More danger signs about the economy

I am increasingly concerned about the health of the US (and global) economy. The most unnerving recent event was the Federal Reserve's announcement that it will stop reporting "M3." This may sound like an arcane thing, but it is actually quite important. M3 is basically the number of US dollars out there. Why would the Federal Reserve decide to stop reporting such a basic and important number? My feeling, and that of a number of observers, is that the money supply is out of control. (See http://www.goldmoney.com/en/commentary/2005-11-17.html and
http://www.solariactionnetwork.com/phpBB2/viewtopic.php?p=9790#9790.) Over the past years, more and more money has been created. This has the effect of devaluing each dollar that's out there. What then is a dollar worth? That's a very good question. I think not much. This chart indicates how much gold is backing this money that's out there. http://www.bullandbearwise.com/GoldFearChart.asp. It's the lowest it's been in the past 50 years! Not good.

No one wants to the US economy to fail because the entire globe is dependent on it, which has propped it up for a while, but we can live in denial only so long. I think the day of reckoning is coming. Here's one more chart: the S&P 500 index in terms of the gold price: http://stockcharts.com/def/servlet/SC.web?c=$SPX:$GOLD,uu[d,a]wjlanyay[pb20!b50][vc60][i][J63685568,Y]&listNum=1. The S&P 500 has gone nowhere in the past 2+ years, and the recent downward breakdown does not look good for the future. I think we will see the economy struggle more and more.

This devaluing of the dollar will effect everyone, especially the poor because everything they need will cost more. How can we help them? The time to intervene to put in place protections is now, but of course, Bush will never do anything like that. Until we have a more capable and responsible president, we will need to take care of ourselves. Perhaps states can take action.

At the individual and community level, protect yourself by investing in gold and other real, tangible hard assets. Get your money out of the "tapeworm" economy and invest in your local economy. (See www.solari.com for more info on this idea.) The authorities will not take care of the people, so we must take care of ourselves.

The economic environment has been dominating my thoughts recently. I will get back to other thoughts in my blog in the near future.