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The election is less than a year and a half away.  Any hope that the incumbents have to hold onto their jobs rests on the performance of the economy and the stock market.  You can be certain that they will use every trick in the book – PPT intrusions into the markets, falsifying data (unemployment and inflation releases) media mis-information (Sinclair’s MOPE – Management Of Perspective Economics) and most certainly, QE3 (but out of public view) to put a good face on things going into the fall of 2012.  But the problems will still be with us and nothing will change.

The debt ceiling will be raised.  There is absolutely no chance that our President and his minions will accept a balanced budget.  It is insanity to deal with deficits by raising taxes instead of cutting expenses.  Beyond that simple fact, the discussions between the Democrats and Republicans center around slowing the growth of debt, not balancing the budget.  It’s insanity on display and the American public hasn’t a clue that we are looking into an abyss.

Here in Minnesota we are experiencing the “mood” of the masses.  They are demonstrating at the State Capital with signs that read, “Tax the Rich” and “Make The Rich Pay Their Fair Share.”  Geez, I thought I was paying my fair share already.  And I don’t consider myself “rich,” and I have worked hard for what I earn, for the last 30 years.  See, they even have ME apologizing for being successful.  The masses will not give up their handouts without a fight.  They are the people who elect our officials – add up all of the union members and government employees and the outcome is in – those without money or with less money will vote in politicians that promise more wealth transfer.

We cannot grow our economy to a point where we can rehire the 10 million people who have lost their jobs in the last 30 months.  We can’t even create enough jobs to employ the new crop of college graduates coming into the market, let alone deal with the 22% who are already unemployed.

The housing debacle is far from over.  Expect a 20% further fall in the value of your home.  For half a decade, the engine of growth in our economy was rising home values.  Coupled with falling interest rates, the equity in our homes became a cash machine.  When prices came tumbling down, so too did the economy and unemployment soared.  Do you expect this to turn around?  Of course not, so what then will rekindle our economy?  What will replace the high paying manufacturing jobs that we outsourced to the Far East?  Government jobs (which produce nothing) and low paying service jobs replaced the manufacturing jobs.  This is not progress; it is regression to the extreme.

The economy is hanging on by a thread financed by unending welfare payments and government handouts.  All, of course, with borrowed money.  And the stock market keeps going up with the help of the PPT and hedge funds, investing other people’s money.  Almost all of the action in the stock market is programmed trading, not the “little guy” adding to his portfolio.

The Fed has thrown trillions into the pot and we have nothing to show for it.  The big banks that they saved from bankruptcy are still stuffed with toxic (off the books) assets and are unable or unwilling to lend to small businesses.  None of the money ever hit Main Street and ended up in the pockets of ordinary Americans.  It was a bail out of the big banks and brokerages financed by taxpayer money.

The sad thing is that this outrage is accepted by the man on the street.  Where is the anger?  Where are the demonstrations?  Americans took to the streets in the 70s.  Where are they in the 2010s?  Why are the young people not demanding that we bring back the troops from Iraq and Afghanistan?  I guess the difference is this time we don’t have a draft, so they remain silent.  We are not protecting America from “terrorists,” we are creating terrorists by invading their homeland and killing their brothers, sisters and children.  Millions of people are going hungry and living in shelters in America and we come up with trillions of dollars to finance endless wars that serve no purpose – unless you are part of the industry that supplies the weapons to fight the wars.  This IS the military/industrial complex that Eisenhower warned us about in action.

Sorry to get “political” but our politicians are not doing their job; none of them.  (That said, I do like Ron Paul)  Our Federal Reserve is not doing their job either. In less than 100 years, they have nearly destroyed the value of the dollar and Bernanke is in way over his head and without any solutions to this mess.  If the Fed stops buying bonds from the Treasury (QE), interest rates will rise dramatically, decimating the stock market and the housing market.  If they continue to buy the bonds, you can kiss the dollar good-bye.  The politicians are spending more than we take in in taxes, causing the Treasury to issue even more bonds.  Any way you cut it, there is no way out of this mess and there is not much road left to kick the can down.

As far as I can determine, we will be dealing with more inflation and a moribund economy.  All of the MOPE will not change the facts one bit.  I really don’t see how they can hold this together until the election, and if they pull a rabbit out of a hat and hold things together until then, it will be all over by 2013.

It is also a certainty that gold and silver will offer financial safety in these extraordinary times.  I see no other alternative and it gives me no pleasure to say it.  If you think that I am being too pessimistic and too much of a “doom-and-gloomer,” then send me an email and please explain how we will fix these problems and where the growth in jobs and the economy will come from?  I would love to be proven wrong.  Meanwhile, I keep buying gold and silver and hoping for a miracle – which I do not expect to happen.