Double-Dip Baloney …

Not for nothing, but in my view all this talk about a double-dip recession in the U.S. is a bunch of baloney that misses the real issue …

A. The United States economy never even came out of its recession in the first place. And …

B. Our economy is already in a depression, one that’s about to get a whole lot worse.

Don’t believe me? Just ask anyone on Main Street if the U.S. economy ever came out of a recession. I doubt you’ll find more than one out of every five Americans you talk to who believes the economy recovered.

Yes, the economy did avoid a total meltdown in 2008 and 2009. But get out of a recession? Give me a break!

First, the true unemployment rate in this country is at least 22%. Not the 9.1% mythical figure Washington is reporting.

You see, Washington plays with the unemployment number. The figure they report every month is what they call the “official” unemployment rate. But it includes only those ages 16 or older who are not currently employed, but are able and available to work and “actively seeking work.”

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The Final Fall of OPEC Thugs …

America has been sending OPEC about a billion a day. Folks like Gadaffi … Chavez … and even Saudis (with rumored links to 9/11). Now the U.S. government is finally taking some action with House Resolution 1380. It’s about to trigger a super shift to natural gas. One under-the-radar company is projected to grow 11,100% this year. That’s the kind of growth that could really kick the stock’s price into overdrive. Right now only a handful of people know the details of this play. Here’s the full report from Dr. Kent Moors.

}

Plus, Washington conveniently leaves out people who are working part-time, people whose hours have been dramatically cut, and “discouraged” workers — those who are ready, willing and able to work — but have given up looking for a job because they can’t find one.

Add these workers into the mix and you have an actual unemployment rate of 22% — more than double the so-called official number and almost as bad as the Great Depression of the 1930s.

Plus, of the unemployed, a full 45.1% have been out of work for six months (27 weeks), also rivaling the Great Depression.

President Obama’s just announced job plan will help a bit, but not much in the grand scheme of things.

Second, from its 1925 peak, the median home price in the U.S. fell 12.57% into a bottom in 1932. Compare that to the 32% decline since the property peak in 2007.

Third, in 1929, total U.S. debt as a percent of GDP stood at roughly 290%. Today, it’s approaching 1,000%, and growing. That’s equal to 10 times our country’s economic output!

Put another way, it now takes $10 of debt to produce $1 of GDP, compared to $2.90 during the Great Depression.

I don’t know about you, but to me, that’s not real economic growth. It’s debt-riddled growth. It’s treading water at best, before drowning.

Fourth, U.S. high-yield corporate bond default rates last year hit their highest level since the Great Depression. And although they’ve come down a bit since then, there’s no doubt in my mind that corporate bond default rates are going to surge again in the months ahead.

Fifth, there are at least half a dozen more stats I can cite that are already worse than those seen in the Great Depression. From durable goods production and sales, things like autos, etc., to the number of families requiring public assistance, to the number and rate of children that are now homeless.

So no matter how I look at it, our country is not heading into another recession. It’s already in a depression. In fact …

In real terms, the U.S. economy has

already contracted more than it did

during the Great Depression.

In today’s world of floating fiat currencies, it’s very difficult to measure changes in the value of anything without a benchmark, since the dollar itself floats in value.

That’s why I often prefer to use honest money — the price of gold — as a value-measuring yardstick, because over time, gold always holds its purchasing power.

For instance, back in the 1930s — and all the way through 1971 — the U.S. monetary system was on a gold standard. In 1932, for instance, just before President Roosevelt devalued the dollar, $1 was equal to roughly 1/20 of an ounce of gold.

In 1971, it was equal to about 1/42 of an ounce of gold. Then, Richard Nixon severed the link between the dollar.

IFTHEN(FIELD9=1) {

External Sponsorship

The Final Fall of OPEC Thugs …

America has been sending OPEC about a billion a day. Folks like Gadaffi … Chavez … and even Saudis (with rumored links to 9/11). Now the U.S. government is finally taking some action with House Resolution 1380. It’s about to trigger a super shift to natural gas. One under-the-radar company is projected to grow 11,100% this year. That’s the kind of growth that could really kick the stock’s price into overdrive. Right now only a handful of people know the details of this play. Here’s the full report from Dr. Kent Moors.

}

IFTHEN(FIELD9=2) {

External Sponsorship

The Final Fall of OPEC Thugs …

America has been sending OPEC about a billion a day. Folks like Gadaffi … Chavez … and even Saudis (with rumored links to 9/11). Now the U.S. government is finally taking some action with House Resolution 1380. It’s about to trigger a super shift to natural gas. One under-the-radar company is projected to grow 11,100% this year. That’s the kind of growth that could really kick the stock’s price into overdrive. Right now only a handful of people know the details of this play. Here’s the full report from Dr. Kent Moors.

}

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And today, one dollar is worth roughly 1/1865 an ounce of gold.

So now, let’s take a look at our country’s GDP in terms of the amount of gold it can buy.

And let’s do a simple comparison of 1932, the depths of the Great Depression …

With 1971, just before the gold standard was abolished …

And then with the year 2000, the peak of the tech bubble … the year 2007, the real estate peak … and the latest GDP data.

That way we can see what’s really happening to the value of our country’s GDP in terms of how much gold it can purchase at those different points in time.

 In 1932, our country’s GDP was worth 2.8 billion ounces of gold.

In 1971, it was worth 27.74 billion ounces of gold. Put another way, our country’s GDP was almost 10 times what it was in 1932. So over that 39-year period, the purchasing power equivalent of our country’s GDP grew almost 1,000%.

In 2000, the purchasing power of our country’s GDP continued to appreciate and would purchase 34.54 billion ounces of gold, a 24.5% increase.

But at year-end 2007, it was worth only 16.87 billion ounces of gold. A whopping 51% CONTRACTION in the purchasing power of our country’s GDP!

Think that’s bad? As of July 31, 2011 — latest GDP data — our country’s GDP would purchase a mere 7.72 billion ounces of gold.

That’s a 54.2% decline since the peak of the housing bubble in 2007 …

And a whopping 77.65% decline in GDP since the end of the year 2000.

If that’s not a contraction, if that’s not a depression in real honest money terms, I don’t know what is.

Of course, almost everyone will argue with me about the above analysis, the main objection being that I’m viewing the economy in terms of gold only, and that the contraction I speak of is merely because the price of gold has gone through the roof.

But I ask you the following questions …

If 5,000 years of gold holding its purchasing power doesn’t give it the right to be a measuring tool, then what tool would you use? Paper money?

And if you think paper money can be used to measure real values, then why does paper money — in almost all cases — buy you less than it did a couple of years ago … five years ago … 10 years ago … 50 years ago?

Moreover, for the economy’s current GDP to equal the same gold purchasing power it had in the year 2000 — 34.54 billion ounces of gold — the price of gold would have to plummet by more than 77.65% to roughly $417.

What are the chances that’s going to happen?

Especially since the Federal Reserve — I have absolutely no doubt about it — will soon be forced to start printing money again?

Folks, the U.S. economy is already in a depression. Deep in a depression. Problem is, almost no one realizes it.

Hopefully, you do. And hopefully, you’re taking the steps necessary to protect your wealth so that it does not suffer the same devastating losses in real terms.

Best wishes,

Larry

P.S. Stay ahead of the curve with all my analysis, all of my recommendations, flash alerts, strategies to protect and grow your money, and more! Become a Real Wealth Report member today.

It’s the best money you will ever spend for your investments. I guarantee it! Click here now to join.

Your thoughts on “Double-Dip Baloney …”

  1. Well, I just love depressions. My business is having its 3rd best year ever in 2011 and my portfolio has doubled since November 2008 / March 2009 lows.

      1. I like miners more than gold or silver. I bought in November of 2009 about a week after you recommended XME. Buffet was buying too. So I decided to move in on November 19, 20, 21. I also bought emerging markets, you recommended BRIC I think. I also bought energy, you recommednded XLE, I think. Generally, I just own the world with 7 mutual funds. Then I add a few goodies. I have a little SGOL and I might buy a little SLV on the dip.

  2. Thank you Larry for bringing us a dose of reality. You may want to read or re-read Animal Farm by George Orwell to give you some insight why all this baloney is going on. Hopefully we will get a chance to get more gold and silver at lower prices as they are liquidated for the current crisis. By the way, I think the pigs represent the bankers.

  3. I have just been starting to follow you since about 1 year. Apart from gold what other “ways to protect ourselves are there” – and even that you mention not to buy now since feel it will come down. It seems that all option are riddled with bad news.

  4. Thanks for the update, and please keep them coming. It’s difficult not add to my Gold Mining stocks right now, and the updates help me keep my powder dry. I’m looking forward to loading the wagon!

  5. Larry,
    What would be the possibilities if things got so bad that overnight the dollar was adjusted(devalued) and everything was also adjusted up, say gold to $4000.00, S&P to 2300, and you were waiting on the sidelines in cash you missed the moves? Any chances of this in this crazy mess? Thanks.

  6. Hi Larry,
    Do you have any thoughts on what the dollar index (mainly because of the EURUSD) is doing right now? Clearly, the commotion in Europe has made the dollar rally higher lately. However, I do wonder whether the dollar will continue its downtrend in the long run or will this realisation that the recession is not and never was over contribute to an increase in the USDIndex? Thanks.

  7. I don’t think asking main street America what they think about the economy is going to get you any good answers.These are the people who elected whatever politician promised them the most “something for nothing”.Americans are mostly to blame for the bankruptcy of this country.

  8. Hi Larry

    Where is the video…I am now addict you cannot stop that ritual…

    okayyyyyyy I will wait next monday

    lol thanks for the great job

    Mokette

  9. Re GDP, GNP I wrote a paper on this subject, post BS in Bus Ad. It’s very difficult to find information on this subject. Another huge question is HOW DO THEY DEFINE GROSS NATIONAL PRODUCT, OR GROSS DOMESTIC PRODUCT?! War does not add to a nation’s capital wealth. Not politically speaking, but economically speaking, when a nation wages war they are throwing away their man power and natural resources; and they should be incurring future debts to care for their military that suffers physical injuries. Subtract this out, and we could have a minus figure for our GNP and GDP. Would appreciate if you could consider this in one of your future reports.

    Also, I think all of the bank derivative fraud and debt, making the 6 largest banks bankrupt, is not capitalism. It is fraud. And I estimate those 6 bank’s bankers that got commissions and bonuses on those, NOTIONAL amount of over $280 TRILLION per OCC report on bank derivative holdings, were paid around $60 TRILLION in illegal commissions. William Black, Attorney and professor who was a director of the equivalent of the FDIC for the S&Ls during the time the S&L s were going bankrupt, says these derivatives are fraud much worse than Bernie Madoff’s; and that they should be prosecuted; thereby stopping these activities. I think it will ruin US capitalism when after the next credit crunch, these crooks take their $60 trillion and buy up all the bankrupt corporations for pennies on the dollar.

  10. I too am addicted to your videos and really miss them!!! In these difficult and chaotic times it helps me to keep a perspective.

  11. Hey Larry ! Yer the best ! I could only humbly request you could post a transcript of your vids. I live in the middle of Bumf%&* and have ugly internet reception. One time the phone company could not find me to repair a hard wire for hours. I told the tec, I can’t beleave you could not find this place. The rep waved her arms, spun around in a circle and screamed “Well look whare you are ! ”
    Thanks :)

  12. Larry, love your analysis. I remember you stated that you believe gold will dip below $1400, any ideas when to go buy back in?

  13. Larry, Was beginning to worry that you weren’t coming back from your Labor day week-end. You’re spot on re the current Greater Depression… most of my fellow students in jr. hi in the mid-30’s lived with their grandparents or uncles and aunts even though rents were only 7 or 8 dollars a month… got out of the service in 49 and had 4 separate careers after using the GI bill to get thru college. Read all the Howard Ruff type newsletters thru the 70’s and 80’s and retired in “86… they all talked about what was “going to happen”. whereas you talk about what “is happening”. Lost about half my life’s savings in 2003 when I staked my son’s vegitarian resteurant that went bust but have more than gained it back at least double following your advice. I now have a farm supporting about a dozen persons, partly family. My nephew gave me his savings to buy metals for him and I’ve been holding off in keeping with your feeling that the metals would retrace down to $800 for gold and $30 for silver…. are you expecting that to play out or has the PIIGS collapse made that less likely than you’re former trend lines indicated? I guess I’m a witness to the fact that your analysis is spot on…. thanks for your trenchant commentary. J.

  14. President Nixon took the US off the gold standard because he had no choice at the time. Even though US citizens could not change dollars for gold, foreign countries could. The French were coming over here with boat loads of paper and going home with boat loads of gold. Fort Knox would have been empty in less than a year if that had been allowed to continue.

  15. Larry:

    Really do NOT like the new format. Impersonal and lacks the nuances gathered by the video. Please go back to the video – once a week – perhaps on Monday or Wednesday would be better. How can I say it? The new format is lousy.

    Jay

  16. Hi Larry,
    When do you think dow will hit 9300 and gold 1300 level again. Dollar has lost about 25% of it’s value so
    far.How far do you think will drop.

  17. Larry, I have been holding on to gold and silver for some time now.
    With silver possibly pulling back to around 30. What are your thoughts about pulling out of silver and gold, and reinvest in an income property, while biulding up funds for the next pull back insilver?

  18. Hello Larry,

    Thank you for your updated article. You have continually voiced NOT buying silver until we see $30.00 an ounce, or even $28.00. Since it is so hard to buy physical metal at spot prices, given the $2.00-$8.00 premiums on silver, in order to buy$30.00 silver, we would have to see sub $28.00 or lower. Any thoughts on your price targets in relations to dealer premiums?

  19. Larry,

    What has happened to your weekly analysis of the markets. Don’t tell me Martin has put you in the doghouse again.
    Maybe it’s time to shine up you crystal balls!

    Good luck,
    mc

    PS try laying off the booze, if possible.

  20. LARRY I JUST WANNA SAY THANK YOU FOR UR AWESOME EXPERIENCE AND GREAT INSIGHT. LAST MONTH YOU SPOKE THAT THE DOW WOULD BE AT 9000 BY MID SEPTEMBER AND WHAT DO U NO ITS MID SEPTEMBER AND THE DOW IS AT 11,400 I SUPPOSE MONDAY WILL SEE A VIDEO THAT SAYS THAT BY MID OCTOBER WE COULD SEE THE DOWN AT 9000 BUT THERE IS A CHANCE THAT THE MARKET WILL GO TO 11,8 FIRST AND WHEN THAT HAPPENS IN OCTOBER YOU WILL SAY NOVEMBER, BUT IT COULD HIT 12,2 FIRST. SHOULD BE JUST LIKE LAST YEAR YOU WRONG AND PEOPLE WATCHING YOU LOSING MONEY. CANT WAIT TO GET EVEN ON ALL THE STUFF YOUVE RECOMMENDED SO I CAN GET OUT WITH MINIMAL LOSSES AND NEVER TAKE ADVICE FROM YOU AGAIN

  21. Anyone care to comment? My guess is that gold/silver have found a bottom after the Euro selloff and will begin to climb back up in price as investors view the crisis as over (at least for the moment) and will begin to stop selling Euros. This will end the recent rally in the dollar and gold/silver should go up. Am I missing something?

  22. We want to add gold (and silver) to our core positions and are waiting for a pullback. We haven’t received any alerts on this even though there was a pullback yesterday. Assume you are on top of this…. we miss the every week videos. Don’t want to miss the train!
    Thanks for your good work.

  23. Larry, not sure if you will read this as I don’t see any recent replies, but thought I’d give it a shot. If not I’ll repost on your next post….Comments:

    1) I’d have to say I don’t like the new format. As it was in the old format I felt I was waiting for input and looking forward to it. The markets are very tumultuous at this time and it is nice to have the regular feedback and guidance regarding your take on the markets. Granted I know you are mostly geared toward long term trading (and that is fine), but I still like the updates particularly because if the market does pull back I wonder if you are ready to go in. Waiting for your ‘all clear’ could miss some good market opportunity / prices if that occurs before your regular post every other week. Note the post above had nothing to do with current market projections – only economics. Granted also, you have given us pre-market levels to look and watch for – but I’d still like your guidance feedback.

    2) I missed your big investor update / announcement 2 or 3 weeks ago. I was out of town. In it I believe you were going to provide details regarding current and long term trends and some timing ideas you had. Note, that I am not currently a subscriber to Real Wealth although I have been considering it for some time. I’m not sure what info and feedback you provide to subscribers. I was looking for a promotional page / video discussing it, and I believe you have had one in the past. Recently, looking for more info on your program I ran across the ‘Safe Money’ report and advertisement provided by Weiss. I ended up subscribing to that. I’ll still likely subscribe to yours once I find out more details about it, and if you have ‘Special Reports’ , and ‘bonuses’, etc would be nice. As it is I am hearing less and less from you lately during a VERY important time of rapid change. I understand you may have other priorities particularly if you’ve been doing this for years and are moving away from this business and your involvement with it to some degree – that’s certainly your right. I’m just wanted to know if your level of involvement and feedback with be enough for me to bother subscribing.

    In closing, let me note that I disagree with the negative remarks made by others above. I’ve followed your column for some time and your insights appear very keen, skilled, and insightful. Sure you may sometimes miss the timing a bit, but you typically get the gist of the market moves. Consider silver… I remember you said a pullback was coming and to not touch it with a ten foot pole. I couldn’t resist, puchased some and within a week or so the expontial rise broke. LOL! I should have listed to you. I’m more trusting now and still waiting for the pullback in gold below 1610 or so possibly as low as the lower 1300’s for the buying opportunity. I hope that buying opportunity shows soon as many have projected gold to 2500/oz by year end if not higher.

    Again, thanks for everything and let us know what your current thoughts are. I for one certainly appreciate the effort you make.

    Bill

  24. Boom..there it is…don’t ya hate that..

    DXY 88-92 by Feb 2012…play it for what that means…

    DOW 12888 by Feb 2012….all set up……AGU is a freaking covered call $$$-maker….own the underlying…sell CC’s….

    How are everyones’ X3 Shorts doing???…..buckle up..

    DOW will not be below 10,866 until end of 1st quarter 2012…it’s there for all chartologist to see…..

    Thank you, Ben B, my wittle accidential-genious…Larry and Mike Larson officially missed the boat on Tuesday, Spet 13th..

    That’s as much of the golden goose as I can give away…always amazes me how these prognosticators always want to “give” away their golden goose for our benefit..

  25. I have previously written a somewhat sarcastic blog here to Larry. On a more serious note, I do think it is a problem of Weiss Research that out of thin air, people like Larry just kind of disappear from view (discontinue their weekly blog). It is unrealistic for people to expect any analyst to predict with the kind of accuracy (including that of timing) we would hope for. That said, it is disconcerting that when things don’t go as expected, people like Larry seem to disappear from a blog, or in some cases, just disappear completely from the Weiss Research Team, never to be heard from again. (Presumably they don’t end up at the bottom of some river).

    In any case, It seems that continuity would be preferable to most readers, and if some of the predictions or expectations don’t occur exactly as expected, than acknowledge it, analyze it , and move on from there; don’t just disappear. And finally, an analyst suddenly disappears from the the Team altogether, than how about a word of explanation?

    mc

  26. With the sovereign debt crisis in Europe do you feel there is any possibility that the countries in trouble will dump their gold reserves and thus cause the price of gold to collapse?

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