STORE OF VALUE? - Apr 15th news...

"To restore...harmony,...to render us again one people acting as one nation should be the object of every man really a patriot."

-Thomas Jefferson

MARKET NEWS DIGEST

Dow plunges 400+ points in 3-day rout -MW
IBM results, mixed data stoke fears of slowing economy
By Mark Cotton, MarketWatch
April 15, 2005

NEW YORK (MarketWatch) -- U.S. stocks ended at their lows for the year Friday, with the Dow Jones Industrial Average tumbling more than 400 points in three days, in a week dominated by concern over a slowdown in the economy.

The Dow Jones Industrial Average ended down 191.24 points, or 1.9% to 10,087.51, posting its biggest one-day decline since March 2003. It also marks the first time the benchmark index has posted three straight triple-digit declines for more than two years.

The Nasdaq Composite Index fell 38.56 points to 1,908.15, marking a six-month low while the S&P 500 Index fell 19.43 points, or 1.7% to 1,142.62.

On the week, the Dow fell 3.6%, the Nasdaq gave up 4.6% while the S&P 500 was down 3.3%.

In Friday's action, IBM's weaker-than-expected earnings and mixed data overshadowed strong quarterly results from General Electric and Citigroup.

"Short-term momentum is obviously negative based upon worries over earnings, worries that perhaps higher energy prices have really had a toll on the economy, worries that inflation lurks around the corner presenting more problems," said Joe Battipaglia, chief investment officer at Ryan Beck & Co.

"And clearly the problems at Ford and General Motors as a big-picture issue are plaguing investors."

But Battipaglia believes the underlying fundamentals remain positive, citing solid consumer spending trends, steady economic growth, attractive interest rates and energy prices that appear to be stabilizing.

http://www.marketwatch.com

Related Stories
DOW 11,000... Not NOW! -Craig R. Smith ... Investors know the price of everything and the value of nothing! -- March 14, 2005 -- It seems the financial media is in search of pundits with "safe bets" in 2005 for the stock market. I guess it's no secret that investing in the 21st century has come to resemble gambling so much, that there's just no hiding it anymore. But no amount of window dressing, public perception management or anything else can cover up the fact that "2005 is going to be a tough year for stocks" Don Hayes tells CNBC.

New bull market in stuff, not stocks -CRS ... "Some of the sharpest minds on Wall Street are betting that you'll make more money in metals than Microsoft the next few years. The new bull market is in stuff, not stocks, they say. We're talking about land and oil and gold, the commodities that once made John Jacob Astor, John D. Rockefeller and the Hunt brothers very rich men." -USAToday ... Printed Edition SPECIAL MAG-CD OFFER

Feb. Trade Deficit Soars to Record $61B -BL

April 12 (Bloomberg) -- The U.S. trade deficit surged to a record $61 billion in February, driven by a jump in oil prices and imports of Chinese textiles as well as foreign-made pharmaceuticals.

The 4.3 percent increase in the trade gap for goods and services followed a 5 percent rise in January to $58.5 billion, the Commerce Department said today in Washington. The February number compares with a median forecast of $59 billion in a Bloomberg News survey of 68 economists.

Imports rose to a record in February, evidence of stronger corporate and consumer demand that will encourage Federal Reserve policy makers to keep raising interest rates. The surge in demand is being satisfied by foreign producers, prompting some economists to lower their first-quarter growth forecasts.

``While we imported the necessities, we didn't sell a lot to the rest of the world,'' said Joel Naroff, president of Naroff Economic Advisers in Holland, Pennsylvania. ``As for the Fed, this report would likely mean more measured rate hikes.''

The median forecast in a Bloomberg News survey earlier this month called for the economy to expand 4 percent at an annual rate in the first quarter. High Frequency Economics Ltd., in Valhalla, New York, today cut its forecast to 3.5 percent from 4 percent, chief U.S. economist Ian Shepherdson said.

``Yet another quarter of strong domestic demand will probably be held down by a wider trade deficit,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. He cut his forecast to about 4 percent from 4.5 percent.

http://www.bloomberg.com

Ex-NYSE traders facing indictment -CNN
Former specialists charged with trading to benefit their firms at the expense of their clients.
April 12, 2005

NEW YORK - Several former New York Stock Exchange traders who oversaw stock auctions on the floor face indictment Tuesday on charges that they traded to benefit their firms at the expense of their customers, people familiar with the matter told The Wall Street Journal.

The criminal probe by federal prosecutors in New York City grew out of a civil case against the seven firms that employ the traders, known as specialist firms. Without admitting or denying wrongdoing, those NYSE specialist firms last year paid a total of $247 million to settle charges that their employees interfered with customer orders or put them aside, usually for just a few crucial seconds, so they could trade their firm's own money, taking advantage of their knowledge of which way the market was moving.

The Securities and Exchange Commission also is expected to file civil securities-fraud charges against a bigger group of more than a dozen former specialists, including onetime employees of four of the Big Board's five major specialist firms, people familiar with the matter said. They are Bank of America Corp.'s (BAC) Fleet Specialists unit; Van der Moolen Holding NV's Van der Moolen Specialists USA ; Goldman Sachs Group Inc.'s (GS) Spear, Leeds & Kellogg; and Bear Stearns Cos.' (BSC) Bear Wagner.

In a rare move, the SEC also is expected to file and settle charges against the New York Stock Exchange for allegedly not properly policing floor traders.

http://www.cnnmoney.com

Gold May Rise as Hedge Against Inflation -BL
Apr 11, 2005

April 11 (Bloomberg) -- Gold may rise for a third week on speculation accelerating inflation will boost the allure of the precious metal as a hedge.

Twenty-two of 43 traders, investors and analysts surveyed April 7 and April 8 advised buying gold futures for April delivery, which rose 50 cents last week to $428.80 an ounce on the Comex division of the New York Mercantile Exchange. Eleven recommended selling the metal, and 10 were neutral.

``High inflation is inevitable, and that will eventually benefit gold,'' said Stephen Leeb, president of New York-based Leeb Capital Management Inc., which oversees $110 million, including 5 percent in gold equities. Higher prices for airline tickets ``or what you're paying at the gas pump: That's just flat- out inflation, and we're seeking hedges,'' he said.

The price for an average gallon of gasoline will rise to a record $2.28 a gallon this summer, the government said April 7. Rising fuel costs led AMR Corp.'s American Airlines and other U.S. carriers to boost round-trip U.S. leisure fares this month. Qantas Airways Ltd., Australia's biggest airline, more than doubled surcharges for international flights.

The gain in gold futures last week was expected by the majority of analysts in a survey March 31 and April 1. Prices gained $3.50 the previous week. Gold reached a 16-year high of $458.70 on Dec. 2 in part because U.S. consumer prices rose 3.3 percent in 2004, the most in four years.

A futures contract is an obligation to buy or sell a commodity at a set price by a specific date. The Bloomberg survey has forecast the direction of gold correctly in 30 of 50 weeks, or 60 percent of the time.

U.S. Consumer Prices

Some investors buy gold in times of inflation, which erodes the value of fixed-income assets, such as bonds. Gold futures surged to $873 an ounce in 1980, when U.S. consumer prices rose 12.5 percent from the previous year.

U.S. consumer prices in February rose 0.4 percent, the most in four months, the government said on March 23. Excluding food and energy, prices in February were 2.4 percent higher than a year earlier, the biggest increase since August 2002. A day earlier, the Federal Reserve raised its benchmark interest rate for a seventh time since June to curb inflation.

The Fed raised its target rate for overnight loans between banks by a quarter-point to 2.75 percent and said ``pressures on inflation have picked up.''

``I don't think the Fed has the kind of latitude they would like to have to raise interest rates aggressively,'' Leeb said. Gold prices may double in the next three years, he said.

Crude oil, which reached a record $58.28 a barrel on April 4, is 44 percent higher than a year earlier. The Reuters-CRB Index of 17 commodities, including coffee, copper and sugar, on March 16 reached 323.33, the highest since December 1980.

IMF Gold

Gold may also rise on speculation the U.S. will veto any attempt to sell gold owned by the International Monetary Fund, the third-largest bullion owner after the U.S. and Germany.

The IMF owns 2.1 percent of the world's bullion, worth about $44 billion at current market prices. The fund has kept the value of its gold at less than $41 an ounce since 1971. A revaluation would enable the IMF to forgive debts or suspend loan repayments to combat poverty in Africa.

The Group of Seven richest countries will meet April 15 to review a report by the IMF on the possibility of selling some of its gold. The U.S. is the largest shareholder of the IMF with a 17 percent voting stake, enough to block an 85 percent majority required to approve a gold sale.

The IMF ``will not sell gold,'' said William O'Neill, a partner at Logic Advisors LLC, a commodity consulting company in Upper Saddle River, New Jersey. ``The U.S. remains against such sales and is not likely to alter that posture.''

http://www.bloomberg.com

IRS faulted for financial services audits -AP
By MARY DALRYMPLE
AP Tax Writer

WASHINGTON (AP) -- The Internal Revenue Service audits far fewer of the biggest financial service companies - banks, brokerages, accountants, lenders and others - than it does other large corporations, according to an analysis of government data.

The IRS disputed the findings by Syracuse University's Transactional Records Access Clearinghouse and emphasized that the agency audits returns with a high risk of tax evasion, regardless of the industry.

"The conclusions drawn by the TRAC analysis are not accurate," said Deborah Nolan, IRS commissioner for the large and midsize business division.

Using information provided by the IRS, the researchers measured disparities in audit rates of corporations with $250 million or more in assets.

The report being released Monday found that about 15 percent of financial services companies were audited between 2002 and 2004. In contrast, virtually every corporation in agriculture, mining, construction, heavy machinery and transportation was audited.

"The very low attention being given to the financial sector by the IRS is particularly surprising in light of the leading role this industry plays in the country's economy, including the level of income subject to federal corporate income taxes," the researchers said.

The audit rates for other companies fell in the middle. More than three in five communications, technology and media companies were audited. The rate was about four in five for retail, food, pharmaceutical and health care businesses.

http://www.ap.org

Related story:
4-15-05 --Americans Spend 6.6 Billion Hours on Taxes -AP ... For individuals wondering how long they will spend on tax forms, the taxpayers' group said it takes an estimated 26 hours and 48 minutes to prepare the Form 1040 and its most common supporting schedules. That includes keeping records, learning the law, preparing forms, copying and mailing...Nevertheless, the forms are not just a drain on people's free time, but on the productivity of the country, Keating said. "That's a huge, dead weight burden, trying to discern the tax code, what it rewards most," he said. "If we turn the nation into a paper-shuffling, law-figuring-out country, no one actually gets anything done."
4-13-05 -- Bill would dump IRS for sales tax -WND... Rep. John Linder reintroduces legislation to overhaul federal system

Oil could hit $100, hurt growth -CNN
Global lending organization says prices will remain volatile through 2030, posing 'serious risk.'
April 7, 2005

WASHINGTON (Reuters) - China's growing thirst for petroleum, tight supplies and little spare production capacity will keep oil prices volatile through 2030, with the possibility of spikes as high as $100 a barrel, the International Monetary Fund said Thursday.

The world faces "a permanent oil shock" and will have to adjust to sustained high prices in the next two decades, the International Monetary Fund said on Thursday in the starkest official warning yet about the long-term outlook for energy supplies.

"In short, it will continue to be a rocky ride going forward, with a wide band of uncertainty surrounding high expected prices," said Raghuram Rajan, the IMF's chief economist.

As living standards improve in China, India and other developing nations, oil demand will increase, especially for cars and trucks, Rajan told reporters. The IMF forecast indicates that China will be consuming nearly as much oil in 2030 as the U.S. consumes now. Currently the U.S. consumes about a quarter of the world's oil production.

"The oil market will remain tight in the coming years, and high and volatile oil prices will continue to present a serious risk to the global economy," the IMF said in its semiannual World Economic Outlook report.

Through 2010, oil prices will be subject to large swings as non-OPEC producers try to meet incremental demand. "Since the prospects for higher spare capacity are unfavorable, the market will likely remain tight and vulnerable to shocks," it said.

From 2010 through 2030, after non-OPEC output has peaked, the world will be more dependent on the Organization of Petroleum Exporting Countries to meet demand. That will also bring "growing upside risks to prices," the report said.

The IMF forecast average world oil prices in a range of $39 to $56 per barrel in 2030, as expressed in 2003 dollars. That would represent a range of $67 to $96 per barrel in nominal terms.

For 2005, the average world oil price will be about $52.23 a barrel, IMF analysts said. That is sharply higher than the $37.25 a barrel than the IMF forecast in its September report. $100/Barrel oil possible

U.S. crude oil soared to a record high of $58.28 per barrel on Monday in a buying frenzy triggered by a Goldman Sachs forecast that prices could spike as high as $105 per barrel.

Rajan said such a high price was possible.

"To the extent that there is some kind of supply disruption, $100 a barrel does not seem outlandish," he said. "Is it the most likely scenario? I think not necessarily. It depends on how the market evolves."

The new IMF report estimated world oil demand will grow to 138.5 million barrels per day in 2030 from 82.4 million bpd in 2004.

Significant growth will come from China, which was forecast to consume 19 million bpd of oil in 2030, more than triple the amount used in 2004, the IMF said.

http://www.cnn.com

Related Story:
4-14-05 -- Investment firm predicts $5 gas -WND ... Analysis says 'perfect storm' brewing to worsen oil crisis... prices could skyrocket to $200 a barrel and gas prices to $5 or higher.

Related Offer:
SPECIAL REPORT: $5 Gas Coming Soon!...The coming oil crisis will create economic and political discontinuity of historic proportions, as the world adjusts to a new energy environment and it's economic impact, for example...

Craig R. Smith joins WND commentary lineup -WND
Author, radio talk-show host to write weekly column for WorldNetDaily
April 11, 2005

Talk-show host, author, businessman and popular media commentator Craig R. Smith begins writing a weekly column for WorldNetDaily today.

Smith is the host of "America at Night," and considers it his mission to stimulate meaningful late-night talk by helping his audience discover that talk radio can be both educational and entertaining while engaging in common-sense analysis of the big social-cultural-economic issues of the day.

During the '90s, Smith also hosted two other radio talk shows, "America Talks" and "World Economic Perspective," which aired on over 150 stations nationwide and then "Our Times," a weekly 30-minute TV show in 2000-01.

Additionally, over the past two decades, Smith has appeared on over 1,500 radio and TV programs on all of the major networks, as well being quoted in Time, the Wall Street Journal, the New York Times, Newsweek and WorldNetDaily to discuss his perspective on breaking news events.

Smith has also written "Rediscovering Gold in the 21st Century: The Complete Guide to the Next Gold Rush," where he documents how America's financial climate changed dramatically as the 21st century was born.

"I am thrilled that Craig Smith is going to be a regular commentator for WND. He is knowledgeable in so many areas and is the person I turn to specifically for advice on financial and economic analysis. He's not only a great communicator with great instincts, he's also a great friend and radio talk-show colleague," said WorldNetDaily Editor and Chief Executive Officer Joseph Farah.

Craig is married to his first wife of 25 years, resides in Paradise Valley, Ariz., and has two grown daughters who, he says, "have made my wife and I very proud and humble – at the same time!"

http://www.wnd.com

COMMENTARY

Wealth without work: Deadly social sin -Craig Smith, WND
Exclusive Commentary
April 11, 2005

"Buy now and save" scream the media headlines, but few buyers are saving anything at all for the future. They've bought the No. 1 consumerism lie: Spending equals saving.

Consumerism lie No. 2 is that you can become wealthy without working, i.e., by gambling without allowing any savings for in the future. Millions today believe gambling equals wealth.

Shall I go on?

In January 2005, America's savings rate finally hit a whole number: 1 percent – the lowest annual level since the Great Depression! America is now near the bottom of the global savings ranking. I could hear the mass media yawn. They've forgotten that just a little over a decade ago we still had the moral /economic courage to save 9 percent per year.

The Dallas Morning News reported: "The most-repeated saying among economists the whole world round is, "Don't underestimate the U.S. consumer."

But that's not the problem! The real issue is that consumers have overestimated themselves for so long that now the delusion of both "spending equals saving" and "gambling equals wealth" goes unchallenged. It's mantra has become the middle-class equivalent to the "bling-bling" craze among the wealthy.

Today, America is standing nose deep in an ocean of personal, corporate and government debt – we're treading water at best, yet the lie goes on – daily – brainwashing the next generation.

The moral model from history is that we should be exalting the future by saving instead of consuming.

Sadly, this perspective is not widely understood today. Instead, America has become soft in our seemingly unending era of pseudo-prosperity. The proof? Millions of Americans fall into the credit trap, annually resulting in over 2 million bankruptcies in 2004 – doubling over the last decade.

My perspective is that most simply suffer from a lack of a clear perspective on the proper use of money, debt and credit. The great problem today is that our whole debt-based money system is strangling us because we have not learned the historical mandate to own "honest money" and shun debt.

Honest or "real" money must have four minimum characteristics:
1. Must be scarce.
2. Must be divisible.
3. Must be portable.
4. Must have store of value.

Today's "U.S. dollar" fails the test, (it has no store of value) yet the world pretends it is the standard of all other currencies and assets. Yes, it sounds crazy, but it's true. Not even Alan Greenspan would deny that our modern credit-debt-money system operates on pure public confidence – perpetuating a massive deception at all levels.

* No wonder the dollar's value has slid 40 percent since 2001.

* No wonder the stock market is going nowhere fast.

* No wonder virtually every commodity on the planet is rising.

* No wonder gold and silver coins are known as "the real thing."

Here are five time-tested steps to create real wealth – without gambling:

1. SHUN DEBT and begin to live within your means. Establish a workable budget and begin to pay off your debt ASAP. Practice daily living under your means – then you'll never have to live beyond your means.

2. SAVE 10 percent for your household, THEN GIVE 10 percent to your favorite charity. This means working toward the goal of learning to live on the other 80 percent.

3. DIVERSIFY your reserve capital into seven or eight areas, beginning with the least risky. Ask yourself, what if my home value began dropping? Everyone should have at least six months income in emergency savings, just in case.

4. "REAL" MONEY is something everyone should own. U.S. gold and silver coins offer the best of everything – safety, financial privacy and profit potential. So much so that I wrote a book about it ("Rediscovering Gold in the 21st Century").

5. TRUE WEALTH FOLLOWS GOOD IDEAS – conversely, true poverty follows bad ideas. Home-based businesses are helping millions of Americans "live the dream," but beware of those promising wealth without work. As a chief executive officer for over 20 years, I've discovered the fundamental cause of financial problems is often as simple as our attitude toward hard work.

The bottom line is that we should work all we can, save all we can, and then give all we can – that is the anti-drug to gambling with debt. May we all remember the second of the "Seven deadly social sins" according to Gandhi:

1. Politics without principle.
2. Wealth without work.
3. Commerce without morality.
4. Pleasure without conscience.
5. Education without character.
6. Science without humanity.
7. Worship without sacrifice.

Perhaps in the weeks ahead we can tackle some of Gandhi's other seven deadly social sins.

Read Craig Smith WND Commentary Archives

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4-10-05 --'Favorite' for new pope against gambling -NYDN ... But oddsmakers think Italian has best shot at papacy at 3-1 --New York Daily News

Gold: The only currency that can't be printed -Fleckenstein, MSN
The world is starting to see that it's not just the dollar that has serious problems. Brewing financial crises and weak currencies make gold the best choice for crisis protection.
By Bill Fleckenstein
Apr 11, 2005

As far back as April 2003, in a speech I gave at the Las Vegas Precious-Metals Conference, I stated that gold would benefit from an inevitable economic crisis of confidence (which could be postponed but not avoided). Now, nearly two years later, it is my belief that the catalysts for this crisis are here. This week I will focus on one of them, the dollar.

Growing concerns about the dollar, in fact, prompted editorials in both The New York Times and the Financial Times (known as the FT) a week ago. The Times' April 2 editorial, "Before the Fall," takes exception to the sanguine viewpoint "that foreign central banks won't risk the losses in their dollar reserves that would occur if they started shunning dollar-based investments." In brief, the editorial warns, "the United States is betting that it's too big -- in other countries' eyes -- to fail."

The Times also warns that if foreign central bankers decide to stop buying our dollars, we may need to "borrow in the face of an ever-weakening dollar -- a recipe for higher interest rates and higher prices." Further, it notes: "If the economy is in a housing bubble, as many analysts believe, higher mortgage rates would pop it, with dire results for homeowners' balance sheets and the overall health of the economy."

I suspect that "dollar bag holders," i.e., the foreign central banks, won't feel comfortable reading this, and it will strengthen their resolve to lighten their dollar positions. From a perversity-of-markets standpoint, though, the fact that the editorial board of The New York Times felt so compelled to write this editorial may mean that the dollar bounce will continue.

Meanwhile, though I have been bearish on the dollar for some time -- and think it's headed lower over time -- I would not have spoken as forcefully about the immediate future as the editorial did here: "The recent rally of the United States dollar notwithstanding, the greenback has nowhere to go but down . . . The dollar's current uptick is just a breather in its overall downward trajectory . . . The dollar is heading down, no matter what." I say that because, as anyone with any experience in the financial arena knows, in the short run, markets can do anything.

However, I think it's worth noting that The New York Times editorial page dislikes the present administration so much that it has a bit of an agenda. Thus, its argument may be seen as more political than heartfelt economic concern.

Now for a look at the Financial Times' April 2 editorial, "Crosscurrents Make Currencies Choppy," which I think will also put pressure on foreigners left holding the dollar bag. Unlike The New York Times piece, the FT gets at the trickier problem of the dollar going down against what: "The euro does not have much to recommend it, other than not being the dollar."

http://moneycentral.msn.com

Government's monetary word games, -Barnewall, WND
March 31, 2005
By Marilyn Barnewall

My friend, Jim Ewart, author of the book, “Money,” has written an overview of some of the popular misconceptions about. what else? Money.

Ewart says most misconceptions and myths about modern cash are “vulgarisms.” He uses the term “vulgarisms,” not because it is "vulgar" to discuss money (in some circles), but because vulgarisms are "often heard, incorrect word usage, improper phraseology, and illogical compounding." Ewart is a very topic-specific, focused kind of guy.

He reminds us that for 2,400 years, money has been (and still is) coins of gold or silver made in a mint to be media of exchange. Money substitutes are widely acceptable in trade as long as owners of the substitutes are (or can be) given immediate access to an agreed upon, fixed weight of gold or silver. Until about 1978, U.S. dollar bills were immediately redeemable in fixed weights of gold or silver.

Referring to paper currency, Ewart says “paper money” is a "dangerous colloquial term." It is a vulgarism. It is dangerous because it promotes public acceptance of government deficit spending. It is a vulgarism because any paper currency not directly tied to gold or silver is not a legitimate money-substitute.

As long as our paper currency was directly tied to a fixed weight of gold, government could not print more paper bills than the gold the country had available for payment of the paper bills.

"Radical extremist talk," you say? Think again.

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.”

That sounds pretty radical. Those words come from an article written by none other than Federal Reserve Chairman Alan Greenspan.

Herbert Hoover said [unbacked] paper currency helps politicians by making it possible for government to take "the savings of the people by manipulation of inflation and deflation. We have gold," Hoover said, "because we cannot trust government."

With gold as the base of a currency, government spending is limited. When on the Gold Standard, government could print only as many dollar bills as it could back with gold. Using the “Dollar” Standard rather than the Gold Standard allows government to print as much irredeemable currency as it has ink.

For the 20-year period before August 15, 1971 – while currencies were redeemable in gold or silver – the central banks around the world increased their reserves by only 55 percent. Since the Gold Standard was replaced by the “Dollar Standard,” central banks increased their reserves by 2,000 percent.

Why are costs increasing so quickly? The lost value of “the dollar” is the biggest reason. When our currency is worth less today than it was yesterday, more of it is required to purchase anything. Government bought a lot of ink and printed a lot of bogus paper currency. Increased costs are the result of the declining value of the “dollar,” not the increase of product costs.

Ewart says, "Newcomers to the money issue may innocently repeat this vulgarism: 'Gold is money, all else is credit.' It is better stated: 'Gold coins and silver coins are money; all else is credit.' Please recall that only coins of gold or silver, manufactured in a mint to be a media of exchange, are money."

Ewart also says that today there are no real Federal Reserve Notes in general circulation. "They began disappearing in 1963," he says. "Today's pieces of paper bearing the words "Federal Reserve Note" are not promissory notes. The paper currency in your pocket that says "Federal Reserve Note" on it doesn’t promise to pay you anything.

The law says a promissory note must identify a maker, a payee, a dollar amount, and a due date. Today's U.S. paper currency, because it fails to identify a payee and a due date, might best be called 'Federal Reserve Tokens.'"

Is a modern $5.00 bill a promissory note, or is it just - paper currency? When a transaction is credit-based (and all financial transactions that do not involve minted gold or silver coins involve credit), it involves a promissory note.

Some of our old paper currency said, "This Note is A Legal Tender For Ten Dollars." It also said something like, "The United States will pay to bearer." Ewart says the words “Legal Tender” must be preceded by “a” or “an” to have legal standing. Does it say that on the paper bills in your wallet?

Jim Ewart, one of the nation's experts on money, says today's paper currency is bogus. It makes no promise to pay anyone anything.

When I write articles about today’s modern paper currency not being legal tender, I always get this response: "My banker disagrees with you that what we have today is not legal tender. How should I answer him?"

This is a difficult thing to explain in few words and so I asked Ewart what his response would be. It follows.

"Here’s a good response... a short story that may reduce the confusion most people have with this topic.

"Suppose you loan your best friend five donuts. Your friend, Bill, gives you a promissory note, promising to pay you back five donuts on your demand. His note says, 'Bill Smith will pay to the bearer, on his or her demand, five donuts.'

"This 'five donut bill' also says, 'This note is a legal offer for five donuts.' A few weeks later, Bill asks you for his note back, just for a second, so he can take another look at it. You comply. He takes it into his office for a few minutes, and then comes back to you. He hands you the “note,” says 'Thanks,' and walks away, smiling.

"You now see that the 'note' is changed. It now says, 'Bill Smith' and 'Five donuts.' It also now says, 'This note is legal offer for all debts, public and private.'

"Your friend Bill’s 'note' is no longer a financial instrument. It no longer promises anything to anyone.

This fictional story parallels the bizarre wording changes made on U.S. paper currency. I hope this story helps you understand the significance of the monetary "word games" played by what appears to be just a tiny handful of government officials.

http://www.wnd.com

UNEXPECTED RETURNS -John Mauldin, Frontlinethoughts.com
April 8, 2005

Writing on the train to Yorkshire from London, I am surrounded by a gorgeous English countryside on a beautiful spring day. Life has its moments. I like the trains in Europe. Quite a civilized way to travel. Yet every time I pull out my wallet, I am reminded of reality. The ebb and flow of the dollar has made this a most expensive country for someone from the states. Nearly everything is the same price, just in pounds instead of dollars. And a pound that is worth more than two of my pitiful dollars, at that.

It has given me cause to think about cycles, because some day in the future, the English will be complaining about how expensive it is in the states. Maybe not for a long time, but all things ebb and flow, currencies included, but especially the stock market.

The stock market in 2005 has gotten off to a mixed start. January presented losses, often not a good sign for the rest of the year. We had a little hope with a positive February, yet we are back in negative territory after March. Most investors want to better understand the implications of the current secular bear market--how long will it last, what can we expect from it, and why is it happening?

We can find these answers and much more in an incredible book by good friend and industry colleague Ed Easterling called Unexpected Returns: Understanding Secular Stocks Market Cycles. I am going to review his book at length this week because it will help you to answer pressing questions about secular stock market cycles, the current cycle, and what you can expect in the years to come.

As you may remember, Easterling's firm is Crestmont Research (www.CrestmontResearch.com) and his work has been included in many of my letters in the past. Many of you will recall that some of the research and charts were included as well in two co-authored chapters in Bull's Eye Investing. One of his most recognized charts is the Stock Market Matrix, the colorful mosaic of stock market history that was a large foldout in Bull's Eye Investing.

Easterling's background and experience includes extensive work in the financial markets and hedge funds. He also serves on the adjunct faculty in the Cox School of Business at SMU and teaches a graduate-level course on hedge funds to MBA students. In Unexpected Returns, he has successfully taken detailed research and a scholarly perspective and presented it in a layman's style for the benefit of a very broad audience.

For all of you that have visited his website, you have seen the extensive charts and graphs that he uses to reveal insights about stock market history, interest rates, and secular stock market cycles. Unexpected Returns includes his charts and graphs, over 60 of them, in full color--you will not find many other investment books that include such graphics that make it so much easier for readers to understand their meaning and messages. Beyond its great presentation, the real value of his book is the information and powerful insights. You can order the book at Amazon [http://www.amazon.com/exec/obidos/ASIN/1879384620/frontlinethou-20]. It should be required reading for professionals. Serious investors will devour this book and profit.

You should get your kids to read this book before they start investing or as a condition for getting their inheritance. If you don't understand how the markets cycle, you get caught up in chasing them, which is a prescription for losing money. It is the way we are psychologically hardwired. See deer. Chase deer. Kill deer. Eat Deer. Life is good.

Except the markets are not like a deer. The market is a very cunning, mean and vicious predator, luring us into a chase, toying with our emotions until it turns and devours our retirement plans. You can handle and tame the beast, but only if you understand how it works. And right now, it is setting up a generation - my generation - for a feast. Only we will be the menu and not the guests.

I had the opportunity to read Ed's manuscript. It is not something meant to be read in one evening. It must be read chapter by chapter and meditated upon. It is not fast food, but sustenance for a month. Let's dig into the details; it will forever change the way you approach investing in the stock market.

http://www.frontlinethoughts.com

MEGASHIFT: The best news since year one... -James Rutz, author
April 11, 2005

The 1700-year nightmare is over.

A megashift of spiritual power into the hands of ordinary people is about to overwhelm the world and put it into vastly better shape. Prepare yourself to take part in a total makeover of Planet Earth!

You are about to discover a new world where...

* Over a billion non-Christians may become highly active Christians in the next dozen years.
* A whole new form of Christianity promises to bring a far greater impact than the Protestant Reformation.
* Millions of ordinary people are doing miracles.
* God has brought hundreds of people back from the dead, mostly in the last 15 years. These are not near-death experiences, but real resurrections of actual corpses.

New book tells all

MEGASHIFT not only documents a wide range of miracles, but also spotlights hundreds of thousands of house-church teams around the globe that are producing a new culture of responsible freedom.

In these teams, people are allowed to speak and interact. They often form deep friendships, dump their heaviest problems, turn into free and powerful spearheads of worldwide change, and get connected with God and man in ways that almost defy description. This is a megashift away from spectator religion.

8% Growth Per Year

There is a hidden world that already has 707 million evangelical/charismatic Christians who are growing by an incredible 8% a year. In the center of this shockwave are roughly 100 million in informal networks of committed circles who run their own show without buildings, paid pastors, or sermons. MEGASHIFT is a startling introduction to that surge of grass roots power and love, which is forming the culture you will soon live in.

Megashift.org

[Editor's Note: I've known and admired Jim Rutz's work for well over a decade. I just received my review copy of MEGASHIFT, so stay tuned for an upcoming review. Jim was a guest on America at Night with Craig Smith over a week ago discussing the Pope's passing and trust me, his perspectives are world-changing to say the least... "Mary is perhaps the most embarassed saint in heaven," Rutz told one listener ... reflecting on her elevated stature in the Roman Catholic faith ...in his typical iconoclastic style. So, if you're a night owl, or just traveling about this Spring/Summer, please tune in or visit Americaatnight.com Sunday - Friday midnight to 4am Eastern - heard coast to coast and streaming live. But don't expect host Craig Smith to bore you to death talking about economics because this program is more about understanding the big picture of how to win in life and have fun than it is about how to make money. For that you must read your weekly RMP and visit WND.com to read the latest Craig Smith economic commentary. Next Week: "Financial Confidence Torn: But is it Reparable?"]

Related Story:
The BIG Picture: A Surprise-laden Survey of the 30 Foremost Movements of God in America - James Rutz & David Bradshaw, 1995 ... What you hold in your hands is likely the only thing that purports to tell you what the Lord is up to in the U.S.A. as we enter the 21st century. We all face a growing number of distractions and it's easy to get lost in the forest looking at one tree.

Welcome to the 21st century paradigm shift
-- from a "stock-driven era" to a new "commodity-driven era."
In "Economic Solutions for the 21st Century" you'll discover ...
* SOCIAL SECURITY REFORM ... A plan to unify America
* WHY YOU MUST OWN assets that offset a DECLINING DOLLAR
* WSJ SAYS: "You don't have to be rich to invest in COINS."
* WHY SILVER could rise to $50, $75 or even $100 per ounce.
* "ATOMIC IRAN" spells the beginning of a new U.S. "Dirty War"