.  Once Our Heavenly Father deals out righteous judgment based on “fair share”, I suspect that term will go by the wayside. 

Christina Romer is the former top economic advisor for President Obama.  I find it interesting in her interview that she mentions the “real” unemployment rate (15.7%) rather than just the popular number (8.8%) used by politicians.  She also suggests that a weaker dollar is good for America.

http://finance.yahoo.com/blogs/daily-ticker/bring-qe3-t-afford-not-more-romer-says-20110407-045249-959.html

A weaker dollar is good for those who have invested heavily in precious metals and energy.  It is bad for inflation-sensitive purchases.  Our debt-based economy is difficult to manage and someone is going to lose, most probably the average worker.  Wall Street was saved at the expense of us all.  How many Treasury Secretary’s and economic advisors have worked or consulted with the same Wall Street firms that were saved?  Nobody has gone to jail for those fraudulent securities that nearly brought down the global financial system. 

Until the average American wakes up and realizes that the politicians have no real solutions to the problems plaguing the economy, we are destined to repeat the mistakes currently being made.  When 1 out of 6 people are unemployed and we hear the popular version of 1 in 11 are unemployed, our response is different. Management by perception can last only so long.

The photo ops this week concerning the government shutdown seemed like a circus.  Clearly with a structurally unsound economy in the balance, do you think they would worsen the problem with a shutdown?  It would be interesting to have heard the conversations behind closed doors.

I watch a few precious metals stock on a daily basis: Goldcorp, U.S. Gold, & Silvercorp.  Yesterday, all three broke through notable barriers on the upside.  Goldcorp has had a problem staying above $50 but blew through it yesterday:

Silvercorp’s chart:

U.S. Gold:

This day was a memorable day for these and other stocks in this category.  All three stocks rose on strong volume and I suspect the Wall Street insiders are now seeing upside potential.  I have ownership in all three but would not recommend purchasing these stocks after this run up unless Our Heavenly Father were to tell you specifically to buy these.  After a day like this, there is normally some pullback.  A bull market is known for “bucking off” investors on the downside.

Now that gold has busted through the $1,440 target, I am focused on the $1,530 level.  It will be interesting to see if silver finds major resistance at the $40 level.  Round numbers tend to be a resistance level.  Once $40 is breached with resolve, I look at $51 silver as the next area of focus.

Disclaimer:

The investments, investment strategies, and investment philosophies discussed or presented at this Website each involve their own unique risk factors or considerations; these risk factors are not discussed on the Websites. Visitors should consult with a licensed, qualified investment professional, and/or research the risks involved, before investing: SERVIAS MINISTRIES< INC. ACCEPTS NO LIABILITY OR RESPONSIBILITY WHATSOEVER FOR ANY LOSS OR DAMAGE OF ANY KIND ARISING OUT OF THE USE OF ANY OF THE MATERIAL ON THE WEBSITES, OR AS A RESULT OF MARKET RISKS. INVEST AT YOUR OWN RISK.

The following graph provides us with a view of what the Federal Reserve has done over the last three years precipitated by the banking crisis (or disclosure).  The crisis did not begin on a particular day but was the inflection point of years of poor monetary management and regulation:

Hard assets such as gold, silver, energy, agricultural land, etc. are the only insurance that I know of to offset this huge amount of money printing.  The deficit continues to grow and unfunded obligations are out of sight.  The toughness found in depression-era Americans has been lost by attrition.  We are heading for the harsh realities soon and will get the opportunity to find out what we are made of.

Those who have been reading this blog know about a “black swan” event, an unexpected and unanticipated event that has a negative impact on lives and/or financial markets.  It appears that we are finding a flock of black swans around the globe.  There are so many unusual events happening around the globe that reporters must choose which event to focus on.

Japan’s triple catastrophes will be felt for a long time to come.  In the current paradigm, nuclear energy must be developed but the images from Japan will cause an uphill battle for the industry.  I find it interesting that the Japanese do not trust their government to tell them the truth about the exposure risks.  It seems like the people around the world all have the same mistrust of their governments.

Meanwhile, President Obama’s pledge to get us out of war seems to be put on hold while the U.S. and its allies bomb Libyan targets and begin enforcing a no-fly zone over the country.  Only time will tell when we can close down this latest campaign.  Last weekend Saudi Arabia sent 1,000 troops to Bahrain to enforce martial law and keep the unrest in check.  That did not make the network news but is probably the most significant piece of news of the weekend.  If Bahrain falls, the Saudi’s could be next.  If that happens, oil could shoot up to the $200 range.

While the geopolitical turmoil rages on, the Fed continues to print money which will ultimately show up as price inflation.   They have been successfully re-liquefying the banks.  That means they have provided the banks with money and means to create risk-free profits to offset past losses… what a deal!  They have successfully robbed from the savers of America to give to the banks who in turn issue ungodly bonuses to management.  This act of unequal weights and measures will receive a harsh judgment at some point.  Our Heavenly Father has an excellent memory.

So we are seeing natural disasters with greater frequency, geopolitical upheavals in energy sensitive areas, and potential economic tsunamis heading our way.  What should we do about all this?  First and foremost, draw near to Our Heavenly Father for HE will lead and guide each one of us through the upheavals.  Secondly, do what you can to prepare for worst case scenarios.  Those of us who bought and stored potassium iodate were prepared when the news reported the nuclear event in Japan.  With an indefinite shelf life, the pills provide a simple, low cost “insurance” policy against global events such as what we have recently experienced.  Buy enough for your loved ones too.  Buy extra non-perishable food.  With inflation expected, it would be a good investment anyway.  Keep extra cash in case of an emergency.  ATM’s in Japan were shut down thus people were unable to get cash.  Have an evacuation plan drawn up in case you have to leave your city unexpectedly.  Most of all, deal with your denial that something could not happen to your locality.  Think the unthinkable!