The Government Panic of September 2008

Since the Congressman Kanjorski comments about the panic withdrawals, the Fed has obviously decided, given that we live in the the age of the internet, to simply go with the flow and act as though it was a known fact about heavy mutual fund withdrawals across the board. It wasn't. I was looking for such stories back in September because of the problems at Primary Reserve. They weren't there. But more important than acknowledgements of the withdrawals, is the panic it caused. It completely reversed Fed policy. The problems at Bears Stearns didn't do this. The problems at Lehman didn't do this. Not even the sub-prime mortgage crisis caused such panic. Congressman Kanjorski is right. It was an electronic run on the banks. If it had been allowed to continue, it would have resulted in trillions in withdrawals, the system would have collapsed. That's what caused Bernanke to within a matter of a couple of days completely change Fed money growth policy. The problem now is that he can't stop printing or the same threat comes back. He's trapped in a major monetary inflation spiral that will ultimately lead to a huge price inflation spiral.

Gold has been going up for a reason. My guess is the players, the Paulson's and Rubin's know what is coming and while they have "The Kid" Geithner run distraction plays, they are loading up on the yellow metal. It's the one thing that will survive the financial panic ahead. Gold won't melt in an overall financial meltdown. I hope you own some.