If you have a house which is falling down from termites, has a leaky roof, iron plumbing, stopped up septic tank, or whatever, and you approach a home insurance company, wanting full coverage for your house, and they say “you’ve got to be kidding,” should the D.C. Gang force the insurance company to issue you a homeowners policy? If you never cut your grass, never paint, never shovel snow off your sidewalk, and your neighbors consider you a menace, would any insurance company issue you a policy? Both Dems and Repubs might want big daddy government to force them to issue it, assuming the health care thing goes into effect. Why not throw pre-existing conditions out the window for home coverage?

Currently, there are scads of auto mechanical insurance policies advertising on the TV channels. If you have a true clunker which knocks, smokes, and leaks, would you expect an insurance company to issue you a policy? If the health care proposal for no pre-existing conditions considerations, why not for cars too?

If you were an alcoholic, with dozens of DUI’s, and a host of traffic accidents charged to you, would any insurance company issue you any coverage for any price, if they had their head screwed on correctly? If no pre-existing conditions can keep a health insurance company from insuring your health, why not force insurance companies to insure your driving habits, regardless of the risks?

Insurance companies as well as all businesses are in it to make a profit, and that’s the way it should be.

If you need a loan and go to a bank, shouldn’t they check your credit rating? If you have a credit rating of 100, have defaulted on lots of loans in the past, have no savings, your credit cards have been revoked, and there are tens of thousands of dollars still owed on them, would a banker loan you a quarter if he was in his right mind? If insurance companies can’t use pre-existing conditions to deny you health coverage, why not force the banks to loan you money, regardless of your credit rating?

If the Dems and Repubs have their way, along with Obama, and you have advanced cancer, Hodgkin’s, melanoma, kidney failure, or whatever, they want insurance companies to have no choice but have to insure you. In other words, by law or bureaucracy, the D.C. Gang in both parties wants to insure the death of insurance companies.

It seems to this amateur, that if you have a serious, incurable disease, or severe health condition which either can’t be fixed, or to fix it would cost several hundred thousand dollars, an insurance company wouldn’t really be interested in covering you for a hundred bucks a month. One of my best friends is in such bad health that he has cost his medical insurance company probably a million dollars already, and he is still living with myriad health problems. Bud is probably 150 pounds overweight, has never cared for himself, smoked for decades, has very high blood pressure, and did tons of drugs, in addition to being diabetic and having had several heart attacks. He is still covered because unless he misses a payment, his insurance can’t be cancelled. Believe me, he’ll never miss a payment! His insurance company is on the hook with a certain loser, but when he took out the policy, the insurance company thought him to be a fair risk.  They were wrong, and are paying for it.

Denying pre-existing conditions as an excuse for not issuing a health policy, sounds just wonderful to the un-thinking boobs who occupy those offices on Capitol Hill. Do they ever really THINK?

Actuaries are in business to do risk assessment for insurance companies. They go over statistics, figures, probabilities, and risks. If the Demos and Repubs have their way, you can forget actuaries, because the D.C. Gang will force insurance companies out of business. The point is, once again, that both parties have destroyed America with stupidity, greed, and that ever-present ego governing us, when we need laws only to protect us from our enemies, and not ourselves. With every vote over the last 75 years, it seems as though each vote drove another nail in our collective coffins. The Tea Parties have plainly demonstrated that we have had enough of both parties, and we should throw them both out with a couple of exceptions. The Democrats are worse than the Republicans, I’ll admit, but there are far too many office holders who haven’t a grain of common sense, and I have had enough of both of them. I am no longer proud to be a registered Republican, but have not yet re-registered as an independent. Local Republicans are fine.

Regards,
Don Stott

September 11, 2009

Pre-Existing Conditions? was originally featured on Whiskey and Gunpowder

These three banks were following Wall Street like a shadow, and lending money to buy stocks and real estate.  While the US stock market was doubling, the Icelandic stock market went up 900%.  By 2006, Reykjavik real estate prices doubled, and the average Icelandic family was three times as wealthy as it was in 2003.  All this supposed ‘wealth’ was tied to the investment banking industry.  Sound familiar?  Naturally, the whole thing collapsed with a huge thud, when the three investment banks went bust last October.

Fishermen quit fishing, and the craze was to buy and sell stocks and real estate.  For the past few years, many Icelanders engaged themselves in speculation, and seeming to be successful, they did what Americans and the rest of the world did.  They bought things they couldn’t afford…on time.  Since interest on their krona was 15.5%, why not buy euros or yen at a 3% interest rate and clean up?  So they made huge loans of euros and yen.  Then their krona collapsed, and they still owe for the euros and yen they bought.  They now own $500,000 houses on which they owe $1.5 million, and $35,000 Range Rovers, on which they owe $100,000.    There have been lots of fires in Iceland recently, to pay the bills of course.  Lucky insurance companies.  It will happen here, and already has to a small degree.

Iceland has lots of wonderful glass and steel office towers and apartment buildings, which are unfinished and empty, with gobs of money owed on them.  Sort of like the rest of the world, I suspect, but it happened in Iceland far quicker.  The bomb went off in Iceland quickly, because it is so small, and its speculation went to such extreme heights.  Walking around Manhattan, the empty stores, streets, and taxis are quite evident I hear, and the same thing is obvious in big cities and small towns everywhere.  The bomb will explode later in these places outside of Iceland, but beware:  Iceland might be the prototype.

Icelanders discovered that trading bits of paper isn’t a productive enterprise.  A handful of guys, who fancied themselves as financial experts, were taking out tens of billions of dollars in short term loans from abroad.  They were then re-lending this money to themselves and their friends to buy assets, such as soccer teams, cars, homes, etc.  Since the entire world’s assets were rising; thanks to people of like mentality paying crazy prices for everything, the Icelanders appeared to be making money.  One non-Icelandic fund manager said that its like, “You have a dog and I have a cat. We agree that they are each worth a billion dollars.  You sell me the dog for a billion, and I sell you the cat for a billion.  Now, we are no longer pet owners, but Icelandic banks with a billion dollars in new assets.  They created fake capital by trading assets amongst themselves at inflated values.”  DOESN’T THAT SOUND LIKE THE REST OF THE WORLD’S FINANCIAL GENIUSES?

Iceland was and is, simply the extreme of what’s going on in the rest of the world, and it came home to roost in Iceland first.  When traders got a whiff of what was going to happen in Iceland, guess what they did?  They went short and made a lot of money.  Do we think that insiders at AIG, Citibank, and the rest of the bankruptcies, knew in advance of what troubles loomed ahead?  Of course they did!  Can we possibly imagine that they shorted their own companies in advance of the collapses and made tons of money?  And that such bonanzas are carefully guarded in the sacrosanct walnut-paneled boardrooms of these holies of holies?  I think there’s no doubt about it.

Iceland looked so good to the rest of the world…for a time anyway…just like Madoff. That they “invested” heavily in Iceland, with its 15.5% interest.  Germans banks put $21 billion into Iceland banks.  The Netherlands gave them $305 million. Sweden kicked in $400 million.  U.K. investors forked over $300 billion from various pension funds, hospitals, universities, and other public institutions.  Oxford University lost $30 million.  It’s all so sad that 99% of the world believes things to be true, which couldn’t possibly be true.  That “experts” can do no wrong, and are to be trusted with wealth and surplus assets.  A few years ago, and not in the current time frame at all, a local retired electrical contractor and his wife, who had bought gold eagles from me @ $301, and silver eagles @ $7.50, were lured by a fast talking Madoff type into “investing” $100,000 in his scheme with the promise of a ten percent annual return.  They tried to get me involved and even introduced him to me.  I said NO, and tried to tell them that it would cost them their $100,000.  It did.

See, gold and silver don’t require “trust” and expertise to own.  No degrees or licenses from experts are required to decide to buy gold and silver, which after all, are historic money throughout the ages.  They’re simply a way of protecting assets from the criminal inflating of the world’s currencies.  The dollar is not alone.  Don’t be fooled by the “strength” of the dollar.  It is strong only in comparison to other pieces of paper, which are all being printed with merry abandon by the world’s governments.  People who brag about their CD making 4% rather than 2% are essentially bragging that their boat has a smaller leak in it than their neighbor’s, and is sinking more slowly.

Hope you went to a Tea Party!  I went to two, and it was a blast.  We sang the National Anthem, God Bless America, America the Beautiful, My Country Tis of Thee, saluted the flag, and had a grand time. In this town of 17,000 we had over 400 at one of them.  People were driving by honking their horns and waving.  It made tears run down my face.  Sorry, I am a hopeless romantic, and I love America.  It’s the current government I hate, and both parties.  If the Republicans would listen to our music and pay attention, they could take both houses at the next election, but it’s doubtful they’ll wise up and think straight.  How sad!

Regards,
Don Stott
Colorado Gold

April 17, 2009

Iceland: Harbinger of Worldwide Collapse was originally featured on Whiskey and Gunpowder

One big difference, as I have written before, is that during the Hoover-FDR  first great depression, there was absolutely no inflation.  None.  Why?  Because the dollar was backed by gold!  It was illegal to print trillions of paper dollars during the first great depression. That’s why FDR tried to get everyone to turn in their gold.  He could then spend more gold-backed dollars.  Also, there were no credit cards, no interstate roads, and virtually no air travel.  Stocks were being sold with little or no down payment, just as homes were being sold for the same requirements during the second great depression.  During the first great depression, there was no trillion dollar credit card debts.  During the first great depression, stocks plunged as they have done now, but perhaps a little bit further.  Then, there was no PPT or plunge protection team to keep the stock market artificially high; and you can bet your bottom dollar that the PPT has been busy of late.

Speaking of stocks, can anyone give me a reason why they have gone up a thousand points, other than the PPT?  650,000 or more each week are getting laid off, businesses by the thousands go bankrupt or close each week, prompting even more layoffs, and the chain reaction continues.  One of my clients says that stocks are going up because during a hyper inflation, everything goes up, and that is a good point, but there are no profits anywhere, so I think that argument my not be totally true.  I honestly do believe that gold and the Dow will cross eventually, with the Dow on its way down and gold on its way up.  Gold and silver will NEVER go to zero like paper assets (sic) can and have done and will continue to do.  With hyper inflation, gold and silver will be made to go up even further than other prices, I believe, because more and more people are seeing the beauty of tangible beautiful, historic money, in the form of gold and silver, and there is only so much of it out there.  As it becomes more and more difficult to get, due to increased demand, prices of metals will have to go sky high in dollars.

We drove over 3200  miles last week, mostly in Texas, and going to and from there.  The Blue Bonnets are out and beautiful, but even in Texas, the economy isn’t good at all.  While Texas houses haven’t plunged like Las Vegas, California, and Florida, it’s because they never got that high in the first place.  Still, layoffs are plentiful, and tourism, motels, and other non-essentials are hurting…even in Texas.  Closed auto dealerships are plentiful, and in one wonderful German restaurant, which used to have people waiting around the block on a Friday evening, we were seated instantly.  The second great depression is going to leave an unemployment rate of close to 20% before it’s over and all the spending and bailouts are merely postponing the inevitable, and making it worse with hyper-inflation.  The term “trillion” was unheard of a couple of years ago, as far as deficits are concerned, and now that term is thrown around like penny candy at a fair 50 years ago.

Silver is down a buck an ounce from a week ago and gold a hundred bucks.  Great buying opportunity, because they won’t stay there.  Silver is an unbelievable bargain.  In 1980, when gold was $850, silver was $50, or a 16 to one ratio.  If the ratio was 16 to 1 now, as it was then, and has been throughout history, silver would be $55 an ounce, not $12.25.   It will happen. because history cannot be denied.  It you’ve got the place to put it, get silver!

Hoover and FDR was originally featured on Whiskey and Gunpowder

Do you have a slight idea of how many millions of retirement accounts, pension funds, and charities have been destroyed because of the Barney Franks of D.C.?  I find it incomprehensible to witness that a stock market can go up 497 points, three days after another 20 banks went under, and every conceivable thing which can go wrong has gone wrong. I am astonished at the credulity and unabashed total economic illiteracy of the American and even the world’s public.  We’re headed for hyperinflation, with prices of everything going through the roof, and America is buying stocks rather than gold and silver?  Unbelievable.  Millions of offices, stores, and shops are empty throughout America, thanks to bankruptcies.  Millions of homes are empty, being foreclosed, in some cases brutally vandalized, and people buy stocks, rather than gold and silver?

Remember Stott’s Law?  “The more of anything there is, the less they will be worth.”  This is true with houses, cars, dollars, stocks, government and bureaucracy.  Millions of new shares of stock are issued each week, and government is growing like a weed.  There’s very little gold and silver on earth, so the law will never apply to them.  They’ll never go to zero.

State governments are broke, county, city, and town governments are suffering from a lack of sales and property taxes, which pay for public trash removal, snow plowing, police and fire departments; and people are buying stocks?  America’s travails have ventured around the world.  Not that the Brits don’t have a housing bubble, and the French too, or other nations also, but we seemed to have triggered it.  There are trillions of derivatives still out there.  It isn’t all over at all.  This is just the beginning, my friend.

The D.C. Gang supports the automakers, while the auto dealerships by the dozens go broke.  Who will sell the cars if the dealers are gone? Used car lots are chock full, and no one is buying them.  Massive business failures are around the corner, and people are buying stocks?  If there ever was a bear market bounce, this is it.  If there ever was a rally with no logical reason to support it, this is it. Many many shopping centers and malls are on the skids, their mortgages are in default, and not being helped by vacant stores.  I do know that thousands of ex- Circuit City and other big box stores are not free and clear, and the owners of them are in deep trouble with no rent coming in.

Locally, there are two sand and gravel companies.  One of them is shut down totally, and the other is hanging on by a thread. Locally, there are lots and lots of vacant stores, and this isn’t a manufacturing town.  My town is a farm town, has 17,000 people in it, and there are lots of vacant stores which weren’t vacant a year ago.  All localities are in trouble.  Silverton,Colorado, with 450 people in it, depends on tourism since the mines were shut down by the EPA and MSHA.  They’re dreading this summer’s business, and people are buying stocks?

We’re headed directly into socialism with a capital “S” and that results in communism in far too many cases.  When Hitler and Castro came to power, they were regaled as saviors and heroes.  The Ruskies still idolize Stalin, who murdered 30 million.  In South and central America, the socialists are gaining ground, and with voter approval.  When you get in bed with government, usually by the volunteerism of the vote, you are going to get raped.  America has gotten into bed with, as Rush calls him TOTUS (Teleprompter of the US), and we are getting screwed with our own smiling faces. Would I opt to leave America?  Hell no, because as far as the Latin nations are concerned, one of their most common shouts have always been “Revolution!”  Governments come and go down south, I am afraid.  Who would have ever thought that Iceland could go bankrupt because of AAA rated securities?

Want to short the dollar?  Buy gold and silver which are the enemies of paper scrip.  Want to be safe?  Get out of the big cities.  It is so sad.  Grievously sad about what’s happening to America and hundreds of millions of its citizens.  We’re being over run with illegals from Mexico who won’t learn English, and think we’re supposed to support them.  We’ve elected a bozo who has about as much true love for America as does any pip squeak, lusting for power, politico.  Our currency is headed south with all deliberate speed, helped along by Democrats and a few Republicans.  Our guns are threatened, and with every day that dawns, a new little bureaucracy is formed.  A popular talk show host’s wife read the 600-page Stimulus Bill and was appalled at its contents.  According to her, the bill is full of giveaways with a separate little bureaucracy to oversee each handout.

The plain fact of the matter is that with a $3.6 TRILLION deficit, and long term obligated to pay debts of $75 TRILLION, the debt cannot be paid, any more than could the German debt be paid after WW I, other than with printing press money.  Will dollars be used as insulation or as a method to start fires eventually?  How can it be avoided?  If anyone has even a smidgen of a way this can be avoided, please let me know.  Is there any other way to protect ones self from hyperinflation, other than to get out of the currency that is being hyperinflated, and into something tangible?  The king dollar has no clothes, people are beginning to see the truth of it, and the laughter has begun in the form of escaping from them.

Regards,
Don Stott

March 26, 2009

Absurdities of Socialism and Hyperinflation was originally featured on Whiskey and Gunpowder

When, on top of the central bank making interest rates absurdly low, and the Barney Franks and other do-gooders urging banks to loan to the unworthy and threaten to fine them if they didn’t, a lot of bad loans were made by bankers to those who were irresponsible.  They had to, because a Jimmy Carter “Community Reinvestment Act,” would cause the irresponsible bankers to get sued if they didn’t make bad loans. In addition to the pressure from the CRA, ACORN was blocking bank drive through lanes with pickets, and threatening banks if they didn’t make bad loans.  Loans requiring no money down were made by the thousands.  All you needed was to be a minority, or a bad credit risk, have a low income, and want a home.  Sort of like the Bol Weevil in the song.  “Jus lookin’ for a home.”

Homes were being bought so fast, and with such easy mortgages, that home builders decided to build to meet the demand.  With the good times rolling, developers borrowed, bought land, built streets, sewer lines, underground utilities, and waited for spec house builders to show up and buy the lots.  A few did, but by then, the crash had started.  There’s thousands of empty lots on hundreds of empty developments in America today.

Banks might not have been so irresponsible, but for the fact that if they made a bad loan, they immediately sold it off to Freddie and Fanny, thereby releasing them from any risk.  Fanny and Freddie, then bundled the loans in batches, and sold them to everyone who would buy them.  When the bundled packages of mortgages were rated at AAA by rating agencies such as Moody’s, how could they lose?

Cheap money is what it was, and everyone was partaking.  Cheap money draws people like flies to honey. More dollars were created between the years 2000 and 2007 than in the entire history of America, and that’s nothing compared to what’s going on now. From 1998 to 2006, home prices went up 150%.  Homes didn’t change; only their prices.  Mortgages were given to virtually anyone, who immediately sold them to Fanny and Freddie, who resold them in attractive “AAA” rated packages to investors around the world.  Everyone was off the hook! Victims are the buyers of the packaged mortgages which were falsely rated “AAA.”  Home prices got so high, and the flippers of houses did so well, that when the obvious peak was reached and the bubble would simply have to pop, guess who was holding the bag?  Governments, pension funds, central banks, individuals, and you name it.  Why shouldn’t someone buy a packaged group of “AAA” rated mortgages?  Besides, the mortgage packages were insured by AIG, the world’s largest insurer.  How many hundred billion to AIG so far?  Then, brilliant Wall Streeters decided to place huge bets on the phenomena, called ‘derivatives.’  Hundreds of trillions of dollars worth.

Fanny and Freddie are government backed institutions, “too big to fail,” have been bailed out, and operate at the instructions, funding, and power of the Congress.  When the Barney Franks told Fannie and Freddie to make sub-prime loans to help the poor and worthless, they did, and told banks to send them all they wanted.  They did, and made even more bad, sub-prime loans to virtually anyone who walked in the door.  Mortgages were so easy, that thousands of people became “Mortgage Brokers” overnight, and set up in shopping centers and any available office space.  Everyone was having a blast!  Commissions and points were flying around like trailers in a hurricane. When the peak was reached, a chain reaction was started, which hasn’t stopped, nor reached the bottom yet.

All the while, before the peak was reached, the majordomos of economics, such as Sir Alan Greenspan, were encouraging people to get ARMS, or Adjustable Rate Mortgages, which was a sure guarantee of a failure.  Greenspan said in 2003 that “The notion of a bubble bursting and a whole price level coming down, seems to me as far as a nationwide phenomenon, really quite unlikely.”  It may have seemed “unlikely” to Sir Alan, but it didn’t to me.  When it started down hill, naturally we needed more government to fix it, so the “Emergency Economic Stabilization Act of 2008″ was passed, which authorized the Treasury to purchase $700 billion in assets “at any time.”  The taxpayer was on the hook.  Then there is the “Troubled Assets Relief Program Act,” which allows the Treasury to seize any financial institution’s assets at whatever price it dictates.  Then, short selling was prohibited under, “The Uptick Rule,” as it destroyed the banks reputation.  This is an outrage, of course, as are all the bailout programs.  Government officials are running around like the well-known chicken with its head cut off.  We now have the “Term Auction Facility Act,” the “Term Securities Lending Facility Act,” and the “Primary Dealer Credit Facility Act.”  Sound like more government to you?

On October 9, 2007, the Dow was 14,164.53.  See what the real estate crash did to even stocks? Let’s now get back to the primary cause, and that has to be interest rates.  The interest rate acts like a floodgate, or the market’s governing body, which keeps floods from ruining everything.  If the interest rate is controlled and manipulated, to ‘boost the economy,’ we get into a bubble phase, which feeds on itself, till it has to burst. My banker, I am sure, sets interest rates on those to whom he loans, based on their credit worthiness.  Interest rates, SHOULD NOT BE SET BY ANY GOVERNMENT OR PRIVATE BANK.  The setting of interest rates way below what the market would have set them, by the Federal Reserve, has caused the world-wide chain reaction we now see.  As you know, in my opinion, the Federal Reserve should be instantly put out of business, and the Congress should not subsidize or dictate to anyone.  The Fed raised interest rates and flooded the market with dollars 80 years ago, and caused the great depression.  It did the same thing between 1995 and 2000, by increasing the money supply 52%, which caused the ‘dot com’ bubble to burst.  The Fed’s lowering interest rates eleven times to help us out of the dot com bubble, started the housing bubble.  The Federal Reserve is an unmitigated fraud and disaster, and there is no logical reason for its existence.

To fix the mess we are now in by endless printing of dollars and creating more and more bureaucracy, is pouring gasoline on a fire. Hey DC Gang…STOP FIXING IT.

Regards,
Don Stott

March 13, 2009

When Central Banks Tamper with Interest Rates was originally featured on Whiskey and Gunpowder

I am not trying to be an alarmist, but I am worried about a lot of things.  I just have to imagine what the chain reaction of the current downhill slide of the world’s economies can bring.  Here’s what I imagine can happen in years to come:

Pensions will go bankrupt or be a shadow of what they were before, causing millions of retirees to be broke and maybe even hungry, with no recourse.  Stocks and gold will probably cross at about 3,000.  Robberies of banks and citizens will increase many fold, and make the streets of big cities dangerous.  The danger will cause movie theatres, night clubs and restaurants to do poor business because of citizen fears of venturing out at night.  Cars not in garages or in some way protected, will be subject to theft, break ins or stolen tires and parts, especially in big cities.

With the populace unable to pay millions of mortgages, arson and fires of foreclosed or about to be foreclosed homes will be rampant.  Many of the elderly may resort to arson, in an attempt to become solvent enough to rent an apartment till they die.  Fire and police departments, especially in big cities, will be run ragged.  Insurance companies may refuse to renew in large cities or in certain neighborhoods, as they have done in Florida and New Orleans already, due to the hurricane damage possibilities.  Remember; an insurance company will never insure unless there is little chance of having to pay.

Mexican illegals will continue to go back home, since they will be unable to find work here.  Broke Americans, rather than starving, will gladly do any sort of work in fields or other places, to eat and stay alive.  Unions will find their memberships declining drastically, and many will simply cease to exist.  Travel and tourism will decline to the extent that many attractions, cruise lines, and amusement parks may become bankrupt or cease to exist.  Citizens will arm themselves and not hesitate to shoot robbers breaking into their homes.

Many will grow their own vegetables in home gardens, to save valuable dollars.  Oil consumption will stay low, and maybe even go lower, due to the lack of travel.  Church attendance and offerings will decline, due to the poverty of memberships.  Service club membership, such as Kiwanis, Lions, and Rotary will decline, and many individual clubs will cease to exist.  Travel agents will close their doors by the thousands, as will restaurants, clothing stores, auto dealerships, and chain stores of many things, because of their requiring a percentage of the operator’s gross.  Why pay 7% or 10% of a store’s gross, just to be able to use the parent company’s name?

The big cities, with their large numbers of out of work minorities, will become extremely dangerous places to live, and there will be an exodus to safer, small towns, by those who are able, even if it means selling a big city home at a sacrifice price, just to be safe.  The infrastructure and utility providers in big cities may become insolvent or fraught with vandalism.  Out of work minorities won’t be able to pay utility bills.  Without electricity, gas, or water, even for a short time, life can be extremely difficult, and especially in a high-rise building or multi-storey apartment.

Government size will grow, and grow, and grow.  More and more departments will be formed and bureaucrats hired, in a feeble attempt to ‘fix’ the depression.  It’s doubtful that most will realize that it was government that got us here, and the majority will wrongly think that more government will fix things, rather than make them worse.

How did government get us here?  It didn’t start with George Bush, LBJ, Jimmy Carter, or even Ronnie Reagan.  Lovable Ronnie did his best, but while doing his job, he quadrupled the national debt.  The trouble began with Woodrow Wilson, when he got us into World War One.  It was about over, when Wilson and Colonel House decided to get America involved.  But it was FDR who really started the road to ruin.  I’ve been over this with you readers many times, but when a government begins to subsidize anything, be it farmers, old people, poor people, cold people, minority people, sick people, or any people, business, or other entity, the end is in sight.  The subsidies, no matter how innocent they may seem to be at the beginning, will grow like a cancer, till the entire economy and national life style is destroyed.  Governmental subsidies and handouts, are indeed like a cancer, eating and spreading out of control, and most especially at the federal level.  Once a citizen gets a check from D.C., they are 100% going to depend on their continuance.  Public housing residents are several generations old now, and each subsequent generation is more worthless than the previous.  Public housing occupants believe it is their actual right to have free housing.  All recipients of subsidies and handouts actually come not only to depend on them, but begin to believe they have an unconditional right to them.  The first public housing, Social Security, and various other handouts, are now over seventy years old, and have grown like weeds in springtime.

As each year has passed, more and more handouts and bureaucracies who hand them out have been formed and populated.  Each succeeding handout, such as food stamps, Medicare, and Medicaid, brings more and more on the dole, and more and more think it is their right to have it. Each handout and subsidy destroys a part of our free economy, substituting the marketplace, which is self-regulating, and gives highest quality and lowest prices, with wasteful, expensive, totalitarian bureaucracy.  Obviously, the national debt has grown like Topsy, because there are never enough taxes collected to pay for the handouts.  Taxes have grown thousands of percentages since FDR, and taxes are levied on every single thing a human uses, consumes, produces, or buys, thereby destroying freedom and the marketplace.

Candidates for public office, realizing that they can’t get elected unless they promise more handouts and largess from the public treasury, always do as they promised.  Now, as we are in another deep depression, the spending and handouts will grow more and more, as will the government.  Donald Trump, this morning on Fox News said, “It’s 1929 all over again.” Panic and paranoia will grow, and millions more will buy guns and ammunition to protect themselves.  They should, because I believe that in the big cities, riots will break out, with much physical damage and loss of life.  The jobless, hungry, and homeless, will multiply in big cities, and riots will be the logical result.

With currencies failing around the world, it will become obvious to more and more people, that saving in them is futile, and sure road to bankruptcy.  More and more shysters will be discovered who had been running Ponzi schemes, defrauding millions of people out of billions of dollars.  (Gold and silver require no trust of anyone or anything.) Former wealthy people and families will discover that their former wealth in dollars, has bought less and less, to a point where annuities, and whole life policies will become virtually worthless, as all tangible prices go sky high in currencies, as has always happened with hyper-inflation throughout history.

Government will also become paranoid and attempt to legislate away the Second Amendment under the ruse that it is to ‘protect people,’ or other nonsense.  In reality, millions of guns in the hands of the citizenry will protect them from crooks, robbers, and rapists, but also from government, if it all comes down to that, and it might.  Will American soldiers shoot their own citizens, if ordered to do so by government, under some sort of phony charge?  If a citizen writes or talks against government actions and policies, will they be prosecuted?  Will it be seditious to speak one’s opinion?

Here’s today’s quote from Atlas Shrugged, page 995, and everyone PLEASE buy, read, and pass this book on to your kids.  “The wads of worthless paper money were growing heavier in the pockets of the nation, but there was less and less for that money to buy.  In September, a bushel of wheat had cost eleven dollars; it had cost thirty dollars in November; it had cost one hundred in December; and it was now approaching two hundred, while the printing presses of the government treasury were running a race with starvation, and losing.

“When the workers of a factory beat up their foreman and wrecked the machinery in a fit of despair, no action could be taken against them.  Arrests were futile, the jails were full, the arresting officers winked at their prisoners and let them escape on their way to prison.  Men were going through the motions of the moment, with no thought of the moment to follow.  No action could be taken when mobs of starving people attacked warehouses on the outskirts of the cities.”  Whet your imagination?  I hope so.  If you’ve ever read a book that seemed to come true, this is it.

As a grotesque finale of FDR’s feeble attempts to get America out of the great depression, contrary to his campaign promises, he virtually forced Japan to bomb Pearl Harbor, and we were in a World War, which of course got us out of the depression.  Will a ‘false flag’ attack or some other specious happening, eventually get America into WW III?  We seem to be following FDR in most other ways.  Protect yourself, and buy and read Atlas Shrugged.

Regards,
Don Stott

February 27, 2009

What Could Happen: The Collapse of Big Cities, Big Governments and Subsidies was originally featured on Whiskey and Gunpowder

Multiply this by millions of permanent layoffs, bankruptcies, shut downs, going out of businesses, chains closing for good, autos down the tubes, housing starts virtually zero, and sales almost the same, and what do you get?  The Toyota effect, multiplied many times over. 2.5 Million jobs were lost in 2008.

You get millions out of a job, millions behind in their mortgage and credit card payments, millions with homes worth less than is owed on them, and the chain reaction follows.  The more layoffs there are, the more store closings and bankruptcies there will be, and resultant layoffs and increasing of all of the above.  In other words, thanks to the welfare state, which wasn’t in existence in the 1930’s depression, credit cards which weren’t in existence in the 1930’s depression, and un-backed dollars, which were backed in the 1930’s depression, and no money down home purchases and ARM mortgages, which weren’t possible in the 1930’s depression, the conditions currently extant can and probably will make this depression far more severe than the 1930’s depression.  The facts say it will be far worse. 

Unfortunately, you haven’t seen anything yet.

Carburetors

For over 75 years, cars, trucks, planes, and everything powered with gasoline engines, used carburetors to mix air and gas to feed into the engine’s intake manifold.  They worked well, but on occasion, they became ‘flooded,’ and the engine wouldn’t run.  (Modern, fuel injected engines can’t be ‘flooded.’)  Carburetors had two things on them which caused ‘flooding.’  (1) The accelerator pump, and (2) The choke.  On cold mornings, often the choke, which restricts the flow of air, might make the mixture too rich, and cause the ‘flooding,’ or often in hot weather, too much gas pedal pumping would inject too much raw gas into the engine, ‘flooding’ it, and causing it not to run.  Both things, which caused the ‘flooding,’ and engines not running, were TOO MUCH GAS. 

The solution was to stop the flooding by depressing the accelerator all the way to the floor, and crank the engine till the excess gas was used up, or open the choke and wait for it to evaporate.  Gasoline engine technology is not the point here.  The point is this:  What got us into this economic mess?  TOO MUCH MONEY INSERTED INTO AN ECONOMY by the Federal Reserve.  Just like the engine being flooded with too much gas, the solution is to cut off the gas.

The Federal Reserve under Alan Greenspan flooded America with easy money, easy mortgages, and easy credit.  The result was bad credit, bad mortgages, and everything being over-priced.  Pouring more gas into a flooded carburetor guaranteed the problem would be made much worse.  Cutting off the gas would be the solution.  Pouring $2 trillion, and god only knows how much more into the economy, is like pouring gas into a flooded carburetor.  It will only make matters worse.  Obama says he has consulted 20 of America’s best, most respected economists, and they say pour more gas (printing press dollars) into the flooded carburetor (economy), and the engine of America will start.  NUTS!  I wish Obama had called me.

The same exact thing was tried in the 1930’s, with huge government spending, and it took WW II to get us out of the depression.  We’re already in two wars, and I certainly wouldn’t want us in a third one.  How about this as a cure for the current depression? 

(1) Get us OUT of both wars we’re now in, and bring home all the troops.  Let ‘em solve their own problems over there.  We’ve got huge ones here, and can no longer concern ourselves with theirs.  This will save hundreds of billions a year, if not well over a trillion. 

(2) Disband most federal bureaucracies, especially the Federal Reserve, and do it Quickly.  The DOT, DOE, HUD–and the list is long–serve no useful purpose.  The Department of Education educates no one, the Department of Transportation transports no one, etc.  This will save hundreds of billions a year. 

(3) Revert to the Constitution, which gives government no authorization to subsidize anything.  This will put an end to all federal welfare, and save hundreds of billions a year.

(4)  Get out of the UN, NATO, and any and all foreign entanglements, at a savings of more hundreds of billions, and get the UN out of America.  Declare unconditional neutrality, and send no money or advice overseas at any time, or for any reason. 

(5)  Close our borders with Mexico, and see to it that they stay closed 100%.  More savings. 

(6) As illegals come up for police stops, free medical care, welfare, school enrollment etc., which are in the hundreds of thousands each year, instantly send them home. 

(7) Renounce NAFTA, and all laws which encourage, tax wise, the building of plants off-shore, and resulting layoffs here.  With the budget balanced, and no more Federal Reserve, recovery would be pretty quick. 

Today, every single state is in terrible economic condition because of layoffs, bankruptcies, and low tax collections.  They have to balance their budgets.  The D.C. Gang doesn’t, and can print and print and print, which they are doing, and will continue to do with nary a smidgen of responsibility.  We all pay for their lack of responsibility with every single dollar we own being reduced in purchasing power.

I can go on and on, but the point is this:  The ones who harm us the most–other than the Congress who has gotten us into this with a hundred years of bad legislation–are bureaucrats, welfare recipients, and illegals, who would be out of work, and that’s great!  Let D.C. turn itself into a ghost town, full of worthless, out of work ex-bureaucrats.  Maybe they’d burn the place down and we could start over.  Let the illegals go home by themselves, or by force when they are picked up.  If states want to subsidize the poor, or illegal, they can, but not the federal government.  All of these ideas would actually balance the budget, and make America strong again.  None of these ideas have a Chinaman’s chance in hell of coming to pass.  Not a single one.  Obama will print up another trillion dollars in un-backed scrip, and we’ll have hyper-inflation, except in housing, because that has yet to reach bottom.

To fix a flooded engine, you cut off the gas.  To fix an economy flooded with paper money, you cut off the paper money, not print trillions more!  The economy is in such a sorry state, flooded with fake money, that the fed interest is close to zero.  They’ll pay you NOTHING to store your scrip for you.  Wise people have taken their scrip, and turned it into precious metals, which will always have value in any currency, or all by itself.  An economy such as ours, which has been flooded with unbacked scrip, and ceased to run, as in a flooded engine, has to get itself out of the mess by ceasing the printing of scrip.

It will be very painful to millions of people who have not been acting wisely, or who have been depending on Uncle Sam for their sustenance.  The pain of this depression is unimaginable today.  We’re only at the very beginning of it.  The only sensible way to get out of it, is to let it run its course, and at rock bottom, the economy will begin to rise like the Phoenix Bird. 

If my ideas ever came into being, there would be wholesale riots by those cut off, and many millions would die.  Wonderful!  We are flooded with not only too much scrip, backed by nothing, but too much human trash, who have been flooded with handouts from the public treasury. Millions actually believe that government owes them a living, which is gross error, and extremely costly. They, like the scrip, are basically worthless, and they must be gotten rid of to make our economy healthy again.  How to do it?  I give up, or at least won’t write about it.

Regards,
Don Stott

January 9, 2009

Basic Economics was originally featured on Whiskey and Gunpowder

Enough about animals; let’s examine how America has, and is being killed.  In the main by two methods:  (1) Currency destruction, and (2) Weakening the populace.  The currency destruction is inseparably linked to the second method.  Before FDR, people used to plan for their retirement, save in sound dollars, own a home, or in a hundred ways, plan for old age.  Americans were strong, intelligent, hard working, and knew that if they didn’t plan for retirement and old age, they might die early.  Did it work?  Of course!  Naturally, the weak and stupid didn’t plan for their old age, and guess what?  They died early, which is as it should have been.  Just like stupid animals, they couldn’t survive if they didn’t act and plan properly.  An animal has to find a place to live, build a nest, store food, and the like.  People had to pay their debts, pay off their home, save money, and PLAN.  If they did, all was OK.  If they didn’t, they died early.  The human strain was kept strong by this method, just like in the animal kingdom.

What stopped this necessity to plan and save?  Social Security, for one.  Government would take care of the oldsters, and remove their duty and necessity to care and plan for themselves.  Government would force a deduction from their paychecks, put it away for them, and then when they retired, all would be well.  This, of course, weakened the populace.  They no longer had to plan, save, sacrifice, and work hard for their old age.  The weak no longer failed and died.  They lived, and continued to live, when they should have, by all logical means, been dead and buried.  By staying alive, they became and become a burden on the rest of the populace and families.  Does this sound coarse, mean, crude, and ungodly?  Maybe it does to you, but it is so logical.  The Social Security scheme, like all other government “plans” and bureaucracies, have ruined the value of the dollar.  Forced, compulsory, Social Security, like all other government entitlements, has become a disaster.  There are far more retirees than workers, and the original 1% deduction, now is close to 20%, still not enough, thereby weakening all of us.  As if that weren’t bad enough, government continues to lie about inflation, which it causes, so the welfare checks are far less than they should be; thereby screwing the supposedly well cared for recipients.  No one can live on a Social Security check today, even though we have all been forced to pay through our noses to support it.  The entire American citizenry has been made weaker, made unable to care for itself, and at the same time been stolen from in a wholesale manner.  Government then, is killing its citizens and itself at the same time.

Originally, there were no public schools.  Everyone taught their kids at home.  Literally, or in a private or religious school. Caring, smart parents taught them well, and the kids succeeded. America, a hundred years ago was far more educated and cultured than now.  By knowledge and skills of reading, math and other subjects, the eighth grader of a hundred years ago compares equally with today’s college student or maybe even graduate. This was without any public schools.  The stupid parents who didn’t teach or show caring, demonstrated it in their kids who failed in life, probably died early, and didn’t become a burden on the rest of society.  Next, there were thousands of one-room schoolhouses, paid for by the local populace, and these schools did very well, but it was the beginning of large public schools, which seem to be not much more than baby sitters.  Home schooling has once again become the smart thing to do by caring parents, because they realize that government schools are a disaster, like every other government scheme and “program.”  Public schools now consume three quarters of all property taxes, and do a lousy, expensive job.  Catholic parents usually send their kids to parochial schools which are in no way “public” and not paid for by taxpayers.  Wealthy parents may have sent, and still do, send their kids to private schools, not paid for by taxes, and they always did and still do a fine job.

Government schools had to fail, like all “programs” fail, because of inefficiency and cost.  The failure and cost of public schools is partially responsible for populating the streets of America with thugs, criminals, druggies, shoplifters, burglars, rapists, and all sorts of riff-raff, which should be dead, and maybe not have been born in the first place, probably. Trash, uneducated, uncaring people seem to multiply at enormous rates and cause a lot of crime, don’t they?  Cruel, ungodly, and coarse?  Maybe, but picture America if there had never been a public school, and every child had been home-schooled or sent to a private school, paid for by its parents, with little or no property taxes, and no terrible, microscopic educating in failing public schools.  There would be thousands and thousands of private schools operating for profit, and competing with each other for achievement, being used by parents who chose not to home-school.  No teachers unions and inept teachers.  There couldn’t be because competition in the market wouldn’t allow for it.  There would be schools specializing in cooking, engineering, language, math, or whatever the parents chose for their kids.  There would be an abundance of religious schools, paid for by churches and parents of pupils, but no drain on taxpayers of any kind, and superb education.

The public school systems, even in small towns like the one I live in, have proved to be expensive disasters.  Homeowners are being taxed severely to pay for these incompetent, inefficient, poorly educating, sinkholes of fading dollars.  So ingrained have public schools and Social Security become in the American mind, that most will disagree with my thesis.  They will moan and groan about how, “We have to care for old people and educate the children,” even though facts and logic prove that the opposite has happened, and cost a fortune in dollars and crime.  America has inflicted wounds on itself over the last hundred years, because the general public opinion is that, “People need to be helped and taught,” regardless of the cost or lack of success at either.  Perhaps 1% of America will agree with me on this first part, because they are so mind-numbed by government propaganda, the media, and the garbage they themselves have learned in classrooms of public schools.  Government and “programs” always come out ahead, and are painted as glorious and wonderful by the media, schools, and bureaucrats.  They are the opposite, and are partly responsible for the killing of America.  Once something gets started, regardless of the total illogic of it, such as public schools and Social Security, there is a zero chance of obliterating it, because so many have become dependent, and thereby weak.  How can a nation survive if it is weak?

Regards,
Don Stott
www.ColoradoGold.com

December 08, 2008

Public Schools and Social Security: Killing America, Part I was originally featured on Whiskey and Gunpowder

Don’t like slavery? Let’s fight a war, even though slavery was disappearing rapidly and it had been illegal for 55 years to import more slaves. Let’s call the power grab “Saving the Union.” That sounds good, doesn’t it? (When dishonest Abe got elected, as the first Republican, six states instantly seceded, as they knew what was coming). Don’t like roads? Let’s build an interstate highway system at taxpayer expense, charge no tolls, and kill tens of thousands of businesses, kill railroads, escalate the price of fuel to pay for them forever, and change the cities, face, air, and oil consumption of America. Want to give a lot of power to big shots? Let’s form the Federal Reserve, which isn’t federal, and has no reserves. Let it print money created out of thin air, loan it to the taxpayers at interest, and make them pay through the gills with inflation.

Yes, I can literally go on and on. They write an infinite number of bureaucratic prescriptions, which are all force fed to the citizenry, who, in the main, seem to think that it is all so wonderful, while the nation is flooded with trash, lazy, non-productive people, living off the thousands of welfare schemes. The masses become so drugged with fake hopes, fake money, empty promises, and non-education that they finally actually voted in Adolph Hitler, FDR, LBJ, and now Obama. The drugs and prescriptions of government and bureaucracy, have worked well by making D.C. the absolutely most stupid, power mad, idiotic, corrupt city in the world. And we all anxiously awaited the outcome of the elections. I did, and so did you, even though one was about as bad as the other, and the Congress is hopeless, no matter who gets elected…except Ron Paul possibly.

What is now happening happened in the 1930s, and is absolutely like a carbon copy. The Fed floods the market with tons of cash, which makes the stock market and real estate bloom like flowers in spring, with banks loaning on slim or no margin, thereby creating a huge bubble, which has to eventually bust. It did then, and has currently burst. Then they tried to “fix” the broken economy, like they are trying to do now, only at the expense of the taxpayer. Didn’t work then, and old FDR finally got us out of it by means of WWII. The morons of D.C. are literally printing $2.7 TRILLION un-backed pieces of paper, to “fix” the economy, and it won’t work. FDR’s dollars had to be backed by gold, so he told everyone to turn in their gold so he could print more dollars, which didn’t solve the depression, but robbed the populace of hundreds of billions of bucks, when he raised the price of gold from $20.67 to $35, overnight. Today, there’s no backing, they need no gold to back dollars, so they merrily will print and print and print till who knows when? Will the buck collapse, thanks to printing? I don’t think so, because everyone’s doing it!

If something works well for politicians, other politicians will glom onto it, and do it also, which they are. The world’s a big printing press. All governments are printing their respective currencies like there is no tomorrow…except there is. Hyper-inflation is what it is called, even though the time delay between printing and hyper-inflation fools most. It will come. How to fix the current situation? Not easy, because as each depression comes along, they might get worse, thanks to government. The way to fix this, is to simply let the cards fall where they may. No interference of any kind. No bailouts, no subsidies, and no ‘help’ from governments anywhere. Failures? Lots of them, but they probably should have failed anyway. Broke people and corporations? Can’t be helped. They have done it to themselves or are caught in a bad place. Everyone has to help themselves, no matter the cost.

Cruel? Yes, but when government ‘helps,’ in any situation, the ‘help’ instantly turns to ‘hurt’ of the productive class, whose taxes pay for government, which is hurting them. Obama has promised to ‘help’ the poor, at the expense of the producers who pay his salary. This is known as biting the hand that feeds you. When government endlessly subsidizes, ‘helps,’ and hires tens of thousands of money-ingesting bureaucrats to regulate the producers and hand out scrip to the non-producers, calamity is the obvious result.

The nations of Earth, with America being no exception, are flooded with trash, non-productive people, who have no real reason to exist, other than to suck the very life’s blood out of the productive class. The entire continent of Africa, to make a generalization, is classic. Ask the Germans about the Turks. How about North Philly, East St. Louis, Detroit, or South Central LA? How to get rid of them? Other than letting them self-destruct, I have no idea, but at least I know the problem. Government handouts gave us the underclass, and now we have to put up with them, while they continue to suck at the government teat. Suppose all ‘help’ ceased? Suppose 85% of federal bureaucrats were fired, the IRS eliminated, and their offices sold to productive businesses? Suppose 85% of all federal government were disbanded, and D.C. was turned into a virtual, temporary, ghost town, till producers could come in? But then, I speak of a Constitutional government, and that is old-fashioned, I realize.

The Constitution tells government what it can do, and that range of permissions has been so totally ignored and violated, that it is no wonder we are where we are now. What to do? There is no better place on earth to live, so we must stay here, preferably in small towns with sound banks, small governments, and no severe weather. And of course, we must protect ourselves. I can offer no other solutions, because the decay has so thoroughly infected the patient, that more prescriptions will only harm us more.

Regards,
Don Stott

November 25, 2008

Stop Fixing It was originally featured on Whiskey and Gunpowder