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Thank-You Letter to Dan Fitzpatrick
by Jeremy Browning
May. 13, 2010 09:06

Dan Fitzpatrick runs an online service called "" The guy is super smart, and he doesn't mince words. When talking about risk management, he's fond of reminding people that if there wasn't risk involved in buying stocks, it would be called, "Money Harvesting."

Last night, he sent out a dispatch with a link to his article Who is Buying Gold...and Why. It frankly discusses the price of gold, government bonds, sovereign debt, socialism and the recession. It's great stuff.

Here's a chunk of that letter for you to gnaw on for a minute:
But think about this for a sec. This is really a domino effect that starts with government debt. When a government starts borrowing excessive amounts of money, the ultimate impact on the price of money effectively "crowds out" private enterprise. Private industry can't grow as fast. And since private industry generates all the tax revenues that governments feed on, tax revenues drop...which means that governments raise taxes. Higher taxes further impede business growth because more of their profits must be paid in taxes.

And on...and on.

Well, we now finally have a situation where an actual nation might default on its obligations. I.e., those evil rich people who loaned money to Greece by buying its bonds want their money back when it comes due, and it is well known that Greece is bankrupt. They won't get their money back.

Now, most people with less than robust logic don't understand this stuff. They just figure "Oh well, things will work out because they always have." Rich people don't see things that way. Again, they respect money and have a lot of it at stake. They arent the type of people who will just say, "Oh, Greece. I see you're having a problem paying all of your public retirees who are 48 years old and you might not be able to pay me back. That's OK. I'd hate to see those folks not get what you promised them, even though what you really did was promise them benefits that you were counting on me to pay for. No sweat! I have a lot of money and can afford it. Just give me a jingle on the telephone when you have the dough."

Instead, they take action. They'll pull their money and sell their bonds at a cheap price...which raises the yield on those bonds even more...further hurting the debtor nation.

I told you. Good stuff.

So I wrote Dan a little thank-you letter.


I just read your article on gold and government bonds: "Who is Buying Gold...and Why".

It was a complete breath of fresh air to me. I've been waiting years for someone to state the obvious -- unapologetically. You did. And your piece is one of the most truthful documents currently circulating anywhere in the media -- online or otherwise -- that discusses the world's current financial situation. That's not hyperbole.

I was a member for about 6 months last year, and I found I just couldn't dedicate the necessary amount of time to my stock market ambitions. I have a wife and 3 kids, and I run a busy screen printing shop (somebody's got to fill those government coffers).

Thanks for reminding people like me that we're not alone, and we're not insane, when we watch the major media outlets and see an enormous disconnect from reality.

Edited May. 13, 2010 09:15


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