Money, Money, Money!!!

One of the problems, over the last year or so, is that a lot of speculative investment vehicles, that money managers use to make money for their clients, have been unavailable. The World's stock markets have been tanking. Securities have become poisoned. Real estate is not a good bet.

At some point, the wise guys focused on commodities, as a market where prices were steadily rising. Commodities proved one of the most lucrative vehicles ever, for speculators. You can buy on margin, which allows you to leverage your investment. To invest, you either have to tie up the actual commodities or control the futures. This takes significant amounts of the commodity, off the market, which drives the price up even more. Over the last year, at some point, almost all the commodities went parabolic, price wise. The smart speculators sold out somewhere in the parabolic phase. Prices eventually got to the point where the people that actually consume the commodity either could not or would not buy them. At this point, the game was over and the remaining speculators dumped these various substances back on the market. This created a glut and the prices plummeted. Cereal grains, fertilizer, base and precious metals, energy, all have now gone through this cycle and the glut of excess still keeps their prices artificially low. People are still consuming commodities. Eventually the excess will be used up and they will resume a stately increase in price as demand increases, for most of them, relative to supply. At that point, probably, the speculators will return, to play their game again.

What are the speculators into now? Honestly, there isn't much left but these are smart boys and endlessly inventive. The answer is, the US Dollar. The Dollar has taken a tremendous beating over the last several years. It has lost much of its value against the other major World currencies. It has now begun to rebound in value. Speculators "buying up" Dollars helps to increase the rapidity and amount of this rebound. It is still, after all, the major currency used for World commerce. There are many ways to leverage money, so that if its value increases, your profit is disproportionately greater. There are many types of US Dollar denominated bonds. Some sell at a discount. Some pay good interest. This, combined with the present, rapidly increasing value of the Dollar, make for windfall profits. The US government is aiding and abetting the Ponzi scheme, by bailing out the issuers and insurers of many of these bonds, so that they can continue to pay the interest, even if the institutions themselves fail. The government sometimes does this even when it has no real or implied obligation to do so. Ironically, they do this by selling more bonds, to get the bail out money, making the game even bigger and more profitable for the speculators. This won't go on forever or even probably very long. The bigger the theft, the shorter the duration, is the general rule of Ponzi.

When the presently inflating Dollar bubble bursts, it's going to take out all of the remaining private banking structure, the Federal Reserve Bank and the US Treasury. The Dollar may not end up totally worthless but maybe nearly as good as. Whether the US government itself can survive an episode like this, is a question that needs to be considered. It would, at the very least, be much diminished.

What will they do then, the smart boys?

I'm sure they'll think of something.