America on Sale - Stagflation Ahead

From the Pfennig@everbank.com: "China's state run investment arm, China Investment Corp. announced it was investing $5 billion into Morgan Stanley.  This caps a year in which Chinese companies and the government bought more overseas than foreign buyers have invested into China.  In Chucks words: "Soon... Nothing will belong to U.S. stockholders... China and the Oil countries will own it all... They'll own it all I tell you!"

The Sovereign Wealth Funds (SWFs) which I wrote about again yesterday are buying all of America and the rest of the world natural resources. Interestingly, the Chinese are buying the troubled financial institutions at,possibly, bargain prices. The infusion of funds may well be the medicine needed to make them solvent again, but the long term impact is yet to be seen.

More on Ron Paul from http://caseyresearch.com/displayDrp.php?e=true:  Responding to the federal government’s seizure of Liberty dollars Paul recently introduced into the House a bill to repeal two sections of the
US Code that were used to justify the seizures. Paul’s bill is called the “Free Competition in Currency Act,” and in his accompanying statement, he hit several points that reflect our thinking as well as his own. They are worth quoting at length:

“Due to nearly a century of inflationary monetary policy on the part of the Federal Reserve, the US dollar stands at historically low levels.Investors around the world are shunning the dollar, and millions of Americans see their salaries, savings accounts, and pensions eroded away by rising inflation. We stand on the precipice of an unprecedented monetary collapse, and as a result many people have begun to look for alternatives to the dollar.

“As a proponent of competition in currencies, I believe that the American people should be free to choose the type of currency they prefer to use. The ability of consumers to adopt alternative currencies can help to keep the government and the Federal Reserve honest, as the threat that further inflation will cause more and more people to opt out of using the dollar may restrain the government from debasing the currency.

“As monopolists, however, the Federal Reserve and the Mint fear competition, and would rather force competitors out using the federal court system and the threat of asset forfeiture than compete in the market.

“A free society should shun this type of strong-arm action, and the Free Competition in Currency Act would take the necessary first steps to freeing the market for competing currencies.”

The Federal Reserve and the Federal Government want an exclusive monopoly to counterfeit currencies in the America. Thus, they will go to any length of pseuo-legal means to protect this.

"Da-Boyz" seem to be back at it again. Gold goes up just over $800 and then is smacked down. It is now at $797.70! Silver, too, which is now $14.22. I always ask, as did David, "How long O Lord?" Of course, he was seeking answers to his prayer when under pressure from attacking armies or treason within his own home. However, I am looking to the Lord for answers in the markets. He, of course, provides answers to prayer in His own way and in His time. We are much too impatient.

As gold climbed to its present level and beyond, it was always shoved back from time to time by the cartel. However, over time, it has continued to climb. At this particular point in time of the market, we are approaching the Christmas and New Years celebration time. There are many folks taking vacation time off from the markets; therefore, all trading tends to be very light. Thus, much of the market remains in a narrow trading range.

This is, also, the time for tax selling. To take advantage of the last days of 2007, it is wise to shed the dogs in your portfolios. I have been doing a bit of pruning, but have left the mining stocks alone. Gold and silver both remain in a bull market in spite of the manipulation. It is these times when we must hang tough.

I have just read and article which suggests that the central bank's flooding of the market with liquidity has a hidden purpose. It is suggested that the rush is to head off the need for redemption of bonds which come due on December 31st. This is a possible reason in addition to saving the mortgage and financial entities associated with the housing bubble bursting. There seems to be an exorbitant fear among the western central banks to take such action to penalize their paper currencies.

At the same time, the Asian central banks are very pleased with the low value of their currencies which keeps export trade flourishing. These currencies will be the ones which profit from the western bank infusions. It is amazing what games the people play with our wealth.

All of the western countries will be paying ever higher prices for food, energy, and other necessities. By the way, this continues to show up in the retail industry here. The heavy discounting continues. It is hard to imagine how great for consumers will be the after Christmas sales. Hang onto cash and make purchases a in a week or so. By the way, what a great time to give cash rather than purchased gifts.

My prayers are for a blessed Christmas of praising the Lord for His grace and gracious blessing to each of us. Let us pray that He will enable us to work more diligently for His glory and the spread of His kingdom on earth.

Best to each, Doug