Wednesday, October 06, 2010

Are the World's Wealthiest People Pulling Out While We Continue to Drink the Kool-Aid?

The world is chock-full of money, so why does everyone seem to be getting poorer? Well, not everyone.  Speak of the devil, what is going on in the world of the elite?  Because they seem to know something we don't. But what else is new?

First things first. The Federal Reserve plans on stepping up its expansionary monetary policy even further in November, and the rest of the world is responding accordingly, by devaluing its own currency. Quantitative easing is the name of the game. This Fed policy is supposed to keep interest rates as low as possible by purchasing government securities, or other securities from the market, thereby flooding financial institutions with capital in an effort to promote increased lending and liquidity.

Now, keep in mind that the interest rate is essentially the price of money, and although, people like former Fed Chair Alan Greenspan would have you believe he promoted the idea of free markets, he did not. Because, at the same time he's preaching the gospel of laissez-faire capitalism, his heavy hand was busy intervening, controlling the price of money (interest rates).

You will find a good explanation of debt monetization here.

Anyway, Nobel Prize winning economist, Joseph Stiglitz thinks the ultra-loose monetary policies by the Federal Reserve is throwing the world into chaos rather than helping global economic recovery.

"The irony is that the Fed is creating all this liquidity with the hope that it will revive the American economy. It's doing nothing for the American economy, but it's causing chaos over the rest of the world. It's a very strange policy that they are pursuing." -- Joseph Stiglitz
Back to the wealthy.  Why the hurry to move assets out of the financial system? Do they know something we don't?
Well, they know one thing for sure: the Federal Reserve will go as far as it takes to protects their ASSets.

By all appearances, the way the wealthiest people in the world are rushing to gain exclusive access to real gold, as they buy it up by the ton, gold just might become extremely scarce in the future, as if it's not already. 

Even the Federal Reserve is selling its paper gold and buying up real gold.  Everyone knows if the financial system collapses, paper gold is worthless, right?  The price of real physical gold goes up as paper gold trades lower and lower and lower. Like everything else, precious metals will never find their true free trade value. That's the scam plan, anyway. Gold bubbles are created the same way other bubbles are created – by converting a limited item to unlimited, by fiat.

JPMorgan reopened its New York gold vault.
JPMorgan has reopened an underground gold vault in New York that was mothballed in the 1990s, in the latest sign of the soaring appetite for bullion.

Investors are piling money into gold in record quantities, pushing the price on Friday to a record nominal high of more than $1,320 a troy ounce. That has made the vaulting business highly lucrative, since banks often charge a small percentage of the value of the gold stored.
And why are insiders in such a rush to get out? 

Insider Selling To Buying: 2,341 To 1 "...insiders in these names sold a combined $200 million in stock in the last week alone (following Oracle insider sales of $223 million in the prior week). Insiders can. not. wait. to. get. out. fast. enough."

So, as more and more high income Americans are reduced to living paycheck to paycheck and record numbers apply for government anti-poverty programs, those at the top are cashing out.
Thirty percent of workers with salaries of $100,000 or more said they are living paycheck to paycheck, up from 21 percent last year, according to the survey of 4,400 workers nationwide.

Overall, 61 percent said they always or usually live paycheck to paycheck, up from 49 percent in 2008 and 43 percent in 2007.

To cope, Americans have been cutting back on how much they save.

Some 21 percent of all respondents said they have reduced their 401(k) contributions or personal savings in the last six months in order to get by, while 23 percent of the $100,000-and-over group said they had done so.

While some Americans have cut back on what they set aside, others have stopped saving all together.
Links:

Calculate your net worth, if you dare.

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