Recently I heard a podcast with Dr. Michael Hudson on "Guns and Butter". The podcast was a referral from Nathan Martin and I listened to it on my morning walk. The morning walk has been a compromise for me, I used to work out before the financial crisis hit to focus on researching. That researching came at a cost because now I;m starting to see the pounds come on and the muscle tone melt away. The morning walks won't bring back 'Stallone' but it will fend off the 'Tony Soprano'... kapiche.

In the podcast Hudson makes a remarkable statement, 'Bernanke and Greenspan look at the wealth of our country in terms of how much debt it can service'. What this statement means is that Bernanke has a pretty good estimation of the entire income of this country and has turned that into a stream of debt payments.

For example, if Louie has me a Financial Advisor and he has a job that earns $1000 a week and has no debts he keeps all $1000 and he is that much wealthier. But if Louie has Ben Bernanke as a financial advisor he is as wealthy as to how much money he can borrow and make $1000 payments. The lower the interest rate the wealthier he is. With a 1% interest rate he is quite wealthy but if that interest rate creeps up to 2%, he is either underwater or will have to work harder. The higher the rates go the more he is in trouble. Now Louie might've been smart and speculated with his borrowed money but considering the markets in the past year we can assume he is underwater on that investment.

If Louie followed my advice he is wealthier as interest rates rise. Louis can make bad investments and lose money but he is not underwater simply because he has not leveraged himself, he only loses the capital he risks.

This brings me to my point. Max Keiser has mentioned many times the war of speculators vs. savers though he never expounds much further than that. I have taken the liberty to expound for him. There truly is a war going on and it's not left/right (Democrat/Republican) it's up/down (saver/speculator) and speculators are winning this battle mightily as they have captured the entire system to their advantage.

If the system were to be in equilibrium the savers would have moved in to replace the speculators on Wall Street and Washington and restore order. But instead the markets are rigged in the favor of spec's, 0% interest rates and removal of bad speculative bets onto the Federal debt. Also important to note is that inflation harms the saver and the Fed is taken every step possible to make sure that inflation is a certainty (ultimately I believe they will be succesful long term).

I will not give into speculation in fact I'll just have to get more creative than certificates of deposit. I'll be continuing to save but in more diverse ways that can't be manipulated. I'm investing in rare precious metals, purchasing materials that will be desirable in any environment (cars, tools, generators, etc...), and will be looking to purchase land if possible (prices are in the stratosphere at the moment).

Steve