Richard Russell - US Bankrupt, Gold Rocketing Higher-King World News

Richard Russell - US Bankrupt, Gold Rocketing Higher
November 7, 2010
With gold hitting new all-time highs, in his latest commentary, the Godfather of newsletter writers Richard Russell stated, "By the end of the second quarter of 2011 the Fed will have created $2.5 trillion dollars out of the blue. This is monetization of the debt, pure and simple. Bernanke is creating oceans of fiat money out of thin air as the Fed moves to cover the enormous debts that a profligate Congress has approved of."
Russell continues:
"This disaster has not been lost on the great majority of Americans.
The Fed has been worried about deflation and unemployment. The Fed's idea in buying Treasury bonds ($75 billion every month) is to drive down longer-term interest rates and thus make it more attractive for Americans to take out mortgages. Perhaps lower mortgage rates will induce more Americans to buy houses, and that in turn might even raise home prices.
My mentor, the great Dow Theorist, E. George Schaefer, noted that because of the greater participation of an emotional public, the stock market and the Averages now tend to push past supposed resistance levels, thereby giving false signals. I agree. Right now the market is reacting to events never seen before. The US has never seen a time when $2.5 trillion in dollars have been added to the system in a matter of 21 months. Businessmen have never had to deal with a situation where the government is spending an amount equal to a quarter of its Gross Domestic Product.
...Through it all, the stock market has been soaring and gold is trading at record highs. At the same time, commodities are rocketing higher, putting an early squeeze on consumer's pocketbooks.
During the 1930s and the Great Depression, if you possessed hard-to-find dollars you were a king. You could literally buy anything you wanted.
"Buddy, can you spare a dime?" That was the sad song of the '30s. "A dime?" grumbles today's American, what good's a stinkin' dime?" During the Great Depression a dime was a treasure. With a dime I could go to White Tower (which I did many times) and buy TWO hamburgers. Or I could go down to the Automat on Broadway and 43rd Street, and for two nickels I could buy a cup of hot chocolate and a delicious seeded roll.
...During the Depression the Fed allowed the money supply to shrink dramatically (up to 80%). Bernanke knows all about that, and he's vowed that this time the money supply will not shrink on his watch. Actually Bernanke will see to it that the money supply expands. And a massive expansion of the money supply, he's certain, should end this Great Recession.
...And in retrospect, maybe Russell was right. Maybe they should have allowed the bear market to fully express itself. That couldn't have been any worse than what we're going through now. And at least the US wouldn't have been bankrupt. Oh well."
Source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/11/7_Richard_Russell_-_US_Bankrupt,_Gold_Rocketing_Higher.html