Episode-572- Economic Fear vs. Common Sense Reality

So today’s show is drawing from a large volume of emails about financial and economic issues based on a request I made for such materiel this week on facebook.    I decided to do today’s show due to a excess of false fear I am seeing in the market right now.  Tune in today to learn why as I put it, “yes Rome is burning but no the sky isn’t falling”

Tune in today to hear…

  • Gold is always THE answer but it is often an answer
  • Understand you don’t have to sell all of anything, you can liquidate half
  • Stop being afraid to hold onto some cash
  • Why yes you should pay off debt and no inflation won’t help YOUR debt
  • What is going on with this JP Morgan, Max Keizer silver short thing
  • If no wealthy people put all assets in one class, why should we, why should our nation
  • What is a TIPs
  • What does it mean when people take a negative interest rate on a TIPs
  • How should we view real estate for us as individuals
  • My case to you as a fellow share holder for the restructuring of USA Inc.

Additional Resources for Today’s Show

Remember to comment, chime in and tell us your thoughts, this podcast is one man’s opinion, not a lecture or sermon. Also please enter our listener appreciation contest and help spread the word about our show. Also remember you can call in your questions and comments to 866-65-THINK and you might hear yourself on the air

35 Responses to Episode-572- Economic Fear vs. Common Sense Reality

  1. The worst team in the NFL is the Lions?

    Man, the Panthers can’t even get respect for being the worst. 1-11 and that 1 only because of David Carr.

  2. Wow! Great show Jack… I think a lot of us needed this.

  3. Great show Jack! The heck with 20 cents, this show alone is worth an entire MSB membership.

    I take issue with you being a Steelers fan though… Go Ravens! :)

  4. Yet another great show. Really liked the USA Inc. analogy, focusing on individual responsibility, self reliance and community building vs fear makes a lot of sense, a very empowering way to look at the economic situation.

  5. Hey guy’s! I just wanted to say something about Max Keiser. I am long time supporter of Jacks show, and I like Max Keiser as well. I really don’t think that he is making money off sliver this whole “Crash JP Morgan buy Sliver” thing. I believe he thinks that JP Morgan is worse that Goldman, and they should go down. But I could be wrong about that. I listen to some of his podcasts, and watch his show’s “The Keiser Report” and “On The Edge.” What I take from it though is that I need to do the thing’s that Jack talks about because they (the Bankers) are just going to keep doing what they’re doing. I think Max and Stacey are a very intelligent people, and they find great stuff for people to keep their eye’s on.

    Here’s a link to one of his recent shows “On the Edge” with Paul Craig Roberts, which I think some of you might enjoy. I also put a link to the one he did with Chris Martenson.

    http://maxkeiser.com/2010/12/12/ote86-on-the-edge-with-paul-craig-roberts/

    http://maxkeiser.com/2010/11/13/ote81-on-the-edge-with-chris-martenson/

  6. While I understand why you think the solution to the current currency is to get rid of the Fed and have Congress print the money instead of the Fed, what makes you think that Congress won’t be as susceptible to the temptation of printing more money than we want it to than the Fed? After all, the Congress we have now has a 20% approval rating and doesn’t listen to us; who’s to say they’d listen to us on the subject of money any better than they listen to us on the subject of health care or spending? The problem with the gold standard back in the 20s wasn’t the gold, it was the Fed. If private banks issued gold-backed currency (or any other commodity, for that matter) as they did before the Fed existed, then any bank which overprinted would simply fail, leaving the other banks to pick up the pieces.

  7. I spelled silver wrong!! What an IDIOT!!!!! Ummm did I spell Idiot wrong?? ;)

  8. Modern Survival

    @Brianna,

    For your objection to have even a shred of merit you would have to show me one time that the congress raised the debt ceiling, passed spending and the Fed said no to them. It has never happened, the congress spends as much as it wants to already and the Fed isn’t, won’t be and never has been a check on that.

    Further if the Congress created the money (like the constitution requires them to) all inflation and deflation and everywhere every penny went would have to be on the public record. Right now the Fed does plenty we don’t want them to and when we ask about it they tell us to go screw.

    Lastly in the end all the Fed does is create debt. Even if the congress created just as much money as the Fed did at least the money would not have interest attached to it.

    Sure the congress often doesn’t listen to the people but it is UP TO US to do something about it. At least we can if we choose to. Not only does the Fed not listen, they tell us they are not listening and they tell us they don’t care and they tell us they don’t have to. Have you seen this?

    http://www.youtube.com/watch?v=kUJIG3JNPk0

    Many people (I was among them at one time) consider the “if we let congress print the money they will spend like maniacs” argument the silver bullet argument for keeping the Fed. Like I said though the Fed has never denied the congress a dime, not ever, in anyway.

    Once you understand that you realize the argument has no merit to it at all.

    Lastly, congress will listen to whomever controls the money. Right now the Fed, the elite banking layer and the mega corps control the money. Shocking as it may seem, if Congress controlled the money, the people control the money.

    You want to know why they don’t listen to us, we don’t control the money. Make the money public and they have to listen.

  9. Great show Jack!
    Your show is often a needed voice of sanity in the “survivalist movement”. I am seeing so much nonsense in the cause of fear-based marketing that I am coming to hate the term “survival”– Just like “tactical” became the buzzword in the gun industry (like when the $500 .223 varmint rifle is resold as the $800 Tactical rifle).

  10. Modern Survival

    Oh and Brianna those private bankers you revere are the ones that created the Fed. They played that gold scam to rid us of Lincoln’s greenback, contracted the gold supply, created the currency shortage of the late 1800s and presented the Fed as the solution to the problem they created.

    In short the gold standard was used to give birth to the Fed. Like I said we all must stop playing checkers. This is a chess game, we need to look much further both back and forward in time.

  11. You said that when Congress raises the debt ceiling or spends money, the Fed never says no. But that doesn’t answer my objection at all. Of course the Fed never says no… but they’re not the ones who make Congress raise the debt ceiling. Congress does that all by itself. All I said was that I think the people would be as good a check on Congress in the area of the money supply as they have already proven themselves to be on those issues originally given to Congress to control in Article I, Section 8. And I disagree that the Constitution gives Congress the right to issue paper currency. I realize you’re going to disagree with me on that, so don’t even bother to rebut this point, but I think that the wording of that section of the Constitution, combined with the disastrous inflation experienced under the Articles of Confederation, show that the Founders didn’t like and didn’t want the country issuing unbacked paper money.

    Also, you seem to think that I argued somewhere that I wanted to keep the Fed. I made no such argument. I argued for private individuals to control the money supply. You seem to think that this is synonymous with Congress controlling the money supply, but I think your argument is akin to a Communist claiming that their government is the people’s government and government property the people’s property. Sounds nice in theory, but it never actually works in practice (And no, I’m not comparing you to a communist or implying your a communist, just pointing out that this single argument you make on this single issue is basically the same argument the communists make on every issue, so please don’t get offended).

    As to your objection that it was private bankers who created the Fed, while it is certainly true that the bankers got together to plan and structure the Fed, and that they pushed for the Fed, it was an act of Congress that brought it into existence. Those private bankers could never have created the Fed without government interference. The Fed could never hold a monopoly on money without the support of the federal government. That is the exact same thing that Congress and crony capitalists do in other sectors of the economy: taking a problem caused by government intervention and proposing a solution of more government intervention. I don’t see why you say that the solution to such problems in say, education or health care is more freedom, and yet claim that the solution in the realm of money is to hand complete control of the currency to government (though of course, they have it already).

    There was indeed a currency contraction after the civil war to get off the greenback and back to the gold standard. But I don’t see why you’re so fixed on the amount of physical money in the economy. If the amount of money shrinks, prices and wages go down. If the amount of money rises, prices and wages go up. The numbers don’t matter, so long as a) the wage/price ratio doesn’t change, and b) the numbers aren’t so large or small as to be impractical. If we went back to gold, there’d be horrible deflation, just as there was deflation in 1981-1982 with Reagan/Volcker when they shrank the paper money supply by raising interest rates. But with the amount of money in ciculation right now, a deflationary period is inevitable, anyway. Why not at least use that period to get onto a sound monetary footing with a form of currency whose production price is something higher than zero? Because that is the real reason precious metals have always been so valued as money. Metal costs something to mine, and metal coins cost something to mint, meaning that the supply balances out when the manufacturing of the tokens becomes unprofitable.

    I also don’t understand why you hold up the greenback as an example of a successful currency. I don’t know how inflated it became during the five years of the war, but the fact remains that no matter how well or badly it did, it only existed for five years, which is not nearly enough time to field test a national currency. Would you have suspected a problem with the Federal Reserve in 1918? Or if you prefer a time frame in which there was no war, from 1921-1926? Probably if you’d lived in 1926, with a booming economy and no special knowledge of money, you’d have thought the whole central banking thing was doing pretty good after all.

    There is one thing you have said that has some merit. It is true that with a publicly issued currency, it would not be issued against debt. However, the problem with the debt is not the debt itself. It is that in order to pay it back, you have to inflate the currency in a never-ending spiral until it becomes worthless. Since Congress would have the ability to inflate the currency that way anyway, I don’t see what difference it ultimately makes whether it comes about as a result of paying back debt or so that Congress can spend what it likes.

    Finally, I never said I revered priavte bankers; merely that in a free market, there would be more checks on the ability of private bankers to issue banknotes based on commodities than there would be on governments to issue unbacked currency in a mixed economy. Those who argue in favor of a government solution always seem to think that those arguing in favor of a private solution are promising perfection. That’s never true. Private solutions aren’t perfect. They’re just less problematic, and the problems have the ability to correct themselves without crashing an entire system.

  12. Modern Survival

    @Brianna

    I suggest you watch “The Secret of Oz” and read my book that will be out in electronic format next week.

    Also some how congress managed to control the currency of our nation for most of the first 100 years of it with out blowing anything up.

  13. I just finished listening to this episode and was quite impressed. However, using our forefathers notions of promoting entrepreneurship, I would prefer to be a sole propietorship instead of just a stockholder.

  14. Jack i think Warren Buffet no longer holds that much silver. This article suggests he sold his holdings which helped to start the SLV.

    http://www.silvermonthly.com/162/analyzing-warren-buffetts-investment-in-silver/

    I don’t won’t to sound like a wise guy. I just wanted to bring this to your attention.

  15. Duh… won’t = want….LOL

  16. Jack, let me just say that this episode was – ahem – pure gold.

  17. Speaking of gold, I have a question. If the United States moved to a system in which its currency was based on the total value of nation’s goods, services, property, and capability, what would that currency be made from? Would it be precious metals, carbon fiber, leather? What would I carry in my pockets to buy eggs?

  18. Modern Survival

    @HenryM,

    You are getting the point by asking the question. Money wouldn’t look or be much different in material then it is right now. Much of it would still be moved electronically as our modern system demands.

    The last time the money was simply made by and backed by the public it looked well, like this,

    http://commons.wikimedia.org/wiki/File:USNotes.jpg

  19. An interesting episode. I especially like Jack’s look at the United States from a business perspective. A clever and insightful way of looking at the country from another angle.
    I do think he falls down though, when he speaks of how the citizens of the United States are special, more hard-working, and somehow possessing more knowhow and wherewithal than citizens of other countries.
    While many Americans may well be hard-working, intelligent, and all the rest, they are no more so than the people of any other country.
    I’m sure the Romans and the British thought that they were quite exceptional too….

  20. @Ed,

    I really didn’t hear that in the show. I think Jack’s point is that Americans are special, hard-working, and possess huge amounts of knowhow and wherewithal, so our money should reflect that. I don’t think Jack was saying that other people in the world are not as hard-working and capable as Americans.

  21. You may be right.
    But to me he seemed to be counting the ‘specialness’ of the American people as an asset that contributes to the value of the American dollar. I just don’t think that this ‘specialness’ exists.

  22. Modern Survival

    @Ed

    Sorry but you are putting words in my mouth. To say one person is great or special is not putting anyone else down.

    To believe that we are a special people doesn’t take ANYTHING away from an Australian or Brazilian or say a Chinese person. We live in a world were by natural rights every person should be seen as equal but not forced into false equality of ability or skill or knowledge.

    Americans are exceptional in some ways, we have weaknesses in others, just like all cultures. Play that liberal bullshit that one man can’t be great unless another is weak if you wish to, as for me I have pride in my nation. Anyone in any other nation offended by that would do best to worry less about me and more about pride in their own.

    I am also very proud of my Ukrainian heritage, but that doesn’t detract from my pride in America. And like it or not America has done many things, no other nation has ever accomplished.

  23. Modern Survival

    @Ed,

    Indeed we are special in some ways and that does improve our national value. Sounds like you need to travel more inside and outside of our borders.

  24. The ‘accomplishments’ of the United States have more to do with its very rich resource base (oil, coal, water and rich soil come to mind) and historical happenstance than with any particular character trait that the America people possess.
    Also, I have no problem with anyone being proud to be American. That is not the same as counting the ‘specialness’ of the American people as contributing to the underlying value of the dollar.

  25. Modern Survival

    @Ed, sorry you have such a dismal view of your fellow Americans. Yes we are special, our culture of blended cultures is unique and special. So are many other cultures.

    You are a perfect example of the liberal agenda (even if you are mostly conservative) of eliminating the concept of American exceptionalism from our society.

    I think the people of China are also exceptional in some ways, that gives innate value to their nation.

    As for our resources along being responsible for many of our achievements. Bullshit, plenty of nations have everything we do as far as that goes.

  26. The United States leads the world in cumulative oil production. What country has more fertile crop land? None. More coal production? Only China, and by far admittedly.

    Also, ok, everyone is special and all people give innate value to their respective countries.

  27. Modern Survival

    Well many have way more oil per capita then we do. Germany doesn’t have as much farm land as we do as they are a smaller nation but again per capita the richest farmland in the world is in Germany.

    Many nations have tremendous resources but have never developed the capacity to use them.

    However, when I said accomplishments I wasn’t necessarily talking about monetary accomplishments.

    Totally dependent of resources tell me any other nation that recognizes the right to bear arms as a God given right inherent to human beings?

    That is just one example. The way many of us great up hunting, camping and fishing on PUBLIC land doesn’t exist in many other nations at all. People that grow up with that level of self reliance are unique. Do other nations have such people, YES, are they that way for different reasons and shaped by different conditions? YES of course.

    So each is exceptional in certain ways, our nation to me is exceptional because we are the largest melting pot ever created. We are more than the sum of our parts just like anything because that indeed is a natural law.

  28. Ok after listening to this episode… someone give me advice on this specific situation

    If you had, lets say, $3000 to invest in something right now and you had ZERO metal would you buy 100oz to start off a collection even at today’s market price? or would you just hold it as cash and start a monthly, dollar cost averaging style, investment in metal?… like say 5 or 10oz a month and hold the rest as cash.

    My plan was going to be just buy a bunch at one time and hold it and then later down the road as I got more cash stockpiled dump another large chunk in metal

    Also this is not my only investment and I have additional cash reserves that this is not a part of (just wanted to be sure we were clear on that one)

    -Nick

    • Modern Survival

      Personally I would not dump 100% of my investment capital into any one thing, including silver. Now if you mean you have 3K allocated out of say 20K of total cash, sure if you feel that you want to hold that much do it.

      If I only had 3K of pure cash I would not personally put more then 1K of it in metals and that would be a stretch. Let me put it this way we ALL NEED a minimum of 90 days of PURE CASH for recurring and general living expenses.

      Don’t put a dime in metals right now unless you are okay leaving the money sit in place for more than 5 years.

  29. I did mention that I have separate pure cash reserves. Sorry if you missed that.

    My question was more if you had 3k allocated for metal would it be more advantageous to buy it in small amounts over time in a dollar cost averaging type way

    Thanks your the answer, i think I answered my own question based on your answer so making our own decisions is what it is all about right?

  30. @Nick if you have no metal, have 3k that you’re going to allocate to metal, and have otherwise diversified (cash, food, water, preps, defense, energy, etc) then I’d personally jump in the game full bore now with that 3k. I’d also put some of it in gold, maybe 1oz gold, the rest silver. I’d then then dollar cost average any future metals money. You’re buying the metal as insurance & diversification – buy in now, then accumulate. That’s my opinion anyway.

    I’d also advise some dividend paying international stocks. Don’t just invest for things to go bad, invest for the case where it all doesn’t fall apart as well.

  31. I’ll throw in with Paul as well – I generally like Max Keiser, on his own. I generally think Alex Jones goes overboard too often, so it figures that if Max & Alex gets together, it’s gonna be a little tin foilish.

    On that topic, one difference I had with Jack’s explanation – my understanding is that JPM holds true naked shorts in silver, not just short options (that have time expirations). In essence they’ve sold silver they don’t have. To get out they can’t just let the options expire, they have to buy silver (or current cash equiv) & give it to the guy they naked sold to. Will this crash them? Who knows… probably not when they can borrow at 0% from the Fed. It certainly is over the top to think just by everyone buying a 1oz coin it’ll push them to the brink. On the bright side though, maybe Max woke some sheep up as to the banksters in control. Each sheep that wakes up and learns TRTAM is one person closer to helping us end the Fed.

  32. I listened to this show 3 times. Good info.!

  33. Great Podcast Jack! So I have a hypothetical question-if I wanted to make myself a bank I could theoretically start my bank with no money zero zip zilch nada? So I would give out loan money that didnt really exist and people would pay me monthly?

  34. Dan,

    you need to have 10% in reserve…so to lend out $100 you would need $10

    -Nick