The markets are going down, down, down.

Will Greece be kicked out of the EU? I say yes.

Will Spain be kicked out? More difficult to say... I'm not sure yet.

Will Germany withdraw and bring back their own currency? I'd say there's a 50/50 chance, and it's getting stronger.

No matter what the charts say, do you really think they'd let the market tank before an election? My guess is that this is just a 'dip', albeit a big dip...but we'll have a nice run-up through November in order to show how genius Barry is...then, we'll all go to war with Iran, Syria et al. AND pull the rug out from under the market.

Your checking account is the liability of your bank owed to you. Federal Reserve Notes are the liability of the Federal Reserve Bank owed to you. If there is a bank collapse walking around with Federal Reserve Notes in your pocket is better than walking around with your checkbook in your pocket, simply because they don't need to be endorsed by you and honored by your bank to pay for something with them. So I agree with you that it is safer to hold Federal Reserve Notes than checking account or saving account balances. That part of you recommendation is accurate.

Let me ask you what the effect is of all the new money that might be printed during an easing. Do you think that this new money might be used to bid up the price of something, and could that something be the stock market? And after the effect of new money drives up prices, do you think that higher prices sow the seeds for eventual reversal of higher prices because less can be bought at higher prices.

All the arguments for runaway prices (worthless FRN's) do not take into account two factors. One is that as prices increase, economic activity is discouraged because less can be bought at higher prices with the money supply that exist at the time purchases are contemplated. The second is that new money in the current system is created out of thin air and loaned into circulation, but the loans come due in the future; when the loans are paid, the money supply contracts as a result of the repayment, going back into the netherworld from whence it came, contributing to economic contraction and downward pressure on prices.

The only way to have price increases at a rapid rate is to have money supply growth outrun loan repayments and the depressing effect of higher prices. Add in fear, which causes people to hold money they receive rather than spend it rapidly (velocity of money flow) and you have an almost impossible task for those who are arrogant enough to think they can manage levels of economic activity by manipulating interest rates and the reserves banks have available.

My bet is that between now and the elections this autumn that the stock market could more likely double than collapse. This is because new money will flow somewhere and the stock market is one path of low resistance, especially if people wake up and realize that government bonds can never be repaid. Of course, in the two years after the election, the stock market could easily give up all these gains and come right back down to where it is today since the increase would have been artificially induced.

So I differ with you on your assessment of the stock market and the likely worthlessness of FRN's. You bank account may become worthless from eventual banking collapse, but such a collapse would just stimulate the desire to own FRN's. FRN's are more likely to lose value from steady increases in the money supply, but not any hyper-inflation.

Or at least educated! I very highly recommend this video:
http://www.youtube.com/watch?v=tj2s6vzErqY

Sorry it's a long video, but it's very interesting and educational and well worth the time!

If you want something a little shorter (smaller bites at a time), check out this website: http://wealthcycles.com/