CONSEQUENCES
By James Cook
Late December 2009

I had a few hours to kill last Sunday before a flock of grandkids showed up to open Christmas presents. Since I was caught up on my reading I clicked on the TV and channel surfed until I came across the 1965 movie, Dr. Zhivago, which was just starting. The part I remembered and wanted to see again came about half way through the movie. The doctor, played by Omar Sharif, had returned to Moscow after two years at the front in World War I. The Bolsheviks were now firmly entrenched, running the country.

Zhivago had married into a wealthy family before the war and when he returned to their large and once lovely household he was in for a shock. A couple of dozen shabbily dressed party members had taken over the house. He and his family were relegated to one bedroom. Any complaints about their misfortune would be cause for arrest. They acquiesced to this theft of their property out of fear.

Frankly, the difference between the Russian Bolsheviks and today’s leftists in American isn’t that great. They differ only by a matter of degree. The Communists in Russia got everything you owned. So far the liberals have only been successful in getting half of what you earn, plus half of what you own when you die. Philosophically, the liberals, the Marxists and the socialist are blood brothers. They all wish to address social injustice, raise taxes, put the government in control of the economy and redistribute the wealth of the nation through subsidies. They’re heightened sense of social sympathy makes them antagonistic to the accomplishments of capitalism. Their outrage over the inequality of incomes overrides any concern for the dire economic consequences of their policies.

What the liberals stand for has always failed when put into practice. It is failing now before our eyes. It will always fail. These leftist schemes promise national ruin. That the historical failure of collectivism is not properly acknowledged by the left speaks of their myopic stubbornness.

Once you commit the first dollar to a government social program it’s the beginning of the end. The number of these programs never stops expanding. At first there was one now there are thousands. Furthermore, the existing programs never stop growing and costs rise relentlessly. You have a three-headed monster; new programs, growth of existing programs and runaway costs of all programs. When the government can’t pay for them they borrow or print new money to keep them funded. This debases our currency, acts as a hidden tax and spreads a contagion of ills associated with inflation. It’s how nations go bankrupt.

That’s not the worst of it. Government social programs don’t work. None of them accomplish what they set out to do. In fact, they make matters worse. We’ve spent hundreds of billions to eradicate poverty. Yet the economic and social condition of welfare recipients is much worse than when these programs started. Despite public housing, rent subsidies, food stamps, welfare payments and more, the long-term recipients of entitlements have essentially become a hoard of drug addicts and alcoholics. Bad character has triumphed.

Worst of all, the attitudes of the underclass and their sympathizers have turned into a frightful animosity towards the prevailing culture. The more money they get the louder their accusations of racism, inequality and injustice. The more they are subsidized, the more they express hatred for America, curse capitalism and support a radical agenda. They make up false charges to justify their shakedown of America. Their leadership gains money and power while encouraging a belief in victimhood.

Whatever you subsidize, you get more of. That’s why the numbers of the unproductive are overtaking the producers. When that day ultimately comes we are all Doctor Zhivagos, sharing our property through government edicts. It’s quite possible America will go broke first and the social welfare edifice be dismantled. On the other hand we could all be collectivized. Whatever the outcome, one thing stands as an historical certainty. We will either do away with socialism or socialism will do away with us.

WE COULDN’T HAVE SAID IT BETTER

Within the next 12 months, the U.S. Treasury will have to deal with refinancing $2 trillion in short-term debt. And that’s not counting any additional deficit spending, which is estimated to be around $1.5 trillion. And remember, there are the expenses of the enlarged war in Afghanistan.

Study the numbers carefully. Then ask yourself, how in the world the Treasury can possibly borrow $3.5 trillion in only one year? That’s an amount equal to nearly 30% of our entire GDP. And we’re the world’s biggest economy. Where will the money come from? And my answer is that the money will have to come from the Fed by way of the “printing press.”

The next question is – how much longer will our creditors be willing to accept “printing press money” from the U.S.? I honestly don’t know, but my thought is that it’s not going to be too much longer. Richard Russell

A million seconds is 12 days. A trillion seconds is 32,000 years! If you truly understand what his analogy is telling you, then you should have no problem understanding the long-term direction of gold. The end game for the U.S. dollar is near as the U.S. government looks to borrow at least $3.5 trillion in 2010 and ever increasing sums thereafter. This cannot be sustained much longer! This activity will have a very bad conclusion within the next few years. Gold and silver prices will continue to ratchet higher regardless of what happens in these short term sell-off scenarios. Buy the dips! Greg McCoach

Socialism has come to mean many different things to many people, but regardless how it is defined, in the months immediately ahead it will be put to a rigorous test. The test will be visible to everyone as countries around the globe run out of money and confront overwhelming debts that cannot be repaid as well as other wide-ranging financial promises that can no longer be met. In short, the ideological bankruptcy of socialism will be laid bare by government insolvency. James Turk

THEODORE BUTLER AND OUR NEWSLETTER
By James Cook

Since Theodore Butler started his own newsletter a few months ago we will no longer carry his current essays on our website. He wants to restrict access to his writing to paid subscribers. Formerly it was provided free on our website and others, but no longer. However, we will still have most of his work included in our newsletter. We pay him a significant monthly fee for access to his current research. We believe he is the foremost silver expert in the world and the information he provides is cutting edge.

We send out 50,000 newsletters twice a month to customers and prospective clients. Customers get our newsletter for three years after their last order. Prospects get it for 10 months. We permanently remove the names of a small number who order from us and fail to pay.

If you own silver and you don’t have access to Mr. Butler’s research you are flying blind. It will be crucially important in the future in order to maximize profits and know if and when to sell.

FELIZ NAVIDAD
By James Cook

Quite a few years ago I rented a house on the beach in Southwest Florida. A new house was being constructed on the lot next door. The owner was Latino and at Christmas time he erected a large sign on the roof of the partially built house that said, “Feliz Navidad.”

My wife and I were attending a social gathering one evening when a woman began chatting with us. She inquired as to where we were living. When I told her, she asked if it was next to the new house. When I responded, “Yes,” she said, “That guy must really have a big ego.” “Who are you talking about?” I asked. “That Feliz Navidad, to put up such a big sign with his name on it.”

We wish all our customers good health and prosperity in the coming year.

SILVER PRODUCTS

We recommend you buy the following products aggressively. One-hundred ounce bars are a great way to own silver. We have beautiful new bars. Each bar weighs around 7 lbs. We ship them to you in a box, five bars to a box.

U.S. Silver Eagles: These one-ounce silver coins are newly struck by the U.S. mint. They have a face value of one dollar. They have a Walking Liberty on their shimmering surface and are big beautiful coins.

Among the best available silver items today are 90% silver coin bags. These coin bags have a $1,000 face value. You get 2,000 silver halves, 4,000 silver quarters or 10,000 silver dimes. These are 715 ounces of silver per bag. A bag weighs 55 pounds and is the shape of a bowling ball. We ship them in half bags, registered and insured through the mail in boxes marked “machine parts.” The coins are all dated prior to 1965 when silver was eliminated from our coinage.

Sincerely,

James R. Cook

President