Let's face it...We are living in an Age of Integrity and Reality about as much as two combatants in a 'rassling ring... the latest entertainment craze...the words and acts of politicians behind the scenes. In essence, it's all hype! As a not-too-distant relative once remarked apropos to my lack of success in my writing career, ' "It's all about using psychology.. You have to butter people up, tell them what they want to hear, then you can have anything you want.' "

   How prescient his words as I reminisce on that moment thirty years back. He was "successful" not because he had sold a superior product (i.e.: British cars which constantly broke down, lacked parts and failed all safety and emissions standards) but because he convinced others--through smiles, bravado and hyperbole (hype)--just how prestigious, awesome and fun owning a British car would be. When the cars broke down, were unserviceable and their various British plants closed down, he blithely unloaded his stock beforehand,  took tax-refuge in Bermuda and laughed all the way to the bank.

   Scenario One: War Dividends.... In today's variegated climate, we can virtually trust few of our "leaders" and "experts"--especially those who have prestige, popularity and principle (not principles) on the line. Like a conniving mistress or a dutiful psychiatrist slaving for $150 an hour, they tell us exactly what we want to hear to soothe our fretful minds. They will commandeer impressive statistics on just how the economy has turned the corner (as Herbert Hoover asserted in '29). What our benefactors fail to tell us is how the majority of the 7-9% gain in the GDP was hoisted/foisted via the trillions of dollars immersed into our military misadventures earmarked for Operation Iraqi "Freedom." This is not positive-net productivity but negative-deficit productivity. Aside from the few military hobnobs and industrial-restoration phenoms who benefit, this money is leaving American to be strewn on the battlefields and beleaguered cities of a querulous, defeated nation of tribal and religious factions. This War Dividend will prove ephemeral at best and will come back to haunt this country's debt load/pyramid for many years ahead (watch out Social Security, Medicare, Pension Funds!) Wouldn't it be ironic if our "Policeman of the World" demise in the Mideast ended, like Communist Russia's,  in the Afghan environs as well?

   Scenario Two: Tax Incentives...Yes, it is true that the mighty Republicans have granted us poor suffering taxpayers a reprieve by injecting trillions of dollars into our coffers; nonetheless, this chick's is going to hatch another rotten egg. Instant gratification solves about as many problems as sex solves marital infidelity. The Fed is living a pipe dream in deeming that instant productivity, instant spending, instant profits will produce permanent results. Injecting steroids to enhance superior athletic performance has proven disastrous and has, at last, produced a backlash of regulations banning this substance abuse. "Steroiding" the economy by playing Santa Claus will also prove disastrous. How well I remember a collaborator-friend of mine who could never say no when her sweet child asked her for candy. 300 pounds later, we can now view the result.

   Scenario Three: The Inflation Bubble...We discussed extensively in our November issue how the forces of inflation and deflation were at loggerheads. While deflation lowers the cost-of-living and doing business, it also decreases individual and corporate earnings-- resulting in massive layoffs and bankruptcies. Of course, during this scenario, those with savings and without debt profit enormously by buying up, cheaply (and holding), whatever suits their palates. Unfortunately, a slew of inflationary bubbles are being staggered--giving certain areas of the economy good-old optimism. Once deflation breaks and the Fed's printing presses create unbridled inflation (which normally takes up to a year). the ball game is over.

   Ergo, that shooting star called the dollar, the stock market, the real estate market, the bank system have had their day in the sun and are now preparing to plunge back to Earth, their ultimate reality.

le scott, evolvingarts.net

Credo:

On a personal note, I am not here to make a killing. My joys in life are my wife, creating Art, playing competitive sports and managing my own personal accounts. If I do little more than cover my costs while helping others along the way, then my life has been that much more fulfilling. I prefer working with investors on a one-to-one basis and recognize how every investor has individual, personal needs. I work with investors with small nest-egg accounts as meticulously as those with huge assets.

Monetary Review – November 2003:

   Since ad infinitum, politicians, bankers, brokers and economists have blustered on how each contemporary economic cycle is unlike any of the past and, in today’s case, how we are living in a “new paradigm” of technology and the Internet, how business cycles are  manageable (i.e.: manipulated?) and how through the "new economy," we can control interest rates and free-market forces. But something happened on the way to the forum...

The "experts" led us astray in the "9/11 (9-1-1) Crash" and they are trying to suck us back into the "new recovery" once again. They posit how the Dow Industrials are approaching 10,000--only10% off an all-time high. They crow on how the NASDAQ has doubled and more than recouped everything lost in the "correction." They arrive at their conclusions by "percentage sorcery." True, the averages have basically doubled (1,000 to 2,000) for a 100% gain this year but they slid originally from 5,000 to 1,000, an 80% loss. Moneywise, on a five-thousand dollar investment, you would have lost $3,000 (5,000 to 2,000) but gained 20% the way the "experts" have it refigured! Guess I should have studied Higher Math more extensively in college...

If Kondratieff's theories were correct (seconded by Ravi Batra's, The Pooring of America, a prognostication of a 1984 Crash) and that the next massive downwave should have ensued 50-60 years after the Great Depression of 1929, why did the major averages set all time records in the 90's? The experts would lead us to believe any one of these factors were contributory: the New Information/Technology Age, the New Paradigm (where stocks sell on future not present earnings: i.e: Global Crossing, a $60 stock reduced to 38 cents in less than a year) and the ability of World Governments, primarily the Federal Reserve, to stave off recessions by turning on and off the money supply spigots. Then what went wrong!  

The cycles of Deflation/Inflation...In the 90's, purely by accidental good-fortune, inflation receded--not because of any glamorous decisions by Greenspan, Clinton, Bush, etc. but because the powers of deflation were seething into world economies, emitting the illusion that because Inflation had been conquered, we could plummet interest rates to Eisenhower days. As Edson Gould demonstrated, three cuts in the Discount Rate are all it takes to institute a stock market bonanza. Not only that phenomenon, but the Fed, by injecting mounds of money into the banking system, was able to bail out many flagellating pockets of the economy without sparking inflation. Unfortunately, that day of reckoning has arrived--that fourth quarter when the starting five has tired, can't hold the lead and is about to lose the game. Remember that old term "Stagflation?" We are about to witness a massive wave of higher prices for commodities, lower prices for wages and an "anything goes" for the banking system, the dollar, taxes, bonds and stocks. Do we follow the crowd or are there individual alternatives/paths we can take?

Yes, Deflation has reared its ugly head, closed down factories, throttled growth, created massive unemployment and “downsizings. The "game" is over. All the manipulations and printing presses of the Federal Reserve cannot stave off the oncoming waves of Depression. Between the Government pushing us trillions of dollars into debt and The Fed pumping money into the banking system (akin to Germany’s Third Reich printing presses), the illusion that all is well, that a recovery is underway is only indicative of the pendulum of Inflation and Deflation swinging uncontrollably wider and wider....The bankrupt dollar may be obfuscated by the Feds forcing banks and foreign governments into continuing to buy our Treasury bonds but who will be forced into buying Municipals, Corporates and Fanny Maes? As more and more phony money is being pumped back into the System, we as citizens will face our Day of Reckoning, for unlike the Feds who can print money and States and Municipalities who can float bonds, our Pension Funds, IRA's, 401-K's and Social Security will be held hostage, while the bankers, brokers, insiders and elected officials run with the loot.

History teaches us that nothing changes until rulers change. These fat-cat rulers ain't gunna change! Either we wait for the next set of rulers to be enlightened or we take matters into our own hands now!  Which is it?