What is in Your Wallet?
Research for Onine Investors

by John Dalt

11/09/09

From August 1999 to September 2009, your dollar has depreciated by 35%!  The Consumer Price Index (CPI) has increased from 166 to 224 during the last ten years.  Is it any wonder investors and traders are looking for hard assets that will increase in value as dollars shrink in value?  Call it the incredibly shrinking dollar.

We have actually experienced deflation in the last year, due to the financial crisis.  Keep in mind, the U.S. money supply is UP 20% since last fall.  Banks are holding dollars, and buying treasuries to shore up their balance sheets.  When these dollars start moving in the economy, watch out!  We expect an inflation trap that will ensnare all those not wary of government’s theft by inflation.

Now that the House of Representatives has passed their version of ‘National Healthcare’, let us all pause and reflect on the anniversary of the fall of the Berlin Wall.  Twenty years ago today, East Germans threw off the heavy yoke of socialism symbolized by the wall that divided them from their capitalist neighbors.

I realize some of our younger readers may not know what the ‘Berlin Wall’ represented.  You can read about the history of its construction.  Why was it built?  People that were enamored with socialism soon realized it was a death trap.  Hard labor at a government guaranteed job building widgets of poor quality that no one would buy.  Shortages of food, and promised health care for everyone, but no doctors.  Our schools teach but do not educate.  If you have forgotten about the Berlin air lift, or the East German Stazi, spend some time doing some research on the internet.  Read about the socialist dream, it always ends in a nightmare.

Over the last two decades, Eastern Bloc countries have run from Uncle Joe Stalin’s central planning and oppressive regulation.  Pelosi, Oh! Bama and Reid run to the sound of gunfire.  They are happy to turn their sites on the U.S. population and fire away.  Somehow, they think they will only kill the capitalists, who will be left to pay for their grand plans?

Buried deep in the health care plan passed this weekend is their revenge on average Joe.  It seems the surcharges on the ‘wealthy’ and the 8% tax penalty on small businesses for not offering health insurance are not indexed.  You know what happens when tax brackets are not indexed; they ensnare more taxpayers every year as incomes rise to keep pace with inflation.  The Wall Street Journal has the story, “The Return of the Inflation Tax.”

The problem with socialism is that you eventually run out of other people’s money .---Prime Minister Margaret Thatcher

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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