2010: whay kind of a year?

There seem to be two types of Investment Prognosticators: a) the ones that predict inflation coming, gold prices soaring and the economy doing poorly and b) the ones who predict that the economy will recover, the dollar stabilize, gold to reach $1,500 then go into a permanent decline.

BTW, most prognosticators believe that gold will hit $1500 next year; it's what happens after where they disagree. So, it is critical to look at the underlining fundamentals of the economy.

The US financial world was thrown into a dive with the change of the accounting system on Sep 15, 2008. It allowed Obama's socialists to nationalize some banks, the automobile industry, part of the insurance industry and student loans. Through the zombie banks controlled by the Obama regime, currency and gold price can be manipulated as we have just witnessed. When oil contracts were bought up prior to the 2008 election, it softened the economy and made us more vulnerable to the financial attack of Sep 15, 2008. Now, it is contracts to buy dollars that was used to produce the dollar rally. Were these moves instigated by the Chinese so they could rid of their dollars and buy gold? Or, was it done by the Obama regime or some of its proxies to make us believe that printing tons of money is reviving the economy? We know how it is being done, we just do not know by whom.

The economic fundamentals are terrible. The regime is increasing the national debt at unprecedented rates, it wants to transfer income from high earners to the government by raising taxes. Such moves hurt the economy. The regime wants to nationalize medical care and use it as a form of taxation. And, of course, the Bush tax cuts will expire.

In short, taxes will reduce the money in economically competent hands and transfer it into economically incompetent hands. Nearly forty percent of Federal expenditures are financed through deficit spending. We are warned that China and the rest of the world are tapped out and we can not figure on them to finance the reckless spending of this regime, PRINTING MONEY NEVER WORKS.

While, people caution us NOT TO expect inflation (because of the artificially induced deflation of the banks), some pretty remarkable inflation has been noted in the last 20 months. These are government figures and may even underestimate inflation. So, how much did prices go up? Food and beverage: 5.6%, cereal and bakery: 11.5%, Sugar and sweets: 11.8%, Cooking oil: 11.6%, medical care: 7.1%, medical services: 14.0%, hospital: 14%, education: 10%; books and supplies: 14.9%.

My predictions: the driving force for everything will be the $2T in expiring Treasury bills that need to be rolled over and the $1.5T deficit that Treasury needs to finance. How to finance this huge amount? There is not enough, excess money in the world to finance this, so this is what Treasury will do. The FED will create a computer entry of $3.5T (and ironically call it part of their assets) and loan this to the zombie banks they control. The FED will pay interest on this - maybe to the tune of $100B. The banks will be happy to take the money. Nobody will be the wiser right? And if foreigners catch on to the scam, there is nothing they can do. And according to the Liberal cant 'we owe this to ourselves, don't we?' [How we Conservatives missed this I don't know. All this business of working and saving is not necessary. All we have to do is print money.] But, of course, foreigners will know and we will know. The US government will obtain ownership of part of everybody's goods, so everyone will try to recoup their loss by charging more. The price of everything will go up. Do you think that Democrats are too dumb to notice? IMO, Democrats are dumb, but not that dumb. And we will see the beginning of a price/wage spiral. To stop it, the FED will raise interest rates, which will crush the Stock Market and the economy.

The cycle theory predicts that faced with the economic collapse, the regime will loosen interest rates again, continue to print money and put us into the hyperinflationary stagflation pioneered by Jimmy Carter.

So, what is the time table? Lots will happen in the first part of next year. The Stock Market will probably blow off in the first six months and then interest rates will rise by the middle of the year. Bonds will crash soon after, then the Stock Market. The inflating of the money supply even more will come in 2011 and gold will reach its peak of at least 2,200/oz, maybe even as high as 5,000/oz.