Law makers are having the hardest time trying to raise taxes for things that don’t directly impact them but would essentially dig into their opponents’ regional interests. It’s already evident regrettably that many politicians are interested in closing “loopholes” for businesses that are creating jobs to attempt to get closer to “balancing” the budget. Senate Republican leader, Mitch McConnell, stated he was open ended in ending tax breaks for special interests. Well, except when it hit close to home on a tax break that effected owners of thoroughbred racehorses of his HOME STATE of Kentucky. His argument was that it might affect the job market, and he was probably thinking this isn’t good for my support base. Senator John Kerry, a Democrat from Massachusetts, someone who by classification is for tax increases etc., said he wants to eliminate tax breaks for special interests as well, all of them but beer companies. We have come to find out that he is a supporter of Sam Adams Brewery in Boston and knows that the company will be impacted by new measures to essentially make them pay more in taxes.

What we don’t understand at is that it seems to be common sense to most people that taking away tax breaks from companies hurts jobs, then why is it ever even a topic of discussion for how to get this economy back on track. It seems so obvious that the more we burden companies and individuals with more taxes regardless whether they are well off or just getting by, you are going to essentially anchor down the economy and cause it to drag. The idea of screwing companies to redistribute their wealth to assist in growing the economy should be understood as a long-term way to discourage growth and a way to give government more power and control. 


It’s like Mr. Obama said, “Do we keep tax loopholes for oil companies, or do we put teachers back to work?” Unfortunately, if Mr. Obama understood that crushing the private industry to grow the public industry is a cancer for our economy, he wouldn’t be saying things like that. Granted if he made some real cuts and started liquidating debt and began to act in the best interest of the long term economy, maybe we will see teachers getting back to work.


House Speaker John Boehner even said, “Tax reform should include closing loopholes–not for purposes of bringing more money to the government, but because it’s the right thing to do.” Now that’s a solid argument if we’ve ever heard one!!! 


What’s Up Fed?


Last week we saw the Federal Reserve begin its second round of “Operation Twist.” The goal is drive down interest rates by purchasing long-term treasury debt and selling short-term debt. Just when we thought the government had no more ammo, they go around and start this. Bravo. Anyone notice how nothing really happens anymore to the stock market when the Fed comes out and makes announcements on their new schemes to prop up the economy. 3 or 4 years ago, as soon as they would announce interest rates going down the stock market would go up by 200-300 points many times. The announcement that they were going to keep interest rates the same would cause the markets to go green. The major QE caused markets to rock upwards. Times have changed however if you haven’t noticed, and there is a limit to how many times a boy can cry wolf and get some serious attention. Markets know that the Fed has failed and is hesitant on any direction to go at this point. After the Fed’s new policy was released, the markets were hammered affecting stocks, bonds, and commodities. It was again another 2008 moment that was festered by fear and uncertainty. Investing in traditional safe haven places such as mutual funds, interest accounts, and Treasury bonds have not been profitable for investors because of inflation. Until the Fed moves out of the way and allows interest rates to float freely, inflation will continue and markets will remain volatile. These low interest rates are benefiting the big banks and pricing waves of people out of the housing market. Would we expect anything less from our government?


The Euro is hitting decade lows against the Yen. The ECB President said, “A lack of confidence may be among reasons for the lenders.” The move we are seeing in the Euro is a result from the lack of progress that is happening in the European Union. Mark McCormick, a New York based currency strategist at Brown Brothers Harriman & Co. said, “We could see the euro down to $1.28 area by year-end.” Members of the ECB will meet on October 6th to discuss the one card that they are dealt, which is how to get investors to purchase more debt. Let’s wait and see if they pull off some way to manipulate the investors to pouring their money into European fiat catastrophes. The Bank of Japan however, didn’t miss a beat. With the gain they saw in the Yen, they were encouraging investors to take refuge in their yen. It’s yet again countries taking every opportunity they have to take what little success they have and amplify it 100 fold to capitalize on it.


Common Sense Against/Inefficient Government Video


Foxbusiness news conducted an interview with Hall of Famer Fran Tarkenton where he discusses the teachers union being ran like the NFL. He pretty much stated if this were true, no one would be watching football and the NFL would go to hell. It would be absurd to not reward players for successful achievements and performance because without rewards, there would be a serious weight on player motivation. But inefficient low performing schools seems to be the American way lately… Excellent interview that agrees with entirely. Currently it is posted on our front page.

The silver to gold ratio is at 54:1 right now. Both metals are huge favorites of ours, seeing silver at this ratio is super enticing and something we couldn’t go without pointing out. Historically, silver has floated around 15 and just by looking at the ratio, one could argue that gold’s little brother has some serious catching up to do. Especially with the most recent sell-off, we have seen major moves in the markets without major changes in the fundamentals, which means our positions are the same and end game scenarios are still at play.

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“When we have gold we are in fear, when we have none we are in danger”– English Proverb


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