Chains of Fiscal Discipline

Richard (Rick) Mills

Ahead of the Herd

Page 4 of 4

 

If labor force participation had remained at the 65.8 percent level it was at when Obama took over from Bush the unemployment rate for March would have been reported at 11.1 percent – that equates to a 3.1 percentage point rise during Obama's presidency.

 

In the final quarter of 2012, the US economy expanded at an annual rate of 0.4 percent. The 0.4 percent growth rate for the gross domestic product (GDP) was the weakest quarterly performance in almost two years.

 

For all of 2012, the economy grew 2.2 percent, that’s after a 1.8 percent increase in 2011 and a 2.4 percent advance in 2010. Since the recession ended in the summer of 2009 the economy has been expanding at sub-par rates.

 

The Congressional Budget Office (CBO) has estimated that the combination of tax increases and spending cuts (the much talked about fiscal cliff) could trim economic growth this year by 1.5 percentage points leaving just 1.4 percentage points for growth in 2013. If the CBO’s estimates of just 1.4 percent real GDP growth this year prove true, America will have experienced its worst four consecutive growth years of GDP in the Bureau of Economic Analysis’ data going back to 1930.

 

There can’t be anyone even remotely thinking the Fed’s, or Obama’s, policies are a success, here’s just a few facts:

  • Medium household income has declined
  • Inflation is climbing much higher and faster than officially reported statistics
  • Few Americans own any significant amount of financial wealth
  • Housing has not recovered
  • U.S. Employment rate is not recovering
  • Consumer goods prices are not stable
  • The number of Americans living in poverty has now reached a level not seen since the 1960s. There are 50 million poor people in America
  • There are over 47 million Americans on food stamps
  • U.S. national debt is $16+ trillion
  • Adjusted for inflation markets are lower than they were in 2000
  • Student debt totals over $1 trillion
  • The Federal Reserve’s balance sheet is plus $3.2 trillion and the Fed is continuing to purchase assets at a rate of $85 billion a month
  • Consumer sentiment is at crisis levels last seen in 2008
  • The banking system backs $7.4 trillion in insured deposits with $32 billion, that’s just .43 percent – when the U.S. was on the gold standard your dollar was backed 40 percent with gold
  • The largest city bankruptcy in US history was just announced for Stockton, California - population 300,000

Blue Collar Man

Give me a job, give me security
Give me a chance to survive
I’m just a poor soul in the unemployment line
My god, I’m hardly alive

Styx

 

Conclusion

 

Is it fair to say the Federal Reserve has failed America? I was watching TV the other night when an ad came on touting some drug. The disease could be cured by diet and exercise, of course most today would rather take a pill then responsibility. Anyway the announcer started reeling off all the side effects of this drug, it wasn’t long before I was staring up at the ceiling and the speakers voice had become Lucy’s teachers voice, yada yada yada blah blah blah, cancer, stroke, heart disease. I found myself thinking I’d rather have the disease then take the cure, it was fixable with some lifestyle tinkering.

 

The next thing I thought of was the Gold Standard was like the disease – not so bad compared to the drug. The Gold standard was fixable and amenable to today, it would work, and it’s certainly preferable to the cure, the pill represented by fiat currency, the Federal Reserve, stock market crash’s, banking and sovereign crises, yada yada yada.

 

I think we all need to ask ourselves if the U.S., and the world, were better off when the dollar was backed by gold, and politicians, along with their bankster brethren, had to operate under the burden of gold’s chains of fiscal discipline. Or are we all doing so well now, are things so great, has the Fed with its limited monetary policies worked out so well that we don’t need gold backed money?

 

Perhaps we don’t need the Federal Reserve, maybe what we need are gold’s chains of fiscal discipline. Perhaps the fiscal discipline of a gold standard needs to be imposed on our dear leaders. This question should be on all our radar screens. Is it on yours?

 

If not, it ought to be.

 

Richard (Rick) Mills

rick@aheadoftheherd.com

www.aheadoftheherd.com

 

Richard is the owner of Aheadoftheherd.com and invests in the junior resource/bio-tech sectors. His articles have been published on over 400 websites, including:

 

WallStreetJournal, USAToday, NationalPost, Lewrockwell, MontrealGazette, VancouverSun, CBSnews, HuffingtonPost, Londonthenews, Wealthwire, CalgaryHerald, Forbes, Dallasnews, SGTreport, Vantagewire, Indiatimes, ninemsn, ibtimes, businessweek.com and the Association of Mining Analysts.

 

If you're interested in learning more about the junior resource and bio-med sectors, and quality individual company’s within these sectors, please come and visit us at www.aheadoftheherd.com

 

 

***

 

Legal Notice / Disclaimer

 

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

 

Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified.

 

Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.

 

Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.

 


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