Right now, however the Fed is on record that they will start monetizing debt and already basically doubled the monetary base. Velocity is still low and many banks aren’t lending, but still, with that kind of monetary expansion, there’s no reason to expect gold prices won’t continue to rise… be it to $1500 or beyond.

Late in the fall of 1988 the accounting firm, Coopers & Lybrand (C&L), won a competitive award to construct a computer system that collected the monthly security and loan information relating to Ginnie Mae’s mortgage-backed security program. As a C&L consultant with a math major and a Wharton M.B.A., I was put in charge of testing the system as it was being developed.

Where is Howard Beale when we need him?  Two years into the Greatest Recession Since the Great Depression (GRSGD) and our financial leaders are still telling us that we need to be patient while waiting for our economic recovery.

Mortgage debt in the United States (currently more than $10 trillion) has grown to the point that it is nearly the same size as our national debt (in fact, a few years ago, U.S. mortgage debt actually successfully passed our national debt), and it has only been as a result of the new Administration’s debt spending that our national debt has regained the lead in the race to see which can account for the highest amount of our economic debt.

Peter Schiff just lost the Republican nod for US Senator in Connecticut. If someone ever embodied the antithesis to the nation’s current approach, it is Schiff.

Throughout much of our nation’s history, US federalism has moved toward centralizing power within the federal government. Since the post-bailout hysteria and most recent public sector expansion, the issue of states’ rights has had a renaissance. Some Americans long for a system where states have more control to govern. You know, the system our Founders seemed to envision, where each state is an experiment adopting best practices from one another.

A few days ago a friend of mine asked me what I would say in an open letter to a group of Independents if they asked me what I thought of the financial reform bill that is currently being considered in Washington. The following is my open letter response to those Independents:

The current financial crisis did not happen because investment companies were dealing in derivative products that no one understood (the simplistic general Democratic explanation), nor was it a result of an abnormal growth in homeownership rates in the United States (the simplistic general Republican explanation). The real reason for our current crisis is that our economic leaders allowed Fannie Mae and Freddie Mac to mismanage mortgage rates and thus mismanage a substantial portion of our “debt economy” for more than twenty-five years.

The Chinese have announced they will allow their currency off the leash. While not a floating policy quite yet, the yuan will edge up over time. Pegged to the dollar since July 2008, the yuan has remained at about 6.83 per dollar. Some economists have described the yuan as 20% undervalued (although when you search to source this, it’s mostly the IMF and politicians that make this claim). This new found flexibility is a step toward what Washington policymakers have been pushing hard for. The conventional wisdom is that an undervalued yuan hurts US exports to China’s growing consumer base. But Donald Trump made an interesting point regarding China, and I quote:

Gold, the safe haven investment for those wishing to hedge against inflation and debt, has been maligned by some traders as an emotional investment. Outspoken economists David Rosenberg and Peter Schiff have called for $3,000/oz and $5,000/oz (and possibly $10,000/oz) gold, respectively. David Rosenberg here and Peter Schiff here.