We can’t tell you how many times in the last five years people asked us if we were Canadian, as if we’d be embarrassed to admit we were from America. Far from it! We love the idea of America, where people live and let live, where you can say what you’d like, work as hard as you’d like (and keep your money), and where all the virtues of a liberal society are brought to life.

But today’s America-largely thanks to the worst generation of political leadership in the country’s history and an inherently flawed money system that forces people into debt-is nothing like the idea of America. Not even close.

So if we’re critical of the current monetary regime and political leadership, it’s not because we’re being un-American. It’s because America doesn’t practice American ideals any longer-especially the political class, which looks out for its own interests and treats people like tax animals to be farmed and, when need be, slaughtered for some ill-conceived policy mess of their own making. And in terms of economic ideals, America’s gradual move toward socialised risks and everyone living at each other’s expense makes people both less free and less wealthy.

Keep in mind Karl Marx never expected communist revolutions in pre-industrial states. He declared that communism was the natural evolution of a capitalist industrial economy after workers grew sufficiently alienated from their production. Marx would probably look at modern day America and nod knowingly.

The U.S. dollar is the symbol of all America’s monetary and political corruption. It’s the tool used by American policy makers to steal away the purchasing power of ordinary people through inflation. We are forced to use it, even as its worth less and less each year.

Meanwhile, American policy makers rack up enormous debts to make promises they know they can’t keep. These debts must be paid by future generations either through higher taxes or more borrowing from foreign lenders, both of which will inevitably result in more money printing and further declines in American purchasing power. Lower standards of living are the inevitable result.

If you mess with value of a currency, you also mess with the durability of other values. There’s a direct link between sound money and civil society. The debasement of our money has lead, in many different, aspects, to the debasement of our culture, politics, entertainment, sport, and business ethics.

So that’s why we’re so nasty about the people who have a monopoly on money printing in the United States. They’ve abused that function to the great detriment of the American people. There should be more outrage and more contempt and a lot less respect for the institution of central banking. It will be the ruin of all of us.

Hopefully not this weekend, though. We don’t want to end the week on too dreadful a note. The upside? Throughout human history, people have tended to use one commodity more than any other as a medium of exchange: gold. It’s a lot cheaper now than it was a month ago.

Dan Denning
The Daily Reckoning Australia

Source: The Crime of Central Banking

The release of the U.S. Federal Reserve’s minutes from the April 29 and 30 meeting of the Federal Open Market Committee (FOMC) included several “pronouncements,” none of which you’re hearing from the mainstream press and all of which we here at Money Morning told you were coming months ago.

Four things to think about:

1. The Fed’s doom and gloom forecast of 0.3% to 1.2% gross domestic product (GDP) growth represent the FOMC’s views from over a month ago. Since then, we’ve had a meager round of data showing that a recovery may be building and that there is, in fact, growth. First-quarter GDP was revised upward to 0.9%. And while that might not be as high as some would like to see, it’s still growth… and right on schedule for a possible late-2008/early-2009 pickup.

2. Investors who are looking to the Fed for guidance are driving with their rearview mirrors. The Fed’s data is almost always delayed more than the markets, which means that the smart money has most decidedly and almost certainly priced in the Fed’s “news” months ago. Smart investors have already been taking positions. In fact, that’s what they have been doing since the March 17 lows. They’re also waiting with baited breath for further deterioration in the Fed’s next comments as a result of higher oil prices in recent days… so they can buy in at even better levels.

3. All inflationary measures are rising and have been for over a year now… despite the fact that the Fed has apparently only just recently noticed inflation is rising faster than it would like. And it explains why commodities, some consumer durables and other traditional hiding places continue to defy all odds and rise despite record high valuations like oil, for example.

4. The Fed isn’t running the show and never has, despite what the media and most people seem to think. And “nowhere,” as legendary investor Jim Rogers pointed out when I talked with him recently at his home in Singapore, “does the Federal Reserve Act say the Fed is supposed to bailout Wall Street.” Which means that uninformed investors may be reading something into the Fed’s actions that the Fed itself isn’t charged with.

Federal Defense

Now here’s what to do:

First, when the markets get sideways and uncertain, it’s important to realize that having the proper portfolio structure will save the day – regardless of who’s at the helm (big money) and who might think he’s at the helm (Fed Chairman Ben S. Bernanke),

And by “structure,” we don’t mean individual stocks or allocation. Instead, what you need is an assemblage of stocks concentrated on the trends of the time, such as energy and inflation, for example.

Traditional diversification, while better than nothing, is just a proxy for having no clue about how to select smart investments. It’s like rearranging the deck chairs on the Titanic. It might look pretty, but it doesn’t work when the entire market goes down at once, as so many investors found out between 2000 and 2002 and again recently.

Structure, on the other hand, is a deliberate attempt to manage risk. That’s why famous investors like Berkshire Hathaway Inc. (BRK.A, BRK.B) Chairman Warren Buffett, George Soros, John Templeton and Jim Rogers concentrate their risks, rather than just spread their money around willy-nilly. [Editor’s note: Click here to find out how you can obtain a free copy of Jim Rogers’ new best seller, "A Bull in China."]

Not only do certain sectors bounce faster but they also fall less. And those same sectors can kick off huge income as they go, which means that investors who “buy” into this argument are ahead of the game far sooner than those who don’t.

Second, pay particular attention to unstoppable global trends. Then place money squarely in front of where they meet. This is not rocket science. For instance, the world’s electrical systems are antiquated or nonexistent, which means they need to be updated and simply built in the first place to meet demand. Which is why there’s an estimated $16 trillion behind the trend.

Other “unstoppable trends” include the emergence of China, inflation, energy, and even war, which, in a sad testimony to our times, is a growth industry.

Third, think like a plumber. A little water in the wrong part of your house can do a lot of damage, so it’s important not to let it get out of control in the first place. We’re not referring to micromanaging a longer-term portfolio here, but unless you’re a day trader or even a swing trader, there’s no reason to be constantly tweaking your portfolio in search of smaller profits when it’s the bigger picture that matters.

Source: Four Things to Ponder and Three Ways to Act When it Comes to the Fed