Congress Suing OPEC?

Just when I thought the news couldn't get any crazier (other than oil hitting $133/barrel), this is the headline I read.

Now I'm convinced that 99% of our Congressmen and Senators are economically illiterate, crazy and stupid. I'm pretty sure their ears are burning from angry constituents wanting them to 'do something' about the skyrocketing cost of gasoline and diesel fuel.

But this isn't the long-term solution, just a short-term election year PR opportunity.

The biggest cause of increasing food and energy prices is our national central bank, the Federal Reserve. The Fed has continued to increased the supply of fiat currency, and as a result, we have a larger number of dollars chasing the same number of goods.

It's done its best to keep this bubble/consumption economy afloat, and bail out the investment bankers on Wall Street. But this juicing of the money supply is hurting Americans and everyone else who holds dollar-denominated investments.

I don't think anyone outside of the Bush Administration really believes Hank Paulson when he says our government has a 'strong dollar' policy. Yeah - pull my other leg, Hank, it plays Jingle Bells. The Fed is letting the dollar sink in value, while trying to pump up the economy and Wall Street.

In the meantime, all Americans are seeing their wealth decline because the value of our money is declining. Unless they hold their wealth in appreciating foreign currencies, stocks of high-quality foreign companies, or commodities such as gold and silver.

Yes, I probably sound like a broken record, but it's the best investing advice I can recommend for current market and economic conditions. Please read Chapters 8 through 10 of Peter Schiff's book Crashproof, and move your money accordingly.

Obama, Hillary and the Stock Market

Conventional wisdom seems to say (if you watch CNBC and Larry Kudlow) that Wall Street prefers Miss Hillary to Obama as the Democratic nominee. That's scary to think that financial professionals prefer an avowed socialist/Marxist to another lesser-known socialist.

Especially when he has Paul Volcker as an economic advisor; and has everyone forgot the socialized health-care fiasco (also known as Hillarycare) she tried to foist on our economy back in 1993?

I guess people prefer the devil they know to the one they don't.

On the Republican side, John McCain is no picnic either. He's the co-architect of McCain-Feingold Incumbent Protection - er, I mean, Campaign Reform Act. In my opinion, this automatically disqualifies him for higher office.

Talked with a friend of mine in Illinois who's not a political junkie, and even he can see that there's no real difference or choice between Obama, Hillary and McCain.

Like John Loeffler says, it's Socialist Party (R) vs. Socialist Party (D).

It's amazing that the President and Congressmen from both parties in Congress (with the exception of Ron Paul) don't seem to have a clue about what's going on with the skyrocketing prices of food and energy. The lack of understanding, vision and leadership with regards to energy, the sub-prime mortgage fiasco and resulting credit crunch is amazing.

On one hand, left-leaning folks in Congress admit that we need more domestically produced oil and gas to reduce our dependence on imported Middle Eastern oil; but we can't drill in the Alaska National Wildlife Refuge (ANWR), because that would be too harmful to the environment and leave a bigger 'carbon footprint' on the earth.

What a bunch of BS - the only "footprint" should be on the backside of these idiots, kicking them out of Congress for such utter stupidity.

The Republicans don't get off easy, either. A lot of them believe we should "stay the course," "finish the job," and "win the war in Iraq." Never mind that after five years, Americans still haven't been told exactly what the job, mission or goal(s) are in Iraq.

And the US military is the largest American consumer of oil and gas. Why the hell are we still over there in this Forever War, when all Americans are getting squeezed every time they fill up their gas tanks and buy groceries?

I know that Republicans in Congress tell us over and over that because those darn Democrats are in control of Congress, that's why foreclosures, oil and gas prices have gone up and we aren't as well off economically. Well.... not exactly.

The Federal Reserve is the biggest culprit behind higher prices. This excess printing of money to pump up the economy, the stock market and bail out investment bankers is the biggest cause of higher prices. It's more money chasing the same number of goods.

Now didn't you so-called 'conservative Republicans' have six years control over Congress, and you basically fiddled while these problems were burning? Didn't you let these mortgage monkeys commit fraud, by lending to anyone could fog up a mirror... and sell these bogus loans to Fannie Mae, Freddie Mac, and Wall Street firms?

I could go on much longer, but I'll cut this rant short. The bottom line is that there's no real choice for President between McCain, Hillary and Obama. The lesser of two evils is still evil. No good is still no good.

I don't know what the solution to this political problem is. Probably a downturn in the economy that's sharp and painful enough to re-inject common sense into enough Americans. Wish I could see a better answer, but that's how I see it.

Deflation... Sort Of - Stagflation, Yes

Bloggers and columnists have different takes on whether the economy is in an in-flationary or de-flationary cycle. In most parts of the country, real estate is in a deflationary cycle.

US stock markets (the Dow, S&P 500 and Nasdaq indices) are going sideways to slightly lower. Incomes of Americans seem to be stagnant.

But the prices of food, energy and just about everything else are going through the roof. In Idaho Springs, Colorado last Saturday, I bought my first gallon of 87 octane gasoline for $4.00/gallon ($3.999 to be exact). Wasn't happy or proud of that to say the least. Especially after losing $100 at poker in a Blackhawk casino earlier that day.

I know the government says that inflation is still low or "manageable" (depending on which parallel universe you live in where you don't eat or drive your car), but Gary Dorsch confirms the fact that inflation levels are vastly understated by Uncle Sam.

This adds up to the economic condition known as stag-inflation (or stagflation), which was last seen in the US in the late 1970s. Fortunately, we had a Fed Chairman with the cajones to put the kibosh on inflation through higher interest rates.

Unfortunately, today we have "Helicopter Commander" Ben Bernanke instead of Paul Volcker as Chairman of the Fed. And Ben Bernanke is darn sure no inflation hawk. For all the talk from Hank Paulson about a supposed "strong dollar policy" (yeah, right), what the Fed is doing is a totally different story. More of the same stuff that got us into this mess - low interest rates and an increased money supply - is being done to hold off the inevitable recession (at least in the short term).

What should you do to prepare for the upcoming economic mess? Invest in tangible (non real-estate) assets, such as physical gold and silver. For more complete recommendations, read Chapters 8-10 of Peter Schiff's book, Crashproof. It's well-thought out, and clearly explains where and why you should invest in certain asset classes to protect yourself against stagflation.