US
Congressional Budget Office:
Gold to keep rising!
Alex
Wallenwein
January 31, 2005
Well,
the CBO didn't say that exactly - but it might as well have.
On
January 25, 2005, the CBO released a short, less than 200 word,
news item designed to calm a worrying public. In essence, it
said that the decline of the dollar over the next two years
will be an orderly one - a view that has since
been reiterated by other US officials speaking from the World
Economic Forum in Davos, Switzerland.
Phew,
am I relieved!
I
surely thought that there is a danger of a catastrophic fall
in the dollar, which would eventually lead to a skyrocketing
gold price. But now that the CBO itself has said this won't happen,
I guess I can just go back to throwing whatever cash and savings
I have available at the stock market, and forget about buying
gold to protect myself.
But
wait a minute. What did the CBO really tell me there when it
made that market-calming announcement?
It
told me, from on high in the US government, that gold will
continue to rise for at least another two years! Why? Because
a falling dollar inevitably brings with it a rising dollar-POG,
as we have seen over the past three or more years.
The
statement was obviously designed to remove any trepidations anyone
might have nurtured in the darkness of his or her untrusting
soul that a falling dollar might bring bad tidings of future
economic collapses, etc. Ironically, in issuing its report, the
CBO has inadvertently but officially given the green light to
all who would consider dumping dollars and buying gold in their
narrow-minded, selfish desire to protect themselves from the
dollar-fallout.
Or
was it really that inadvertent?
It
is no longer a secret that the US administration and Fed both
like the idea of a falling dollar, at least for now. Even mainstream
financial news outlets are on to John Snow with his repeated
claims that the administration supports a "strong dollar"
policy. Everyone is quietly laughing at these remarks as obvious,
Bush-ite double-talk. But is it really?
Maybe
Bush took a few pages out of Clinton's play book? Not such a
far-fetched idea, now that we have all been treated to the questionable
pleasure of seeing the grand-master of double talk and forked-tongue
word-parsing ("tell me what the definition of "is"
is) himself making joint appearances with two generations of
Bushes on TV, appealing to the American public to donate money
to Tsunami victims. (Why is Bush, the "moral president,"
giving such elevated recognition to a known scumbag?)
So,
where's the double-talk here? What is Snow really saying when
he repeats these statements over, and over, and over, in the
face of an "earth-rocketing" US dollar? After all.
He never said that the administration prefers a high dollar,
only a "strong" one.
"Strong"
doesn't necessarily mean "high. If the Bush administration
rightly sees a high dollar as vulnerable to outside attack and
as conducive to in-country stock market woes (foreigners now
refuse to buy US equities unless they represent a super-bargain
due to a lower dollar) and therefore as weak, then a "strong"
dollar can without any doubt mean a far lower dollar than
we have today. It's just like a low, ground-hugging building
is more stable (stronger) in the face of a hurricane than a tall
one. But I digress.
We
all know that the falling dollar means rising gold. Apparently,
that's okay with the Washington crowd these days, because it's
just one price to be paid for a continuing rise in US equities
- or so they hope. Gold control? Who cares! That's only an issue
when a higher dollar is needed, and that is now a policy
of the (Clinton-era) past.
If
anyone ever wants more solid proof that Bush wants - no, needs
- a lower dollar, all he needs to do is watch how adroitly the
Bushites have been falling onto their knees and gone begging
to China to please, please, pretty-please, let their yuan rise
against the dollar to remove that "unfair" trade advantage.
All that is couched in terms of "tough talk" of course,
lest one lose face with the electorate, but what it amounts to
is nonetheless nothing more than begging.
Bush
is in no position to be ordering the Chinese around.
China,
of course, is in no hurry to comply. The communist regime first
needs to make sure that the EU can swallow a sufficiently large
chunk of its future exports before it can afford to do so. But
whenever China does revalue (and eventually it will, gradually
or not), the dollar will undoubtedly fall further than it already
has.
For
how long will they let it rise? For however long it takes the
Chinese to let their currency slowly adjust to world-markets
so it can "float" like a piece of you-know-what in
muddy water right along the other floating pieces of the same
matter down the sewer line of monetary history. Uh-hum. Sorry.
I seem to be digressing a lot, lately.
So,
how far will the dollar fall then?
According
to the calming voice of the CBO, not too far.
What
does that mean?
Who
is to know? When your government speaks to you, caution is in
order, as government always says what is in its own interest
- and that interest is unfortunately diametrically opposed to
that of hard working, freedom loving, private citizens like you.
What's
interesting about this announcement is that the head of Bank
of America's global strategy department said "he was
'extremely surprised' by the CBO's comments, especially since
the group has not been known to speak directly on the currency"
according to another Reuters article.
Why
did they see a need to "speak directly on the currency"
this time?
Anything
extraordinary going on? Noo. That can't be - because it would
make them sound like liars when they say such things only to
calm us regular folks with our ignorant fears.
What
is the CBO's function anyway? According to its own web site,
it's primarily to function as a watchdog over presidential attempts
to circumvent the power of the purse that was given by the We
the People to the Congress - in other words: domestic
budgetary matters, as the name indeed implies.
There
is not a single mention of external matters concerning international
finance or monetary policy. The only remotely relevant provision
is the very last phrase on the CBO's "mission" page
on the site. Under the heading of "Budgetary and Economic
Policy Issues" there is the following paragraph:
"CBO's
responsibilities also entail analyzing specific program and policy
issues that affect the federal budget and the economy. [Ed.:
Is that broad enough for a weasel clause?] For the most part,
requests for those analyses come from the Chairman or Ranking
Member of a committee or subcommittee or from the leadership
of either party in the House or Senate."
"For
the most part" these requests come from other members of
Congress, yes. But what about the other parts? Has Congress'
watchdog-office turned into a presidential lapdog of late? Are
they now spouting the party line at the CBO?
If
their main mission is to watch over presidential/executive spending,
of what concern of theirs is the dollar? Did the administration
need help in calming Americans' fears from a more neutral source
than its regular mouthpiece, John Snow, whose job description
is to say exactly what the administration wants him to say?
Questions,
questions - and we don't know the answers. But we know this:
either the reason for CBO's statement was that a perception reigns
in government circles that Americans' fears about the dollar
are in need of a calming tonic (Case A), or the statement is
eminently believable, coming from a completely independent, highly
non-partisan government office that has only the best interest
of Americans in mind (Case B).
In
"Case A," we know that there is reason to "be
afraid, very afraid" of the falling dollar, and we know
that, if it falls uncontrollably, gold will shoot to the moon
and beyond. In "Case B," we know for certain that gold
will continue to rise for at least two more years!
We
can now now introduce another aspect into the equation. It is
very possible that during this best-case scenario ("controlled"
dollar-drop) the Dow suddenly takes a plunge because the dollar
isn't falling fast enough to sustain continued foreign
interest in bottom-feeding on US equities. We have seen that
even during times of dollar-stabilization the Dow tends to drift lower of late, and that
it rises only during precipitous dollar-slides. in that case,
we may end up with a situation where more and more domestic and
foreign investors could quite possibly remember that saving money
instead of throwing it into the bottomless stock-pit might be
a good idea after all.
And
where would that saved money go? Into bank savings accounts or
CDs that pay out zip above inflation for one year deposits?
Or maybe into the top-runner CD that guarantees you a paltry,
locked-in 5.75% over twenty years - in a rising inflation
environment? Or would you think that most of that money would
go into real assets, like uhhm, say ... maybe ... gold?
Who
knows?
I
only know this:
If
the CBO is correct and its report can be relied upon without
reservation, we have at least another two years of falling dollar/rising
gold. If it can't be trusted and the dollar-slide gets (or already
is) out of US control ...
...
then I can ask you only one more question:
Got
gold?
Alex Wallenwein
Editor, Publisher
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EURO VS DOLLAR CURRENCY WAR MONITOR
Email: awallenwein@houston.rr.com
321gold Inc
Miami USA
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