Manic Melon

Step 1: While congress has dropped the ball, the FBI and SEC are cleaning up after them. They're asking the tough questions, announcing tonight they're investigating Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Countrwide, and 20 other companies.

After they find out that their demise was the result of risky business practices and excessive leverage, maybe it will be understood that only the end of these bad business habits will cause an end to our credit collapse. We're about to dump 700 billion dollars of fuel onto this fire, so I'm happy to see that an investigation is now beginning. Sadly, I fear the results of the investigation and announcement that these companies were simply risky and poorly managed, can't be solved by financial bailouts.

Step 2, in case you want to know, is use this ill conceived bailout to sneak in the right to audit the infamous Federal Reserve! This private bank (you won't find them in the government section of the phone book; they're so NOT federal that they have to pay for stamps; oh, and there is no reserve... only DEBT) is asking that the treasury have the right to purchase assets at whatever value it decides from banks in trouble, without right to review in court or congress any of the activities. As if we have no control the purse strings already, this effectively hands the suitcase over to 2 people, neither of which are elected to their positions.

Needless to say, I'm concerned.

My Big Mistake: waking up to do a little research.

For me, it all started last summer when we were getting ready to build a house. While it wasn't overly "flashy", the house we had in mind was basically my dreamhome. Ah, the mental image of a 5 car garage makes me smile :)

Ok back on track now... Following my nature as a "planner" and "researcher", I wanted to see if it was a good time to make such an investment. Little did I know, I'd be catching on to news (common place news by now) that would actually result in me stumbling down a rabbit hole into a new interest... watching economic developments and US monetary policy (as well as other government policies in this crucial election year).

I'm glad I did a little homework on housing...

It was the housing market blog that actually first introduced me to Ron Paul. I guess I'm kind of slow, as I watched him in two debates and wasn't able to catch on to what he was really saying. Even then, I had little idea of what was to come.

Stumbling down the rabbit hole

As I mentioned, I went from learning about the housing bubble to learning about the growing credit problems. From there, I leaped over to Ron Paul and presidential politics. This brought me to learn more about US foreign policy, monetary policy, and the federal reserve system. Since then, I've been looking at US economic trends and futures, and that brings me to today.... what I feel would probably be alarming information for the masses of America, who seem to think we might just be in a little dip, or dare I say "recession". From what I understand, just being in a recession would be good news.

So now to the POINT of this blog... where is money going in 2008?

First, let's look at the value of the US Dollar

The dollar is the 'common share' of America. It's the basic stock of the United States Economy. A falling dollar buys less, and therefore everything seems to cost more. The graphs I'm now showing first came as a bit of a shock to me, and I felt the urge to pass it along. Take a look at the dollar's value just for 2007-2008:

Others may know what's going on, as this is nothing new. Let's look at the past 2 years:

And in case you're interested, here is the dollar for the past 30 days:

Next, let's look at the value of the stock market

Stock Market in 2008:

So where is the money going?

So if the stock market is bearish, and the dollar is falling (aka prices rising, aka inflation), where do you put your money?

Commodities / Precious Metals

If the purchasing power of the common share of America (the dollar) is sliding, then like many, I'd think to get out of the dollar. It seems that many are thinking the same way, as they are moving towards a currency that has always worked in inverse to inflation, preserving purchasing power. It was certainly news to me, but the way to preserve some wealth in times of inflation is buy purchasing commodities. Commodities are "stuff" that tend not to lose their value, therefore when the dollar buys less, commodities cost more. What commodity for such preservation of wealth comes to mind? Well none other than gold.

Gold, Silver and the rest

It wasn't really familiar to me either. But, many people buy gold, silver, platinum, and more in order to help protect their wealth from inflation and currency debasement. For those of you who may not be aware, the US Mint is still in the business of minting coins from precious metals. Let's take a look:

Gold American Eagle

Silver American Eagle

Platinum American Eagle

Gold is the current trend

Gold over the past 30 days:

Gold in 2008:

Gold over the past 2 years:

Coming out of the closet.

I recognize that people listen to me for Internet marketing and website development consulting way more than any financial advice, so of course DYODD. But, so that I may have a clear conscious and proceed to live life and grow business, I'm telling you that I think you need to pay attention to the economy. I'm not smart enough to know what's going to happen, but from now on I'll certainly paying attention to the trends. Personally I'm quite alarmed by everything I've read over the past few months, so I'm simply voicing my views so that I can move foward with my plans and not feel like I did so in secret, leaving others to the wolves (or in this case, inflation). Unlike some 'gloom and doomers' out there, I won't be grabbing people by the shoulders and shaking them while telling them the sky (aka the dollar) is falling. I also probably won't be moving to Brazil, Australia, or Canada in any near term. But, I do intend to become knowledgable and not be the last one holding worthless dollars.

Even More reason to Wake Up!

While I was taking my sweet time to create this post, Gold briefly topped $1,000 an ounce and dropped back sharply. As of March 20th, 2008, I think you're seeing a bottom in PM's and conditions for a very nice bounce. I will warn you that I have almost NOTHING in terms of evidence to support this view... but let's just say it is a hunch.

Gold: $905.00
Silver: $16.85
Platinum: $1850

No More Money Mistakes

I say it was a "mistake" to stumble upon these economy issues b/c of how it is such a rabbit hole. However, I also think it would be a bigger mistake to continue the "traditional American" route of "earn and burn" spending. I've learned so much in just a few months that I look forward to what I might learn this year.

Gas for 2008

Short term or long term?

If you agree with my hunch that we'll see > $4 gas, you must then ask what will be the trend beyond 2008. Allow me to make my prediction below.

Gas for 2009 and Beyond

Another View

I'm not smart enough to KNOW, but I'm dumb enough to GUESS

I know that Manic Melon will never be a credible source for fuel cost predictions, so let me direct you to the kind of data that supports these thoughts: Google News on Oil.

PS: I forecast oil to cost > $108.00 by the end of summer (or much sooner). Some people think the cost will go DOWN due to recession... but I think we'll be moving into a period of stagflation. Anyways, I really only post this so I can drop "I told you so" comments later. Cheers :)