Bernard von Nothaus

was convicted and could face 25 years in prison. Read here for the details of his incredible story:

http://www.nysun.com/editorials/a-unique-form-of-terrorism/87269/

In the meantime, 13 states are working on laws to make gold and silver legal tender.

http://www.foxnews.com/politics/2011/03/04/utah-house-passes-recognizing-gold-silver-legal-tender/

Of course, the latter article finishes with the readily passed off lie that the gold standard caused the depression. Indeed the depression was caused by the Fed. It was with the creation of this banking cartel, the Fed, that the gold standard effectively ended. Though Dollars were still redeemable for gold in theory, because of the over-expansion of credit after the founding of the Fed, any meaningful redemption would have resulted in its bankruptcy.
Which is of course what happened in 1933. At the same time that the number of Dollars required to redeem 1 ounce of gold was increased from $20.67 to $35, private ownership of gold was outlawed.
The re-setting of the gold price amounted to a bankruptcy in which creditors were repaid only about 59% of their claims. At the same time, all privately owned gold in the USA was confiscated by the government. That made any redemption, even at the new higher price, impossible.
Only after 42 years had passed, in 1975, was it again legal for US citizens to own gold. At that time the price was $180 per ounce.

Gold buyers are jerks !

Yes, Warren Buffet's second in command thinks so, according to this article:
http://blogs.wsj.com/marketbeat/2011/01/12/warren-buffett-bud-charlie-munger-to-goldbugs-youre-a-jerk/


Warren has of course voiced his distaste for gold previously.
But if you simply decide to adopt gold as your currency, you would have to 
evaluate any investment opportunity offered to you in terms of: "Does this offer 
me a positive return ?" Does the offered investment even promise to give you 
your money back to begin with ?

The long term money creation of the Fed amounts to a compound 7.5% per year for 
the last 40 years or so. The current rate appears to even vastly exceed that 
average. 
So, if you buy a 10 year obligation that promises you a return of 3.5%, do you 
even have any kind of chance to ever get your money back in real terms ?
What if you buy stocks that sport an earnings yield of 5% ?
The definition of a bubble is that people buy assets that will never allow them 
to make a profit, except for finding a greater fool !
Now, is there a bubble in gold ? Or is there a bubble in the Dollar ? (and the 
bond market and the stock market ?)

Interesting to note that Warren is just talking his book: When he bought for 
instance into Goldman Sachs 2 years ago, he was given preferred shares with a 
yield of 10% plus warrants (options) to purchase 5 million shares at about the 
then market price.

He then promoted the shares that paid nothing to everyone else. As he himself 
admitted, the 700 billion TARP program was crucial for the survival of Goldman.
He is a very clever investor and knows which side his bread is buttered on !

In summary: I totally buy his argument that it's better to buy productive assets 
than hold cash.
But, if the investments offered do not even promise me to pay my money back from 
the outset, I'd rather hold cash.

What about gold ?

Here are two "mainstream" views of the merits of gold:

http://online.wsj.com/article/SB10001424052748703584804576144493294520526.html

http://online.wsj.com/article/SB10001424052748703584804576144503030551000.html

These views totally miss the bigger point:
What if you were given the choice of "investing" your money to receive 5% less every year? That is, very conservatively, the rate of return offered currently in the US bond market. That is why investors favor cash, which is gold, over investments that are guaranteed to lose money.

This is the essence of our predicament :

While Ben and his central bank friends around the world are bemoaning the lack of inflation, they all have one answer to everything that ails the world: Print more money !
We have a recession or depression: Print more money.
We have too many unemployed : Print more money.
When commodity prices rise to new record levels, like right now, they are not important.
If the official US inflation rate would be calculated like it was during Jimmy Carters time as president, it likely would be closer to 10% than 1%.
I fear that there is a good chance that in the not too distant future the paper currencies of the world will be abandoned as worthless.
It now is clear that Alan Greenspan didn't know what he was doing and it is becoming increasingly obvious that Ben isn't any wiser.
Just today, March 1st, and tomorrow he will deliver testimony on Capitol Hill and will go in great length into his "exit strategy" from the "extraordinary measures" of monetary easing he has engaged in.
There is no such thing. If he's unable to grasp reality today, it is a good assumption that by the time reality hits him like a ton of bricks, it will be too late to turn the ship around.