Monthly Archives: August 2008

I.O.U.S.A. Movie Review

Last Thursday, I attended the premiere of I.O.U.S.A. in San Diego, CA.

I first heard about this documentary two years ago from Agora Financial. The original title was “Squanderville” (apparently taken from a cartoon about the economy that Warren Buffet created).

Agora Financial puts out many free and paid newsletters on the economy and investing. Bill Bonner heads up the organization and they are clearly anti-government libertarians who typically tell it like it is in the investment world. I read the Daily Reckoning (free on dailyreckoning.com) almost daily.

Surprisingly, although I arrived about 10 minutes before the movie started (that’s light years for me!), the theater was about 75% full already! I found a place near the front, and by the time it started, the house was packed.

The documentary was being presented to a live audience in Omaha, Nebraska, where Becky Quick from CNBC was the host, and the creator of the movie Patrick Creadon, and his wife Christine O’Malley introduced the movie. We got to watch tape-delayed coverage of this presentation.

The beginning of the film smacked the audience with our individual “personal debt burden”. I personally was surprised that I owe $184,000, when I never had any part in running that debt up!

The opening scene was a series of clips by various presidents saying how grave the deficit problem is in our country, and how we need to solve it. They then gave us a history of U.S. debt and how in the early days, the government always paid off the debt quickly (the founding fathers were terrified of having debt!)

We are then introduced to David Walker, the former head of the Government Accountability Office (GAO). He talked about how thrilled he was to have “served his country” (funny, I don’t remember voting for him or approving his taxpayer-funded position!).

The movie then focuses in on the Concord Coalition, which is a political advocacy group dedicated to “fiscal responsibility” in government, and preserving the welfare state (Social Security, Medicare, etc.) Robert Bixby is an eccentric character working for this coalition who shows us how the U.S. budget in 1988 was printed in a booklet, and now consists of three thick books, some containing pictures!

David Walker and Robert Bixby set out to educate the country on the debt problem on their “Fiscal Responsibility Tour”. Many “average people” are interviewed, and show that they know very little about what a deficit is or just how grandiose the problem is.

As the movie presents a graphical representation of U.S. government debt over the years, when they get to 1913, they gloss over the Federal Reserve, claiming that it was put into place in order to control inflation and manage the money supply. No criticism whatsoever about the Fed!

The constant mantra throughout the film is the idea that “you can’t cut taxes and keep spending”. There is no debate about taxes themselves, and the debate itself is framed to give the illusion once again that taxes are necessary and good. Government extracting money from us at the point of a gun is called “revenue”.

Old white men in suits who work for the government are constantly presented as experts throughout. One congressman interviewed (forget his name) actually said that the debt is the second largest threat to the U.S. next to Islamo-Fascism! Talk about propaganda.

Other propagandistic themes presented:

-Tax cuts are bad and foolish
-Bill Clinton and Robert Rubin balanced the budget
-Government is the solution to the problems that government created.
-A “surplus” for the government is a good thing
-We need “bi-partisan” solutions to everything
-Ending the war in Iraq is NOT a solution because it’s only 3% of the budget. (no mention of Afghanistan or the bases we have to pay for in 130+ countries)

My favorite part of the movie, and one of its only redeeming moments, was the exchange from 1999 between Ron Paul and Alan Greenspan on the congress floor. Ron Paul rips Greenspan to shreds and asks him how he thinks we can continue this irresponsible policy. Greenspan doesn’t know. Then Dr. Paul says if he were to treat his patients the way he treats the economy way, they’d be dead. This comment is greeted with about 15 seconds of dead silence!

The Federal Reserve is briefly acknowledged at this point as “part of the problem”. Hmm.

I found it amusing that they offered the idea that the government “could go out of business” if we don’t solve this! Boy, that makes me want to call my congressman to “do something”!

The solution is presented as something “we all must participate in”. Graphs and statistics showed us that ending the war and cutting social security completely would only put a small dent in the debt (I guess we should just continue being irrational since it doesn’t make much difference!). This part of the movie was actually scary to me. They are trying to steer the audience into believing that we can’t really cut anything government-related, instead, we all have to “sacrifice”, pay more in taxes, accept massive inflation, etc. Collectivist nonsense to the max!

The immorality being presented here is astonishing. Don’t worry about the insane amount of spending the government is doing. Ask your congressperson to make the “tough decisions”, suck it up, and pay for their mistakes. For the children of course. Wow.

Near the end of the film we are told that doing “nothing” is a problem, and we must get our congress to do “something”. We’re not told what that something is, but we can guess. We are then told to vote. Yes, because nobody has ever heard that before. Say, isn’t voting for government thugs what got us into this mess?

Then we are informed once again that the nearly $9 trillion debt (at the time of the movie) comes out to $184,000 per American. Another slap in the face to us as the camera focuses in on Abe Lincoln’s face on the penny and an upbeat tune plays as the credits appear.

In the entire movie, there was not one single mention of the only thing that is going to solve this problem: a gold standard.

They missed the mark by a long shot and framed the debate instead of giving us the truth and looking at real solutions.

Two thumbs down!

Post-Movie Panel Discussion

After the movie, there was a panel discussion brought to us live from Omaha, Nebraska.

The panel consisted of: Warren Buffet, Pete Peterson (funded the movie), David Walker (former GAO of the U.S.), William Niskanen (Cato Institute) and Bill Novelli (AARP CEO).

There’s nothing good to say about their proposed “solutions”.

From Buffet, we heard that the debt is not that big a problem, that he believes America always comes back, and that we should have some kind of “mandatory savings”. He also droned on and on about “leadership”.

Walker gave us a lot of hot air, screamed about “the children”, and just kept saying we must fix the problem and force our politicians to “make the tough decisions” (although he never detailed what exactly those decisions might be).

Niskanen discussed some nuances of how social security should be “fixed”, and how we should just work until we’re 70. He mentioned privatizing social security like they have in Chile (the truth is, the Chilean system is better than what we have now, but how about just not stealing from workers to pay for this ponzi scheme in the first place?)

Novelli, the AARP guy, offered little of substance, more of the typical “do something”, “vote”, and other mindless claptrap.

I felt like we were watching the communist party up there planning our future for us!

Needless to say, I do not recommend this movie, unless you want a glimpse into the disgusting way in which the mainstream media and the politicians are going to handle this crisis over the next few years.

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What happened to “falling oil demand”?

You’ve just gotta love the mainstream media and their so-called experts! When oil went up to $145 a barrel, it was of course due to rising demand from increasing middle class populations in Asia.

Then, when oil became way overbought, it took a dive- all the way down to a low of $111. All during this price decline, these “experts” on the markets told us that “oil is dropping on lower demand world wide”. HAHAHAHAHAHA! That’s absolutely hillarious. There is either higher demand or there is not. People around the world do not just suddenly decide to stop buying gas. Sure, as prices rise, people will cut back. But this does not mean the demand ceases to exist!

The facts are that 1) the supply of oil in the world is limited (even perceived peak oil will have the same effect as true peak oil), and 2) demand for oil around the world remains unchanged in August 2008 (year over year).

If the demand is still there and there have not been any significant oil well discoveries in the past year, we have to search for a different answer other than the stupid media’s “prices drop due to falling demand” nonsense.

The truth is really not that complex. The trend for oil is UP. Oil is in a bull market. Does that mean it will skyrocket straight up with no pull backs? No, of course not. Just like gold, and stocks, oil will girate between being overbought and oversold. It will trade in a range. But $111/barrell oil is still higher than January’s prices and FAR higher than a year ago.

So oil, just like gold, is in an upward trend. Stay away from your T.V.’s and newspapers and annointed “experts”!

The markets never lie. Oil is in demand and the supply is dwindling.  Keep it real.

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Reality always wins out in the economy

Lately, gold and silver have been getting beaten to a pulp in the markets. The phony dollar rally has been the main cause of this metals slump, but the smart money is holding and buying MORE gold and silver. Today, we have a report that inflation was up in July and prices rose at their fastest rate (year over year) in the past 27 years! On this news, gold so far today has been up about $15 and silver close to $.50/oz.

The fundamentals are still there. We have a national debt that will not be paid off in 3 lifetimes! The government and the Fed will INFLATE OR DIE. There is no other option. The economy will go through major changes in the next couple of years.  These changes will catch most people off guard, but not those of us who have exchanged our fiat dollars for real money.

As a friend of mine put it, “we are flying along here at 80 miles per hour, about to hit a wall, and the politicians, the mainstream media, and even most economists and so-called “experts” do not want to confront this reality.” We will hit this wall without touching the brakes. It may not be this year, it may not be next, but all the human will in the world, including and especially government intervention, can’t change this reality.

Reality may bite, but the avoidance of reality will be the true undoing of our economy and of most individuals’ wealth.

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Gold Oversold

The charts clearly show that gold is oversold.

Today’s rally could signify the end of the correction. With September and gold-buying season approaching, I suspect the gold price will be off to the races very soon.

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The Strong Dollar is a Strong Myth

Today, we had a dollar rally in the face of declining oil prices and gold got whacked, down $30.

However, there is no reason to give up on gold. In fact, the more it declines, the better time it is to buy gold. The trend is still your friend. Gold is still in a bull market. Here’s why you need to hold your gold and accumulate more of it:

1. Oil prices declining is simply a correction in the market. Oil was way over bought when it jumped to 130, then 140/barrel. What we have now is a normal market correction, and not surprising if you have followed the markets for any length of time. This temporary drop in oil prices has allowed for a temporary rally in the dollar. Nothing surprising about any of it, but keep the big picture in mind: we still have peak oil to deal with, and we still have an inflated dollar to deal with.

2. The fed will likely lower rates next time. Lowering rates causes more inflation. More inflation means a lower dollar- and higher gold.

3. We still have to deal with a $9.6 trillion (and growing) debt. This means that in the future, the fed will crank up the printing presses at an alarming rate- possibly enough to completely destroy the dollar. Do you want to be holding on to your worthless paper as this happens?

4. The Fall is historically gold buying season. We’re still in the summer, but many gold rallies over the years have started in mid-August, which will be in a few days.

Buy gold safely and store it out of the U.S. by using goldmoney.com!

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Taxes: The Fleecing of Society and What You Can Do About It, Part 2

In part 1 of this series I discussed what taxes really are, what they do to a country, and what they do to your wealth.

I think we can safely say that it is innately diserable in humans to avoid taxes (slavery) at all costs with the least amount of risk. Freedom is natural, whether it’s personal freedom, or its subset of financial freedom.

Freedom from taxes is where we want to be, but how do we get there?

I recommend mass civil disobedience- everyone just stop paying income taxes. The federal government could not stop a movement like this and it would collapse pretty quickly, and we’d all go home happy and a lot richer!

Although I’m serious about our country needing a mass movement like this to bring the system to its knees, the likelihood of it happening anytime soon is pretty small at this point.

So what else can you do?

I’ve got a few ideas:

1. Get your fake paper money into something solid, like gold or silver, and use your cash only for day to day transactions. Buy physical metals or buy online through goldmoney.com. Eventually, you will be able to use that money for transactions- and keep your wealth out of the hands of the government goons.

2. Start a business. Whatever your business is, you will be able to have endless amounts of writeoffs. Although I make a living with my business, I pay very little in taxes, because I’m not showing much of a profit.

3. Own property (be careful if within the U.S.). You get a nice write-off with the mortgage interest you pay. And if you buy right, you will have an asset that pays you and appreciates in value for years to come.

4. Buy foreign stocks. Europe and Asia specifically. Sell your U.S. stocks before the inevitable crash.

5. Hide your money offshore. There’s no good reason not to do this. Sovereign Society can help you set up overseas in safe havens so that your money is protected and safe from the criminals-in-charge in the U.S.

6. Avoid filling out IRS paperwork whenever possible. There are a lot of false assumptions out there on what you need to do, and what you can skip without getting hauled off to jail. Be off the radar as much as humanly possible. When faced with complying with some tax rule or not, consider your risks but never pay anything in advance just because everyone else is doing it. You may be just sending money in to the government unnecessarily. Take tips, for example. What service employee in their right mind tells the truth to the IRS thugs about how much they earn in tips? The likelihood of a waiter or cab driver getting audited is pretty slim, so under reporting is a risk well worth taking.

7. If possible, get a passport with another country. I have not been successful at this, but some countries allow you to obtain a passport simply if your grandparents were from there. With other countries, you just pay a fee. If things get bad enough here and some future president starts forcing the people to pay up for the decades of government financial stupidity, you will need an escape plan.

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“Core” Inflation

“Core” inflation is a term the government made up to cook the books and give us phony numbers and make us feel all warm and fuzzy about the state of the U.S. economy. Real inflation rates are thus concealed.

Core inflation is measured by taking out the index items that are susceptible to abrupt price movements. This will include food and energy (yeah, like those aren’t important!) and other items from time to time. The high oil prices, for example, even though they affect every other price to which gas is a factor (most things), are not reflected in core numbers.

Anytime you hear the word “core” in the mainstream media when a discussion about inflation arises, turn on your B.S. detector and move on!

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