Financial Sense Blog

Charts speak more eloquently than I can and they speak a brutal truth. Perhaps it is my scientific background or perhaps I appreciate the art that can be found in price charts. In either case, I prefer the message of charts to CNBC blowhards and other so-called experts.

Questions and answers that are specific to our articulated views about the FDIC and the Fed.

Inflation benefits the rich and hurts the poor. The wealthy use low interest rates and leverage to enhance their portfolios. That is why we can expect more inflation. Knowing this can make us rich as well.

Albert Einstein is famously quoted as saying, “Compound interest is the eighth wonder of the world.” And compounding is indeed the topic of this week’s shorter than usual letter, but compounding not of interest but of inflation. As you might expect, I am giving a great deal of thought as to how we get out of our current financial dilemma of too much debt and deficits that are far too high. While I will use US data for our illustration, the principles are the same for any country.

Appears Scotty got it wrong again. We said to beam us up, and he beamed us back. All of a sudden we seem to have returned to 2008. Perhaps, though, we should not be so tough on Scotty. The Federal Reserve had a hand on the controls too, continuing the longest running stretch of asset price distortions in all of history. Think of 97-year-old sports team with one winning season, 1953.

Despite the parabolic rise in the price of silver just in 2011, investors still have plenty to be bullish about going forward, albeit cautiously bullish as a short term correction could easily send silver down to the $37-$38 level.

By the time the Fed realizes the damage it has created, it will be quite late to undo this it and it is going to be very, very expensive and painful to address

Dow Jones Industrial Average charts are including in this weeks's Big Picture show to illustrate market cycles.

Some months back we pointed out that in their present form, banks had become the arteries and veins of the financial worlds with central banks the heart. Unfortunately, banks are driven solely by the profit motive. As they grew into every aspect of people’s financial lives, they failed to take on the corresponding social responsibilities that they came with it. The result is that when their greed went too far and the banking system was threatened with collapse, they had to be bailed out by their customers at the retail level, the taxpayers.

True story: Harold & Maude are a forty-something couple with two teenaged kids. Both are educated, both work in IT, both are fairly sophisticated, financially speaking.