The Depression: Past And Future

America’s recovery has run out of steam. Job growth is nonexistent. Stock indexes cling to highs set earlier this year. Barack Obama’s moneyfest has failed to right America’s listing ship. Yet no one from the Potomac to Wall Street has noticed the obvious — that the U.S. is facing a deflationary collapse worse than anything that has happened in 80 years.

I remember the Crash of 1987, Black Monday, Oct. 19. The only thing I had going for my family was that I held enough gold to somewhat offset the huge losses in my portfolio.

But I was lucky. The ensuing recovery meant that I never understood the hardship my parents and grandparents endured during the Great Depression. I worry that may change.

Bedtime Stories That Give Me Nightmares

Upon learning of the great stock market crash that swept away fortunes, my grandfather said to my dad, “Good riddance.”

The family homestead on Alberta’s prairies seemed a world away from the vexations on Wall Street in the autumn of 1929. My grandfather could not anticipate that the sweeping loss of wealth and confidence would impact his life.

When the stock market crashed, the price of wheat gyrated and began a long decline from $2.50 a bushel to a low of 25 cents a bushel in 1934.

But it wasn’t just the collapse in grain prices that almost bankrupted my family; it was the disappearance of confidence that cut a wide swath over all businesses.

My dad told the story of my grandmother. She had bought about 5,000 bushels of wheat. When the margin ran out, the brokerage firm Tull and Arden Ltd. of Calgary, Alberta, called and wanted more cash. These margin calls happened more than once. My grandparents decided to put up enough cash to hold them over. They sent Tull and Arden $5,000 above the margin.

Many brokerage firms were going out of business. My grandparents asked around and were assured that Tull and Arden would not fail.

My dad told me of the morning his mother came out of their farmhouse to say that the radio had just reported that Tull and Arden was bankrupt. The $5,000 in additional margin money evaporated; my grandparents’ lifetime of savings.

There was talk that Tull and Arden would make good on their clients’ losses. That did not happen. My grandparents never saw a nickel out of the $5,000 they had sent to support their contracts. It was gone along with the original $3,000 they had invested. That equals $100,000 in today’s money. (You can run the numbers yourself here.)

Because the family homestead wasn’t mortgaged, my grandparents were able to hang on — but just barely. Many of their neighbors were not so lucky. As confidence dwindled, so did credit. The economies of the world corkscrewed downward, and my family faced hard times over the next decade.

The Dollar’s Quarter Century Of Decline

We are staring into the face of an economic depression. Bankers are again nervous that other banks might turn off the tap. And the banking crisis of 2008 still plagues the global economy.

Already, banks have once again begun hoarding capital. And the modern economy cannot function when credit is not available. Since most companies and households don’t take out big new loans every day, it takes time for this truth to be realized. But when this happens, panic will ensue.

Washington and the Federal Reserve are doing their utmost to turn back the deflationary tide. The Fed has already injected more than $1 trillion into the economy in a desperate attempt to resuscitate the business cycle. I believe if the President had his way, he would pump trillions of dollars more into American banks, automakers and any and all corporations that might help him get re-elected. What Obama and the Federal Reserve are unable or unwilling to understand is that all this money is killing the one great thing America still had going for it: the U.S. dollar. The greenback that was once revered around the world is now an asset that depreciates almost daily.

The endgame of this accidental or purposeful mismanagement of the American economy could be a 1929-style crash of dollar instruments and devastating deflation.

Obama Will Kill The Dollar, Too

I anticipate that the greenback will lose another 30 percent of its worth against major currencies in the next two years.

As my former publisher at Agora, Bill Bonner, wrote earlier this month:

Every empire ends up broke… and defeated. And the fate of every country that has tried to run a pure paper money system… with currency not backed by gold… has been a disaster. It didn’t matter what anyone thought or did. Once you head down that road, it seems that you have to go all the way. There are a lot of byways and side-roads you can take. But you always seem to end up in the same place.

The correction in bullion prices earlier this year has run its course. Political posturing by the President and Congress and their failure to deal with the fundamental economic and debt problems facing the nation are leading us toward bankruptcy. I believe this ongoing crisis will push gold to $2,000 per ounce by Christmas.

Some have accused me of being a gold bug. Not true. I am a survivor bug. I will take no joy in seeing gold at $2,000 per ounce or even $3,000 per ounce. Such prices will mean hardship for the people I love and for the country I love, the United States of America.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

Snap Back: Stock Crash!

Stock indexes went postal on Washington’s debt deal celebration. Last Thursday, the Dow Jones industrial average declined more than 500 points, its worst setback since the Crash of 2008. Then on Friday, Standard & Poor’s downgraded America’s debt from AAA to AA+. In response, the market suffered an even greater setback on Monday, with the Dow Jones industrial average falling 643 points.

The sky is falling. If you don’t believe me, check what happened to the stock market just last week. American stock indexes vaporized $2.5 trillion in assets over five days last week, and the likelihood of a crushing depression now looms large. The only good news out of any of this is that Congress — that useless bunch of imbeciles — has gone on vacation. Good riddance.

The world is waking up to the reality that President Barack Obama and Congress have agreed only to waste more of our money. Investors get it: America is a runaway train headed for bankruptcy. Traders finally understand that Obama’s vision of Big Government is grinding the world’s greatest nation into a second-rate power at best. America, with all its debts, is being stretched past the breaking point.

Congress needs to own up to some of this mess. Just scant hours before the deadline of deadlines, Washington voted to pass a bill that would raise the U.S. debt limit by at least $2.1 trillion and cut spending by about half that amount over the next decade… or so says Washington.

This has created a big stir with the popular media, yet the government has not done its job. All this hubbub, and Big Government (just the way the Democrats want it) goes on.

But Republicans share some of the blame. The useless agreement involved wrangling, threats and even name-calling by our elected officials. The only reduction in deficit spending set in stone, for now, calls for the government to trim $900 billion in spending during the next decade. Other cuts may be made, but it is uncertain under the agreement.

Put that in perspective: Concrete spending reductions amount to $90 billion per year. Washington is expected to spend roughly $1.4 trillion this year, which it can finance only by further borrowing. These so-called cuts amount to only about 6.4 percent of the current deficit.

It is like a gambler who promises his wife to blow the family paycheck only at a discount resort in Lake Tahoe rather than Caesars Palace in Las Vegas. Remember, the Federal government has promised to reduce spending more times than Charlie Sheen has promised to quit smoking crack.

The U.S. dollar continues to slump while gold has reached all-time highs, prices that were incomprehensible a couple of years ago. The once-unassailable U.S. dollar is sitting on death row. Washington has given it only a short reprieve — and judging by the reactions of the stock markets, a very short one at that.

Equity investors finally understand that the cinching sound they hear every time America raises its debt ceiling is the sound of impending doom.

I know from experience that all things — from debt to barbed wire — can be stretched only so far.

A Tale From The Prairies

I will never forget my days repairing fences with my dad. We stabled horses and always kept an eye on the fences. We would secure them with barbed wire.

Loose wire could maim a horse, so our job was straightforward: Find and tighten any loose wires between fence posts.

We stapled the barbed wire tightly to each post, then moved on to the next one. Dad would then attach the wire stretchers, a jack-like device through which the barbed wire was threaded and then advanced. The key to the operation was to have the wire as tight as possible without causing it to break.

At each post Dad would start cranking the wire stretchers. At first, there was no noticeable change in the slack of the wire. Slowly, each crank would pull the wire through the stretchers. Within a few minutes, the wire would become taut. Then, I would staple down the wire, and we would move on to the next post.

My dad was a perfectionist. If the wire would take three more cranks, he was determined not to stop after one or two. Like anything, you can stretch something only so far before it snaps.

I could always tell when we reached that point, because the wire would start to give off a low humming sound.

That was my cue to step in with a hammer and staple. Sometimes, he would wave me back. “Let me give it a few more tugs. I want to make it tight.”

He would crank again. By then, the wire would be humming like a fluorescent light. That was when I knew to step back. Crank… snap!

At the weakest point between the two posts, the wire would snap. This threatened life and limb, because barbed wire was racing in opposite directions at breakneck speed.

I wish that more members in Congress and the President had put in a little time farming. If they had, they might understand that things can be stretched only so far before they reach their breaking limit.

Instead, our leaders are blissfully ignorant of their massive spending that continues today and every day.

Perhaps the debt ceiling should not have been lifted. Perhaps America should have experienced default. Only our mistakes teach us life’s hard lessons. And I am willing to bet that most of our government officials have never had to face tough lessons. In my opinion, that makes them poor leaders. They are sending America off in the wrong direction, one that will eventually end with a catastrophic result.

Raise And Call

There is an old saying that after you have been sitting at the poker table for more than 15 minutes and you are still looking for the patsy, you’re the patsy.

I am an American living in Canada, a nation best known for its beer and hockey. A decade ago, the Canadian dollar (“loonie”) traded under 70 cents to the greenback. It is now worth $1.05.

This speaks volumes about the mess Washington has made over the past 10 years and portends dark days ahead.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

Wild Horses And Black Swans

It seems we are all living on a razor’s edge. In Barack Obama we have an ineffective President and a Congress that seems unable or unwilling to get its act together. The Muslim threat has not disappeared after the death of Osama bin Laden, and America seems headed toward either a financial or energy crisis or perhaps both.

These are the things we suspect might go wrong. What really worries me about our future is the unknown that might jump up and bite us. Things that are not only unpredictable but are counter to anything we might expect.

I grew up on a small farm where we harvested a bit of grain, planted a lot of trees and even raised some livestock. But the understated purpose of our little operation was always horses.

My dad grew up where horses provided the power, and he loved them. He took my older sister under his wing at a very young age, and by her early 20s she was on the Canadian Olympic Stadium Jumping Team — no small accomplishment.

My two older brothers also rode. And we had a hired man, Jonesy, who was good with horses.

I tell you this not to brag, but to underscore just how much experience and horse sense we had at our little operation. Yet despite all of it, a bolt out of the blue happened one morning in the early 1960s.

We kept a stallion in an 8-foot fenced private paddock. Each year, we would breed him to one of the mares. One spring, a mare had a foal, a sprightly chestnut colt.

There was also a fenced pasture that ran parallel to the stallions and held the mixture of our other mares and geldings. Both pastures led down to a pond at the bottom of the slope.

One morning, my dad and sister decided it was time for the colt to stretch his legs. With mother in halter, they were taken into the common pasture and walked down to the pond to drink.

Now, horse people know that you can’t keep a strange stallion around a colt; he will kill it. I suspect that knowledge goes back to Mongol times or even before.

What was also known (or thought to be known) is that a gelding, having been castrated, would lose the stallion within him — the compulsion to kill a colt. Colts are thought to be safe around geldings.

That holds true, but not for a gelding named Redskin. He snorted, pawed at the ground and made loud huffing noises. Then he sprang, charging down the pasture and straight toward the colt.

I can still hear that broadside crash of Redskin driving the colt into the water. And despite protests from my dad, my sister and even the trainer, Redskin had only one thing on his mind — to drown that colt. Its mother bayed and tried to block the charges but was brushed aside by the bigger horse.

The colt was shaky and weak. The end came quickly. Something that should never happen had just happened — a gelding had purposefully killed a newborn.

There were a lot of tears that morning, but what I remember most was my dad’s consternation. “Damn it, Jonesy, what we just saw shouldn’t have happened.”

This story from my past came to me one night while reading The Black Swan: The Impact of the Highly Improbable, by Nassim Nicholas Taleb.

What Taleb writes is that just because we have not seen something does not mean that it does not exist. But since in our mind it does not exist, we have no way to anticipate it, much less prepare for it.

“Before the discovery of Australia, people in the old world were convinced that all swans were white, an unassailable belief as it seemed completely confirmed by empirical evidence,” writes Taleb. “The sighting of the first black swan might have been an interesting surprise for a few ornithologists (and others extremely concerned with the coloring of birds), but that is not where the significance of the story lies. It illustrates a severe limitation to our learning from observations or experience and the fragility of our knowledge.”

To Taleb there will always be black swans, impossible to predict because we can’t even conceive of them in our minds. He goes on to write that World War I, the rise of Hitler, the market crash of 1987 and 9/11 are “Black Swans.”

Taleb also says there is no way to predict them and since they have the biggest impact on society and the economy, predictions from government, scientists and economists are a waste of time — time in the writing of them and time in the reading of them.

“Go ask your portfolio manager for his definition of ‘risk,’ and odds are that he will supply you with a measure that excludes the possibility of the Black Swan — hence one that has no better predictive value for assessing the total risks than astrology,” writes Taleb.

But Taleb doesn’t throw up his hands. He says we can protect ourselves against the next Black Swan. How? Well, for the rich clients he used to work with on Wall Street, derivatives offer good protection.

For us ordinary folks I think the best — in fact, the only — protection we have from a Black Swan event is gold.

Action to take: Gold has topped $1,600 per ounce, almost twice the price it was when I started recommending it to Personal Liberty Digest™ readers two years ago. Yet given the amount of money that has been injected into the economy by the Obama Administration, plus growing world restlessness, I believe bullion will top $2,000 per ounce within the next year. A Black Swan event might take it toward $3,000 per ounce. Therefore, I urge that you continue to accumulate physical 1-ounce gold coins. My two favorites are American Eagles and South African Krugerrands.

Yours in good times and bad,

–John Myers
Editor, Myers Energy & Gold Report

 

 

OPEC Takes Aim At America

Only once have I looked down the barrel of a gun. I can tell you it was damn disconcerting. It happened 25 years ago. The automatic rifles that were drawn on me then are pointed at America today. Yet President Barack Obama refuses to acknowledge that America is facing Middle Eastern guns.

In 1986, I traveled to Geneva to attend an emergency OPEC meeting. My father Vernon was in his early 70s but had lost none of the drive that shaped his youth as a reporter, which led him to found Oil Week Magazine and Myers Finance & Energy (MFE).

Vern was old school. While he had not changed from his reporting days, the world had. I got a sense of that when we pulled up to the hotel decked with machine gun-toting policemen.

My dad either didn’t notice the tight security at the hotel or he simply didn’t care. He asked the desk clerk, “Where’s the meeting?”

That was a tough question for anyone, never mind someone not familiar with English.

“Are you looking for the OPEC meeting? That is on the penthouse,” he responded.

“Thanks,” mumbled my dad, as he marched toward the elevator. As I crept behind, I heard the clerk say: “Sir, you are not allowed up there!”

Inside the elevator my dad said, “Penthouse!”

The elevator operator protested until my dad spelled it out: “We are the press.”

The operator reluctantly pushed the button. As our elevator climbed higher, I got a sinking feeling in my stomach. I understood we were about to walk in unannounced on some of the world’s biggest power brokers.

The elevator stopped. The doors slid open and before you could say, “Sheik Your Booty,” four machine guns were aimed at our heads. There stood four of the biggest men I have ever seen, each wearing a turban and a bulletproof vest.

Questions were barked out in Arabic. My dad was led down a hall while a single guard stood over me. I must have put him at ease; because after a few minutes, he shouldered his gun and offered me a cigarette.

Our entrance was like the Keystone Kops, but luck would have it that Vern got his story. Down the hall was a member of the Saudi delegation who remembered my dad from a 1962 trip to the Kingdom. While I stood before the guard, Vern was talking to his old Saudi acquaintance. He learned that Saudi Arabia was going to open up its spigots. Over the next several months, oil prices began to fall dramatically.

An Energy Crisis Waiting to Explode

That OPEC no longer exists. The de facto leader of OPEC today is militant Iran, whose influence grows with each passing month. Whether we know it or not, America is staring into the guns of OPEC.

A recent simulation called Securing America’s Future Energy declared that the United States lacks effective energy policy responses in the event of another OPEC embargo. The Heritage Foundation, which is made up of current and former government officials and diplomats, reported that protracted turmoil in principal OPEC countries has the potential to cause a sharp decline in oil production and an acute price spike.

The crisis game they played was called Oil ShockWave, and it took place in The Ritz-Carlton ballroom a stone’s throw from the White House. Players included George Bush’s former deputy secretary of state John Negroponte, a former official of Jimmy Carter’s Administration and a former Shell Oil chief executive. They participated as make-believe cabinet officials. At the conclusion of the simulation, participants acknowledged America had become hostage to its need for oil, yet they couldn’t quite seem to break away.

“We are reaping the harvest of our dependence on petroleum and the fact that the countries that produce it are either unstable or hostile to our interests,” declared Stephen Hadley, who reprised his real-life role as Bush’s national security adviser. “How did we let this happen when we’ve known we’ve been dependent on oil for 20 years?”

Former Shell Oil chief executive officer John Hofmeister played the role of energy secretary in the exercise. He gave assurances about U.S. domestic supply. Not one person called for an accelerated transition to renewable energies. According to one participant, nobody even whispered the words “climate change.”

Hofmeister said: “The most powerful message that we have is that the United States of America has more oil than any other country in the world that we know of. We have simply been holding ourselves back from producing that oil. I think it is time to really get the message to Congress that it is time to start producing.”

My question is: When is Obama going to wake up to the impending crisis? It may already be too late, and if Muslim guns turn on the Saudi Royal family itself, it will be far too late — not just for the House of Saud for but the United States.

Ari Fleischer, the White House press secretary under George W. Bush, said: “The president has to do something bold. He has a real challenge to his leadership.”

Fleischer’s conclusion is that Obama should announce the Federal government is going to open up every acre of land for oil drilling that was previously declared off-limits.

After 2½ years of disappointment, I think my odds of winning the SuperLotto are better than the chances that Obama will wake up to the petroleum peril America is facing. That is bad news for the country, which is staring down the barrel of $8 per gallon gasoline prices.

This summer the threat of soaring energy costs has been swept under the rug by a President and a Congress that want us to be mesmerized by the “debt crisis.” I believe a compromise on the debt ceiling will happen. While nobody may like it, it will do enough to temporarily placate dollar holders. Meanwhile, the clock continues to count down toward zero hour when energy prices explode.

As an investor, you should seek out blue chip petroleum companies whose reserves are in North America. Natural gas is extremely underpriced right now. Besides being abundant, it has the added benefit of pleasing the Greens because it is cleaner than coal and oil.

According to a report from International Energy Agency, natural gas is poised for a golden age — with at least a 50 percent spike in demand by 2035.

The upswing in natural gas comes from several factors. First, there will be a continued focus on energy sources that have lower carbon-emission levels. What’s more, demand from China, India and other emerging economies should remain strong.

In addition, as seen with the Fukushima nuclear implosion in Japan, natural gas looks fairly safe. Germany recently announced that it will shut down 17 of its nuclear power plants.

Action to take: Buy EOG Resources (NYSE: EOG. $101). The company is a big producer of natural gas in North America. But it also has operations in China, so it can take advantage of the resilient Asian economy.

EOG is on the cutting edge of finding and developing unconventional sources of natural gas, especially methane extracted from shale.

EOG has proven reserves of 11.7 trillion cubic feet and not much debt. That combination allows EOG to finance further exploration, while developing new technologies to extract gas. EOG could be a takeover target by one of the majors within the next year.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

Oil: Idiocy Or Conspiracy?

With oil priced at just two-thirds of its highs set three years ago, President Barack Obama launched yet another spend-now-pay-later program. But this time, the President has done it with something much harder to replenish than fiat dollars. He is spilling out the nation’s emergency crude oil reserves.

A year after Obama began limiting domestic petroleum exploration, he has begun siphoning off America’s last energy bulwark — the U.S. Strategic Petroleum Reserve (SPR). Thirty million* barrels of oil have already been frittered away by Obama, yet oil prices are now higher and supplies are tighter than they were before these precious emergency reserves were drained away.

Obama’s actions are so blatant that I refuse to give him the benefit of the doubt. Not only is the price of crude far lower than it was in the summer of 2008, but there is no physical shortage. Just the opposite; oil inventories in June were close to historic highs. There can be no doubt, however, that they will decline. The President has choked off domestic offshore oil exploration and has refused to open up potential petroleum-rich regions like Alaska for onshore exploration.

Does the President really believe we are in a crisis now? Or does he want to make things worse by throwing away our last line of defense, the SPR?

 

Crude Oil Prices Light Crude

Last week, Congressional leaders grilled Federal Reserve Chairman Ben Bernanke as to why Americans are facing rising prices even in the face of a stagnant economy. Crude oil is traded in U.S. dollars, meaning that petroleum exporters like OPEC are insisting on higher well-head prices for finite amounts of oil in a world where Washington is able to create an infinite amount of dollars. It all translates to higher prices at the pump — if not this summer, then certainly by the end of the year.

Worldwide oil supplies are not keeping pace with global demand. Emerging markets’ demand for oil is rising, while mature fields in Russia, the North Sea and Mexico start to wind down.

Congressman Bill Cassidy (R-La.) along with 26 other lawmakers, signed a letter to the President on the drawdown of the SPR. They openly question why the Administration tapped the SPR without adopting a national energy policy that will lessen America’s dependence on foreign oil. The letter begs the question: Why not develop America’s energy resources and remove regulations on drilling in the Gulf of Mexico?

The letter from those members of Congress states:

It’s time to adopt a national energy policy which develops America’s natural resources, creates jobs and lessens our dependence on foreign oil. By tapping the Strategic Petroleum Reserve, the administration acknowledged that rising gasoline costs and increased dependence on foreign oil are unacceptable. Yet, the Department of the Interior continues to delay the issuance of new permits for offshore drilling in the Gulf of Mexico.

The current energy policies damage not only Louisiana’s economy but also exacerbate America’s energy problems. The president has often expressed interest in alternative energy. These polices can be pursued without ignoring domestic energy resources and the associated good paying jobs.

Is Obama acting out of stupidity or is something more sinister going on? That’s a reasonable question, considering that the President is driving America toward an energy maelstrom.

Obama apologists argue that the President simply doesn’t know better, that he and his team of energy advisers really do believe that the draining off of America’s emergency energy reserves makes sense so that the country can afford one last summer’s trip to Nantucket.

I don’t buy that Obama is stupid, not for one second. Say what you will about the President, but he is intelligent, probably too much so for the country’s own good. Obama is a graduate of Columbia University and Harvard Law School. Ivy League universities don’t graduate dummies. I have had two friends who graduated from Yale. Both are remarkably smart.

So what does that leave us with? I believe we have a President who is pressing forward an energy policy that will backstop Saudi Arabia at any cost.

Bandar Barry

Because of the Bush family’s close relationship with the Saudi royal family, Bandar bin Sultan bin Abdul-Aziz, Saudi Arabia’s ambassador to the United States from 1983 to 2005, was nicknamed Bandar Bush.

And while each President since Richard Nixon has supported the House of Saud, no President before Obama has bowed so diligently and committed so much to Saudi Arabia. It seems the Saudi Kingdom dictates policy to Obama rather than the other way around.

Two years ago, another Saudi former ambassador to the United States, Turki al-Faisal, wrote an essay for Foreign Policy badgering “misguided” U.S. politicians who promote American energy independence from the Kingdom. According to the former ambassador, it is “political posturing at its worst.”

I am offended that our President would take such lectures on decency from a tribal prince living in a brutal Muslim regime.

PhillyBurbs.com had the same conclusion on July 11.

It’s not just that Obama has presided over the near-end or slow crawl of new domestic drilling. The administration has been dragging its feet on approving a game-changing new pipeline (from Canada) that would, according to a December 2010 study commissioned by the Obama administration itself, effectively eliminate our dependence on oil from Saudi Arabia…

Our dependence on, in many cases, anti-American oil — Saudi oil, Nigerian oil, Venezuelan oil and the rest — will continue to rise, transferring our remaining wealth to the stand-out Shariah states, kleptocracies [SIC] and Marxist states of the world, further entrenching that ‘oasis of interdependence and cooperation’ Saudi royals talk about. It’s the Saudi dream come true. But it’s an American nightmare.

I can’t speculate as to why the President of the United States is selling out the nation to appease Muslim oil exporters. I believe Obama’s energy policies are inconsistent with those of a President working for America’s best long-term interests.

Action to take: Obama’s policies are leading to a depreciating dollar and higher oil prices. My expectation is that within the next 18 months, crude will surpass $150 per barrel. I urge you to buy blue chip North American petroleum stocks. Suncor Energy, one of Canada’s leading oil sands producers (SU, NYSE, $39.50), remains one of my favorite picks.

In the end, all of Obama’s horses and all of Obama’s men won’t be able to put the House of Saud back together again.

Yours in good times and bad,

–John Myers
Myers’ Energy & Gold Report

 

*Update: The original post had billion. Million is correct.

Defending Your Life

Sometimes, we are in danger because we are in the wrong place at the wrong time. Knowing what to do to avoid such a situation, or what you must do if you cannot, can be a lifesaver.

As a child, I was bullied, and I took more than my share of beatings in the schoolyard. I grew out of that stage and became a satisfactory football player. But I was never confident that I could defend myself.

At 17, I spent a year taking karate lessons. The conditioning part of it was fine, but part of me knew it was a waste of time. There was never any contact, and our sensei taught us that we had to pull our punches. In football we were taught to tackle through the opponent, so I knew there was something amiss.

Later, I spent a lot of years in the weight room. Even as I got stronger, I never had confidence. I decided to go back to traditional karate classes when I was 30. The kata movements that were taught were more choreographed dance steps.

Each day driving home from work, I would pass Matt David’s kickboxing gym. I finally mustered up the courage to go in.

Matt David was an imposing man. He owned a Spartan Gym in the rough area of town, along East Sprague in Spokane, Wash. Matt had a regulation boxing ring at the center of the gym. Surrounding it were speed bags, heavy bags and a mirrored wall. In the evenings, the Lilac City Boxing Club would train there.

I was not so impressed that Matt David had a 7th dan black belt in traditional kenpo karate, a rank he was awarded from the renowned Ed Parker. What impressed me most was that Matt had been an all-state wrestler in high school and was a former two-time California Golden Gloves heavyweight boxing champion.

When I first sat down with Matt, he asked me if I had any martial arts experience. I told him I had spent a couple of years in karate.

“That’s too bad,” he said. “But I can teach you to lose those bad habits.”

So began the school of hard knocks. No longer did I wear a white gi with a belt around my waist. Instead I wore tennis shoes, shorts, a T-shirt, hand wraps and a molded mouthpiece.

Our training was broken into two parts. First, we did calisthenics, hit the bags and shadow boxed. Then, we sparred in the ring with 16-ounce gloves, wearing full protective headgear.

I learned two things: that I didn’t know how to throw a punch and, more important, I didn’t know how to take a one. I dreaded getting in the ring against experienced fighters, but I was willing to pay that price.

That first summer at the gym, I took some tough rounds and suffered a couple of concussions. After one tough round, the head coach for the Lilac City Boxing Club, Dan Vassar Sr., approached me.

“Are you getting tired of getting beat up?” he asked.

At age 34, I joined the boxing club. I started training five days a week. I soon began to improve and gain confidence.

In three years, I had only three fights. I lost them all. But I finished each one of them on my feet. It was an incredible experience to spar against gifted fighters and with great instructors. It was invaluable.

A few years after I stopped boxing, I was cornered by two men on a stairwell when I was with my 10-year old son. They wanted to rob me.

My son and I were lucky: We got out of that mess without a scratch. Our two attackers didn’t fare so well. One ran away, and the other was taken by ambulance to the hospital.

I was not charged. To this day, I know the outcome would have been very different if I had not practiced full-contact fighting.

Three Rules To Live By

I encourage anyone at any age to learn realistic self-defense. No, you don’t have to join a boxing gym. You should not, however, waste another dollar or minute in traditional non-contact martial arts. Instead, study judo, wrestling or mixed martial arts — anything that involves actual physical contact.

In his book Streetwise: The Complete Manual of Personal Security and Self Defence, Peter Consterdine writes that the self-defense combinations most schools teach are a waste of time, that no one ever uses a karate-based attack and they don’t leave their hand or foot stuck out for you to do your stuff.

Consterdine knows his stuff. He is a former British Karate International full-contact kickboxing champion as well as a reputable bodyguard.

If you are unconvinced, consider the adage: “The way you train is the way you fight.”

If you think you might have to defend against a 2-by-4 piece of pine, then by all means, take up traditional karate or tae kwon do and learn how to break a board in half. Then again, traditional martial art students might want to consider what the late, great fighter Joe Louis once said: “Everyone has a plan until they’ve been hit.”

If you want to learn more about real self-defense, pick up a copy of Forrest Griffin’s book, Got Fight?: The 50 Zen Principles Of Hand-to-face Combat. Griffin is a former Ultimate Fighting Championship® light heavyweight champion. Reader beware, he uses graphic language and details the savagery that is a part of his life in and out of the octagon.

The best advice I got from Matt David had nothing to do with throwing punches or applying arm bars. He had three simple rules:

  1. Don’t be in a place where you will have to defend yourself.
  2. If trouble comes your way, run.
  3. If you can’t run, grab the closest thing you can and use it as a weapon.

Hopefully, you can avoid ever having to defend yourself. If you must, you can only hope you have learned a few tactics and that the person threatening you says: “I have to warn you… I have a black belt in karate!”

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

NOTE: Dan Vassar passed away last autumn. You can read about his life here.

Why I Hate Walmart

I doubt any of the nine justices on the U.S. Supreme Court has ever shopped at a Walmart. That probably helped the retail giant when the Court dismissed the largest employment discrimination case in U.S. history last month. But the Supreme Court’s refusal to hear the case brought by 1.5 million female employees hardly makes Walmart a paragon of good business.

The best prices in town really only add up to big profits for Walmart shareholders. Annual sales total more than $300 billion per year. In 20 years, the price of Walmart stock (NYSE:WMT) has risen almost tenfold. But Sam Walton’s Frankenstein has killed off countless small businesses and destroyed hundreds of thousands of jobs.

Based on revenues, Walmart is the largest company on the Fortune 500. The company employs 2.1 million workers worldwide — 25 times more than Exxon/Mobil. Roughly 90 percent of Americans live within 15 miles of a Walmart.

Walmart’s 4,424 stores in America are supplied by 10 million 40-foot containers that cross the Pacific each year from Singapore, Shanghai and Shenzhen, China, to the Long Beach/Los Angeles port. It is estimated that Americans spend $36 million at Walmart every hour of every day, almost all of it on cheaply produced goods made in Asia.

But this fact flabbergasted me most: Walmart imports more goods from China than the total imports from the U.K. or Russia. That makes Walmart a huge contributor to America’s trade deficit, an imbalance that is eroding America’s economic prospects.

In the book The Retail Revolution: How Wal-Mart Created a Brave New World of Business, Nelson Lichtenstein writes: “(Wal-Mart has created an) imagined community where economic and moral lives are interconnected and virtuous. The fact that Wal-Mart itself contributed to the conditions that lead to so much social and familial instability may be irrelevant to those who shop and work there. Indeed, the low pay, high turnover, awkward shifts, and general precariousness that have become the norm.”

My Walmart Story

Last Christmas, I went to Walmart with my wife, Angie, who spent a pile of money there on decorations. Since I bought my Timex at that store the previous summer, I took it the jewelry section to see if they could fix the light that no longer worked. The clerk took it apart in front of me, then gave it back and said, sorry, the watch was OK but the light was broken. Not a problem. That is, until I got home and looked at my watch. It had stopped.

I got in my car and drove through Christmas traffic. This time, I got a different clerk. The clerk that stopped my watch had gone home.

I told the new clerk what had happened, and I could tell she was getting cranky.

“It’s not like we stopped your watch,” she declared.

“It’s exactly like that,” I said.

I knew she wasn’t going to budge. She kept insisting that no Walmart clerk under any circumstances would ever take any watch apart. She repeated this even though she was standing beside the very instrument that had dismantled my watch just an hour earlier.

Finally, I noticed the security camera directly above us.

“Check your cam for 2:55 p.m. That’s when the watch stopped, and that’s what time you will see that the clerk took my watch apart.”That is when she accused me of running a scam to get free batteries out of the store. I told her I was not making a living running around the city stealing Timex batteries from Walmart stores. I went on and explained that it’s like taking your car to get washed, and then it won’t start.

That’s when she told me she knew all about cars because she drove a Lincoln and added that she used to manage seven retail stories where she repaired “nice watches. Rolexes!”

I told her I didn’t care if she once polished the Crown Jewels; I wasn’t leaving until that Timex started ticking.

Finally, my wife, Angela, came along. One of her friends is married to the manager at the store. Angela politely mentioned the manager’s last name.

To which the clerk screeched, “What’s his first name!?”

Only after Angie calmly pronounced the manager’s name, proving she was not a liar, did the clerk finally realign the battery on my watch. It took her less than a minute. As she handed it back to us, she said: “You wouldn’t believe the kind of people we get in this store.”

“She means people like us,” Angela said.

When I started telling friends my Walmart story, I learned that many had their own, some worse than mine.

I decided I would do some research and not let one cranky clerk sway my opinion. I phoned the public library and asked them to set aside some books for me on Walmart. I was shocked to find they had held seven books, all of them to varying degrees negative about the mega-retailer. In fact, one of them — How Wal-Mart is Destroying America (and the World) by Bill Quinn — is rife with horror stories told by shoppers and employees.

Quinn’s book makes other criticisms, too. It points to a 1993 article by The Wall Street Journal that reported on the predatory ways of the retailer. According The Journal, Walmart would lavish money on small-town newspapers with full-page ads. After the company had run its competitors out of business, it cut its advertising budget to the bone. Publishers were left to suffer along with many others in the community.

Dana Meadows, the late founder of the Sustainability Institute, pointed out a Massachusetts study which stated that for every 140 jobs Walmart adds, an estimated 230 higher-paying jobs are destroyed.

You can read the report here.

I am skeptical of this study. But you cannot argue that Walmart has hurt countless family businesses. In Quinn’s book is this 2003 letter from Doug Hartig, the CEO of America’s second-oldest continuously operated family drug chain:

“I’m am a third generation pharmacist, fifty-three years old, with a wife and two great high school boys at home. I spend about half of my time battling Wal-Mart in some way, shape or forum every day. In a nutshell I’ve lost one store to Wal-Mart and they’re after me again.”

Hartig had built a spanking-new store in Galena, Ill., after lots of politicking and hard work. It turned out that Walmart liked his location so much that it decided to build a mega-store right beside his. For three years, Hartig fought to stop the building of that Superstore. It opened in 2005.

Hating Walmart Doesn’t Make Me A Liberal

Walmart is reminiscent of how John D. Rockefeller ran Standard Oil a century ago. He would come into an area and, if he couldn’t buy an oil refinery on the cheap, J.D. would build a Standard Oil refinery next door and sell gasoline below cost. That is, until the other refinery went out of business. Then, Standard Oil would jack up its prices.

On the subject of oil and Walmart, fiction writer Douglas Coupland had this to say: “If I think too much about all of those Chinese factories where all the stuff in a Wal-Mart is made, I get that woozy feeling you get when you see ducks covered in crude oil.”

I understand that a great many Conservatives like Walmart. My grudge against the retailer is not because its female workers didn’t get the Supreme Court to hear their case or because Walmart is anti-union.

Mostly, I don’t like Walmart because it has become so big that it doesn’t care about its customers. America was made great because businesses used to have a heart. My Walmart experience told me that it doesn’t give a damn. Its philosophy: “We got another billion where that guy came from.”

Yours in good times and bad,

John Myers
Editor, Myers’ Energy & Gold Report

Note: The Walmart facts mentioned in the column come from WSJ.com, the books mentioned above and this website.

Blood In The Streets

The headline above once pertained to bear markets and the pounding investors would take.* Nowadays, real blood is being spilled in Western democratic cities like Vancouver, Canada, and Athens, Greece. With America’s economy stuck in recession and with the dismal and arrogant leadership provided by President Barack Obama and Congress, it is not hard to imagine similar violence in American cities.

Such an idea would have seemed preposterous four years ago. But that was before the financial crisis of 2008. For three years, anger has been building — and not just in places like the Middle East where violence is as much a part of their culture as the Quran.

On June 15, riots broke out in Athens, the birthplace of democracy. On Tuesday, violence erupted again. The outbursts were ignited by further austerity measures ordered by the Greek government.

The free lunch Greek citizens have been getting for decades is being ripped off the table. The country has already gobbled up the first $139 billion European Union-led bailout. Any talks on a second bailout for Greece hinge on a further belt-tightening. The people of Greece, raised on socialist handouts, are in no mood to stay on a diet.

On June 15 and again Tuesday, protestors poured onto the streets throwing rocks at Parliament. Riot police finally quelled the unrest, but more violence is expected.

Last week, Greece was hit by rolling blackouts as workers at the main power utility began 48-hour rolling strikes to protest the company’s privatization, part of austerity plans needed to avoid a national debt default.

Selling off assets in the utility is a step the socialist government in Athens must take in its $71 billion privatization plan, which must be completed by 2015. The Greek people don’t want spending cuts and higher taxes. But the Greek Parliament is staring down the barrel of a gun. If it doesn’t implement changes by the end of the month, the country will not get the last $17 billion of bailout money.

To ease the crisis in Greece, EU finance ministers agreed to raise the amount of money they will provide for countries drowning in debt. The move is a last-ditch attempt to keep Greece’s financial crisis from spreading to Ireland and Portugal.

All of this has international bankers worried. Last week, Canada’s finance minister, Jim Flaherty, warned there is still “a real danger” of contagion from the ongoing debt crises in Europe, including the possibility of some damage to the country’s banking system.

“Canada is not an island — no country, any more, is an island — our economies are clearly interrelated,” Flaherty said at a breakfast appearance in Toronto following emergency discussions with other G7 countries.

It’s All Greek To Me

Flaherty should also worry about Canada’s homegrown rioters.  The same day Athens was burning, so was Vancouver.

On the evening of June 15, the team favored to win Game 7 of the Stanley Cup Finals, the Vancouver Canucks, lost. The Cup went to the Boston Bruins, who did not cheat their way to the NHL Championship or get help from the referees. They simply were the better team.

Like most sports fans, I am often brokenhearted. At the conclusion of most seasons, I say, “Wait until next year!” But thousands of Vancouver Canuck fans didn’t say that. Instead, they said things like: “Let’s blow up cop cars; let’s beat up bystanders; and let’s throw bricks though windows!” And that is exactly what they did.

More than 100 rioters were arrested by Vancouver police; as many as 1,000 people could face criminal charges. The dragnet will be aided by the audacity of the looters who photographed and videotaped their rampage and then displayed it on social media websites like Facebook.

The physical cost for the few hours of rioting is more than $1 million, but experts say the long-term damage to Vancouver’s tourist industry could be billions of dollars.

As in Athens, the rioters in Vancouver were mostly gangs of youths bent on creating chaos. This begs two questions:

  1. What would happen in a city like Vancouver if the fledgling economic recovery collapses and the citizens face hardship?
  2. What are the chances this kind of violence will erupt in the United States?

On FoxNews.com, Bill O’Reilly wrote: “The question is: Could this kind of thing happen in America? And the answer is yes. About half the population here now believes income redistribution is the right thing to do. We’re setting the table for violence in this country. Once people start depending on the government for their livelihood, for essentials, and then those essentials are taken away, you’re going to have violence. Also, the more loons there are, the more potential for violence there is. Those anarchists want to burn down everything.

“So we can watch this stuff in Vancouver and Greece, but we shouldn’t think it can’t happen here. The pinheads in America are mounting.”

Before you dismiss O’Reilly as a fearmongering right-wing extremist, it is worth noting that someone on the far left is also frightened of chaos coming to America. Democratic strategist James Carville spoke out about civil unrest that might spring from a still-sick U.S. economy on Don Imus’ syndicated radio show, Imus in the Morning.

“(The recession) is a terrible thing that has happened to people’s lives… If 54,000 (new) jobs is the new norm – this is going to be very, very tough. Some people say it just might be one more thing. We don’t know.”

Carville added that the consequences of America’s continuing financial crisis will not be limited to politics, and he warned of civil unrest because of the bleak economic situation.

“People, you know, if it continues, we’re going to start to see civil unrest in this country. I hate to say that, but I think it’s eminently possible.”

Carville and O’Reilly have agreed on something. If you don’t believe in the possibility, you would have to be naïve. Economic collapse almost always leads to civil strife. What the Vancouver riots demonstrated is that citizens today are spoiled and think they are entitled to whatever they expect.

I have a feeling the world’s staggering economic recovery is about to fall over dead. And not just for Greece. When that occurs, punks like those who rioted in Vancouver will have a lot more to be upset about than the fact their hockey team didn’t win.

Action to take: Take precautions for you and your family should there be violence in and around your neighborhood. Store extra food and water and have your home well secured. Also take whatever defensive measures you feel are prudent. Secure cash on hand and safely inside your home as well as physical gold and silver.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy & Gold Report

*The book, Blood in the Streets: Investment Profits in a World Gone Mad was written in 1987 by James Dale Davidson and William Rees-Mogg. It remains an excellent read. You can purchase it at Amazon.com.

Obama’s Mortgage On Mayhem

Almost all of Afghanistan’s economy is supported by foreign aid, most of which comes from the United States. We have a President who is borrowing money from a potentially much larger enemy, China, to finance foreign wars against Islamic countries who hate us.

According to The World Bank, 97 percent of Afghanistan’s gross domestic product is “derived from spending related to the international military and donor community presence.”

Afghanistan’s government has annual revenues of only $2.5 billion, but the cost of funding its security forces alone is estimated at between $6 and $8 billion. Yes, it sounds like Afghanistan runs its budget the way Washington runs ours.

The United States has spent $18.8 billion on aid to Afghanistan in the past decade. According to a report released by the Senate Foreign Relations Committee, without proper planning, “Afghanistan could suffer a severe economic depression when foreign troops leave in 2014 unless the proper planning begins now.”

I have news for those Senators. Afghanistan is already suffering an economic depression. Trying to prove differently will only further bankrupt the United States. (President Barack Obama plans to announce today further troop withdrawals from Afghanistan.)

Afghanistan is a corrupt country that hates our Christian guts and has zero prospects for advancing beyond the Stone Age. Afghan President Hamid Karzai is at best a drug addict and at worst a jihadist in sheep’s clothing.

According to the newspaper The Chronicle Herald, Karzai is no better than Moammar Gadhafi: “Since the tampering and corruption of the August 2009 presidential elections in Afghanistan failed to produce a legitimate result, the Hamid Karzai regime, like Gadhafi, has no legitimate democratic mandate.

“Karzai remains in power simply because he was the chosen candidate of the U.S. in the first place. The notorious Northern Alliance warlords who constitute Karzai’s cabinet are known to have committed numerous war crimes, and some continue to preside over narco-criminal drug enterprises, yet they remain unindicted (sic) for the simple reason that NATO needs their authority to run the country.”

The only booming businesses in Afghanistan are terrorism and opium. Their heroin is smuggled onto our streets, turning cities into slums and destroying American values.

Furthermore, Karzai has implemented Sharia law, including a 2009 law which makes it legal for a husband to rape his wife. Under the law, if the wife won’t comply with her husband’s advances, it is OK to starve her. And if you think a Ben Franklin-type person is about to spring forth in Afghanistan, think again. It is a crime punishable by death for a citizen to convert to Christianity.

According to Pacific Free Press, there were 96,900 U.S. troops and 87,483 supporting contractors in Afghanistan at the end of last year. That means there are almost 200,000 Americans backstopping a country rife with extremists.

Still, the Administration of President Barack Obama seems to have no immediate plans to pull out of Afghanistan.

As reported by Pacific Free Press, a Public Broadcasting Service reporter said: “An executive at a small defense contractor recently joked to me, ‘Afghanistan is our business plan.’ I asked him what he would do if the war ended. He stared at me for a moment and said, ‘Well, then I hope we invade Libya.'”

For the military industrial establishment, things are turning up roses. If some people in the Obama Administration get their way, there will be boots on the ground in Libya.

And it is not stopping there. On June 8, The New York Times reported that the Obama Administration has intensified the American covert war in Yemen. It seems Obama has never met a war he didn’t like. He has almost the whole alphabet covered, from A to Y (Afghanistan to Yemen). South Africa’s Zulus better be on alert.

Borrowing From Peter To Kill Paul

And where exactly is the money coming from to fight all these wars against Islam? Financing much of this fighting is China, which continues to buy U.S. Treasury bills, notes and bonds. It is an ingenious way of doubling down on America’s impending ruination.

The United States has a national debt of $13 trillion. How does a bankrupt nation keep fighting foreign wars? It borrows money.

China holds almost $1 trillion of Uncle Sam IOUs. It is the country with the most to gain from America’s grand decline.

In a column on Digital Journal, freelance writer Kelly Bowlin wrote: “Let’s put things in perspective. The U.S. has hit its debt ceiling. This comes as bad news, because we’re currently fighting 3 un-winnable wars.”

One of the few people who seems to understand and has a vote in Congress is Presidential candidate Ron Paul (R-Texas).

Paul is one of six members of the House of Representatives who released a letter earlier this month calling for a reduction in U.S. military spending by scaling back U.S. military commitments and reconfiguring the country’s global military strategies.

Paul said Congress “cannot be serious about reining in federal government spending if we take the military budget off the table. We must focus our resources on defending the United States rather than on building and maintaining an unsustainable trillion-dollar empire overseas.”

I commend Paul for his efforts, but I fret they amount to calling a Roman water wagon while Nero was plucking his fiddle. America’s financial situation is in extreme peril because of decades of bad policies. Obama is only making matters worse.

The end result will be the continued devaluation of the U.S. dollar and a bear market in dollar instruments. The U.S. economy is again staggering, and the Dow Jones Industrial Average is clinging at 12,000.

Action to take: Expect a summer of discontent at home and abroad as well as in the financial markets. Keep your investments in real assets, either with physical precious metals or with carefully chosen equities that own real assets such as gold, silver, oil and gas.

Yours in good times and bad,

–John Myers
Editor, Myers’ Energy and Gold Report

Who Shot The Dollar?

Who killed the U.S. dollar? This question will be debated by future historians. Already, more people are asking that question than tuned in to find out who shot J.R. on Dallas. The lineup of suspects is long, but it ends with Barack Obama, the triggerman who killed the buck.

The first wound came from Franklin Delano Roosevelt, who expanded the Federal government’s influence far beyond what the writers of the Constitution ever imagined. He devalued the price of gold and made it impossible for ordinary Americans to convert currency to bullion. But FDR was also crucial during America’s World War II victory, a pivotal event that set the stage for America to become the world’s largest creditor and greatest superpower.

LBJ Chooses Guns And Butter

Another suspect is Democrat Lyndon B. Johnson. When I was in college studying economics, our professor made us read history. This seemed counterintuitive until we read about the guns-and-butter policies of the Johnson Administration.

And while Presidents George W. Bush and Barack Obama make Johnson look like a penny-pincher, Johnson was the first to take a shot at the dollar.

Johnson pressed forward his vision with major spending programs for education, medical care, crime and transportation. He wanted to transform America the way FDR had. And he had a war to fight in Vietnam.

Gold demand rose, creating a drawdown on America’s gold reserves. The root of it all was a growing trade deficit that the United States owed to the rest of the world.

The Administration of John F. Kennedy knew America’s gold standard was in trouble. In January 1961, Kennedy’s Undersecretary of the Treasury, Robert Roosa, suggested the U.S. and Europe pool their gold to prevent a private marketplace for gold in which the price would exceed the mandated price of $35 per ounce. French President Charles de Gaulle reneged on the deal and began to redeem dollars for gold instead of U.S. Treasuries. The drain on U.S. gold became severe.

The 1960s marked a gigantic increase in Federal spending. Johnson’s two-front war was being fought at a prohibitive cost. In 1968, for the first time since 1893, the United States ran a deficit in its balance of trade. Federal debt began to soar. By the end of the 1960s, the U.S. faced the stark choice of eliminating trade deficits or devaluing the dollar.

Gold On Nixon’s Enemies List

On Aug. 15, 1971, President Richard Nixon cut the final link between gold and the dollar. Other nations could no longer redeem rapidly depreciating greenbacks for bullion.

In February 1973, the world’s currencies “floated.” By the end of 1974, the price of gold had soared from $35 to $195 an ounce. The U.S. could suddenly pump dollars without constraint. It was a period during which red flags were being raised for paper investors, few of whom paid any notice.

The majority of investors would pay a steep price for their ignorance. Over the next decade, they suffered through the worst bear market in stocks since the Great Depression and the worst bond market of the 20th century.

A Democrat Gives The Dollar A Reprieve

It is ironic that another Democrat would breathe life into the buck, but that is what President Bill Clinton did.

During the Clinton Administration — with the help of innovative accounting — the dollar stormed back. The disgrace Clinton brought to the Oval Office over the Monica Lewinsky affair seems almost forgivable since his Administration presided over a growing economy and what underpinned it, a strong dollar. More than a decade ago, the world had confidence in the U.S. dollar.

If you do not believe me, check the chart below.

 

Trade Weighted Exchange Index

As you can see, the greenback has been experiencing an unprecedented decline since 2001. No doubt much of the weakness in the dollar was caused by another guns-and-butter President: George W. Bush.

Just 2½ years into office, Obama is pushing the value of the dollar even lower. It’s so low that the value of the U.S. dollar now threatens to undermine our future and our children’s future.

Obama had an opportunity to restore the U.S. dollar and the United States. In that task he has failed miserably.

The London Telegraph details Obama’s murder of the dollar. A few weeks ago, the newspaper wrote: “If President Obama is to be believed, ‘speculators’ are responsible for the rise in oil prices that threatens the global recovery. However, for the real drivers of the oil price, the President needs to look closer to home.”

The U.S. has continued to devalue its currency by allowing the Federal Reserve to print dollars like they are going out of fashion. This has boosted the price of all commodities — and the trend is likely to continue for the rest of this year.

“Commodities such as oil are priced in dollars. When the dollar falls, these commodities — be they copper, wheat, or oil — become cheaper in other currencies. This prompts “speculators” to buy. Prices of raw materials have therefore risen on a sea of dollar liquidity — fueled by cheap money and quantitative easing.”

Obama has been pumping money the way Saudi Arabia once pumped oil. His spending has gotten America close to Third World status.

China alone holds nearly $1 trillion in U.S. Treasury obligations. Still, we have a President who is bent on blaming Wall Street. And he does so after having spent more than $1 trillion in bailouts and pushing the Federal deficit past $14 trillion!

Tale of Two Presidents

The Administration of President Jimmy Carter dealt President Ronald Reagan a bad hand. The world was losing confidence in the once-almighty dollar. Commodity prices were soaring. Reagan did the right thing for America. He bit the bullet. Interest rates soared under the discipline of Reagan and then-Federal Reserve Chief Paul Volcker. The result was a rolling recession that hurt a lot of Americans and could have cost Reagan a second term.

Obama has not shown that courage. Rather than batten down the hatches, Obama has opened the spigots — to the tune of trillions in new dollars. The result is a world in which other nations no longer want the greenback as the world’s reserve currency.

History will show that a lot of Presidents injured the U.S. dollar. But the one who gave the greenback the coup de grâce was Obama.

Action to take: Obama’s re-election is paramount to him. He doesn’t care whether the dollar dies. As a result, you should continue to get out of dollar investments and into real assets. The U.S. dollar and Big Board stocks are heading for a collapse. Real assets offer you your only chance of financial survival.

Yours in good times and bad,

John Myers
Myers’ Energy & Gold Report