- Prediction #1: OPEC will allow it’s member countries to exchange reserve petro-dollars for some other currency (this is the true reason we invaded Iraq). Fed will rocket interest rates and sell off its T-Bills [making us more indebted to foreign countries] to stem the flood of dollars into the economy. Banks will liquidate their cash holdings in response to higher rates, extending credit to business, thus flooding the market with more dollars. Gas prices will hit $7 a gallon by year end.
- Prediction #2: Gold will continue to increase to about $1600 an ounce within the first quarter of 2011, most of that on speculation. There will then be a 30-40% correction, pulling gold down to around the $1000 mark. When this happens, gold hedgers will follow China and India on a buying spree pushing it up to $1,800 by year end.
- Prediction #3: Some states will declare insolvency, probably California and New York. The politicians will pay lip service to taking austerity measures. They may even go so far as to invoke Art Laffer’s revenue maximization model, calling for tax cuts and the economic boost those cuts create. However, this will all be posturing since the states will follow the lead of the Federal government and Goldman Sachs [sorry Elizabeth] and look to the Federal Reserve for help. For the first time ever, the Fed will start purchasing distressed municipal bonds as a back door bailout of the states and major cities.
- Prediction #4: Congress will co-opt the tea party movement.
Predictions for 2011
– December 31, 2010Posted in: Predictions
