Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelertoing Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The U.S. Mid-Term Elections are Over… Yet it Ain’t Over

Politics / US Economy Nov 03, 2010 - 01:41 PM GMT

By: Joseph_Toronto


Best Financial Markets Analysis ArticleOur financial system and our economy nearly collapsed over two years ago. With proper management we should have recovered, but we haven’t. Unemployment, the one thing that voters see and feel, front and center, remains the highest it’s been for decades and voters are justifiably angry.

The diagnosis and remedy has been obscured by dogma and propaganda, but it is not rocket science. Our politicians have had ample time to execute the single most important agenda item of the voters, economic recovery, yet they didn’t. They therefore must be recalled. They fought over health care (medium priority), politics (who gets to be in charge), and dithered over everything else. The most egregious sin of all was giving away Trillions of voter money to overleveraged failing banks and corporations of the elite who made no worse decisions in going into debt than the voters themselves who overextended into debt to buy homes. While saving our incompetent institutions, the people were afforded no likewise relief from their politicians that control their own tax money.

The Diagnosis

The economy suffers from a collapsing money supply and lack of money in circulation because banks don’t want to lend anymore (so much for all of those Trillions of new Federal Reserve dollars now sitting as useless banking reserves). Borrowers also, having been burned, don’t want to be in debt anymore. Our debt based money supply is collapsing. There’s hardly any aggregate demand because consumers aren’t spending while they attempt to rebuild their own balance sheets to get out of debt, all under the burden of high unemployment. It’s the “liquidity trap” and “paradox of thrift” rolled into one stagnant economy. Worst of all, our politicians can’t or won’t see it because they are captives of corporate and banking lobbyist propaganda as they prepare to dole out more taxpayer money to save their precious banks and corporations all while the people continue to lose their jobs and homes.

The Remedy

We need massive tax cuts in relief for consumers and small business employers to help them accelerate their debt reduction, for new hires, and to provide some extra spending cash to stimulate demand. There has been some discussion of complete suspension of the payroll tax for a year or two. This is exactly an excellent remedy and should be enacted and accelerated as soon as possible. The banks and corporations need not worry. The new jobs, spending and demand will increase the money supply by means of increased velocity. It will undoubtedly find its way into the banks and corporations in the form of new deposits and new sales. This is as it should be. Those at the top of the food chain, the banks and corporations, ultimately always have received, and should receive, their livelihood from the millions of individual spending decisions of consumers and not from the handouts of taxpayer money by a handful of ill-informed politicians.

The Curse and the Hope

The taxpayers and voters will remain angry at our politicians if they choose to remain hostage to the corporate and banking interests and continue to dole our massive amounts of stimulus spending to salvage their zombie balance sheets all while ignoring the taxpayers and consumers. Consumers ultimately make up three quarters of all economic activity and are veritably the engine of all economic growth. The hope is that the Tea Party newcomers to Washington will shun the umbilical cord of elite money and propaganda long enough to provide relief to those who put them there, the consumers and taxpayers.

The Risks

There are those who will complain about the massive debt and hyperinflation that the remedy entails. Any sovereign currency issuing government (such as the US) has no need to fear deficits, debt or default as does a government such as Greece and Spain who have forsaken their own currency and have abdicated their power of money creation to other creditors. The government is certainly *not* like the proverbial mom and pop paying their bills around the kitchen table. That image derives from a fixed quantity of money theory derived from obsolete gold standard doctrine and it perfectly demonstrates the “paradox of thrift” (if everyone stops spending and saves at the same time, the economy goes over a cliff) which can drive our economy right back into the dark ages. Modern money is a medium of exchange, a unit of account and its quantity is always highly fluid based on levels of debt, trade, business confidence and velocity. Additionally, any fear of hyperinflation at present is ludicrous given our currently collapsing money supply with the lowest short and long-term interest rates in a century. If the bond vigilantes have no fear, neither should we. Our only risk is future economic mis-management by our politicians should they fail to monitor money supply growth in a recovery and subsequently raise taxes and retire excess money supply as needed to then avoid inflation. It’s that simple folks. It’s called money supply management and at present it requires courageous use of the fiscal power levers we have bestowed upon our politicians for our own benefit instead of the elite.

Very Best Regards,

Joseph Toronto

Affiliated Investment Advisors, Inc.

Joseph Toronto has been a portfolio manager for 26 years for some of the largest institutions in the western U.S. In 1993, Joe founded Affiliated Investment Advisors, Inc., as a registered investment advisor for serious investors seeking professional management for superior safety and returns. Mr. Toronto is a Chartered Financial Analyst and is a member of the Salt Lake City Chapter of the Financial Analysts Society and the Association for Investment Management and Research. He has a Master's degree in investment securities and a B.A. degree with a dual major in finance and management.

© 2010 Copyright Joseph Toronto - All Rights Reserved

Affiliated Investment Advisors, Inc. is a "traditional" portfolio manager for retirement plans, profit sharing plans, individuals, IRA's and other trusts. Affiliated’s portfolio management services are NOT alternative "hedge" fund style and are “fee only” taking no commissions or performance incentives. Affiliated is not a stock broker or financial planner and does not sell any investment or insurance fund or product.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules