Moving from our Katrina coverage, it’s time to take a look at our economy. But, my analysis will not be long or require lots of charts. I can sum up the economic outlook of this country in two words.
Now most investors pay good money for that type of information, but I just gave it to you free of charge. The real shocker is that nobody seems to be aware of this fact. Certainly, we are still in a time of crisis after Katrina and have been focusing our attention there, but our economy has been nearing a critical juncture for quite some time.
The consumer confidence index took a steep 13 percent decline based on some recently released data. Obviously, some of that is attributed to the disaster, but it’s attributed to recent that left many home on the traditionally traveled labor day weekend.
Another sign of the slowdown is the recent strength in gold, relative to the dollar. And it’s not that gold suddenly became more valuable, it’s that the dollar has been devaluated so much that other countries are looking to change to other currencies. And why wouldn’t they? As Congressman Ron Paul , we have a 3 billion dollar daily trade deficit. Eventually, those people letting us purchase on credit are going to wise up and (shock) spend those dollars they’ve been collecting. The flood of dollars back on the market will (potentially) cause a snowball effect as everyone switches to a more stable form of currency that doesn’t devalue in buying power so quickly. Do the math. 10 percent more dollars on the market equals 10 percent less buying power apiece… for everything, not just gas.
Luckily, I still have some of the pre-1965 quarters that have actual silver left in them. Who knows, maybe someday they’ll make me rich. All those lotto tickets certainly haven’t helped.