What does US Mint, Federal Reserve Bank, & Arnold Schwarzenegger have in common?

Very simple, they all want billions of dollars and liquidity! *Drum Rolls

Apologies about the bad joke, but if you have been following the gradual collapse of the US dollar and markets lately, you would have read about the latest post-BO/RB (do we call it BailOut or the nicer phrase, Rescue Plan?) fiasco - the Feds are now considering buying off balance sheet debt financing and short term debt instruments from companies in liquidity crunch.

WAIT.

So the companies that originally sold debt instruments collateralizedto worthless assets are NOW going to sell more to the Federal Reserve Bank - even after the $700 billion bail out plan. Just how much is $700 billion again?

It is $140 billion more than has been spent on the Iraq war since the invasion.

It is $120 billion more than that spent on social security benefits.

It is almost 3 billion nonrefundable bus fares from Durham to San Francisco, leaving tomorrow.

It is nine times the amount spent on education in 2007.

It could pay for 2,000 McDonalds apple pies for every single American.

It is 35 times the amount spent on all foreign aid in most years.

It is more zeros than the calculator that comes with my computer allows.

Sounds about right, don't you think? It's just another sign of the rapidly deteriorating US dollar $ - head for gold and bullion ASAP.

Another proof that things are coming apart at the seams - STATE level bond defaults.
Don't think it can happen? How about to one of the largest states in the US, California and its superstar governor, the Arnold?

Schwarzenegger to U.S.: State may need $7-billion loan

In a letter obtained by The Times, the governor warns that tight credit has dried up funds California routinely relies on and it may have to seek emergency aid within weeks.

SACRAMENTO -- California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.

The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.

The state of California is the biggest of several governments nationwide that are being locked out of the bond market by the global credit crunch. If the state is unable to access the cash, administration officials say, payments to schools and other government entities could quickly be suspended and state employees could be laid off.

Plans by several state and local governments to borrow in recent days have been upended by the credit freeze. New Mexico was forced to put off a $500-million bond sale, Massachusetts had to pull the plug halfway into a $400-million offering, and Maine is considering canceling road projects that were to be funded with bonds.

I suppose it could be hasta-la-vista baby for California government if this doesn't come through... do you think things are serious enough yet? Get some gold and listen to the advice from the folks on Financial Sense - especially if you're in the good ol' US of America.

Just on Kitco.com today we see US Mint has halted production of smaller denomination mints. No shortage in gold and silver, right?

NEW YORK, Oct 7 (Reuters) - Unprecedented demand for
precious metals and volatile markets forced the U.S. Mint to cease production for the half-ounce and quarter-ounce popular American Eagle gold coins for the rest of this year and to
supply other bullion coins on an allocation basis.

 "Due to the extreme fluctuating market conditions for 2008,
as well as current market conditions, gold and silver demand is unprecedented and the demand for platinum is unusually high,"
the U.S. Mint said Monday in a memorandum to its authorized
coin dealers.

 "The U.S. Mint has worked diligently to attempt to meet
demand, however, blank supplies are very limited and it is
necessary for the U.S. Mint to focus remaining bullion
production primarily on American Eagle Gold one-ounce and
Silver one-ounce coins," the Mint said.

 The Mint said it would continue to supply one-ounce American Eagle gold coins and one-ounce American Eagle silver coins on an allocation basis to coin dealers.

 For half-ounce and quarter-ounce American Eagles, the Mint said that inventory was depleted last week and no more coins would be produced for the rest of 2008.

 In addition, the Mint said it would produce 1-10th ounce
Eagles based on current coin blank supplies, but would cease
production for the rest of this year once the remaining
inventory was depleted.

The majors are still down today - Kinross KGC around $13, Barrick ABX around $32, Yamana AUY off tremendously at $6.70. Incredible deals all around for companies that are slated to be making record profits AGAIN.

When the revenues trickle in and the majors are reminded they need to replenish their resources - shopping time abounds and the quality juniors should see a nice round of buyout appreciation.

Just to reinforce the facts that safety is in gold and gold shares - look at the premium on the Gold Trust today. If there was adequate supply and people were lining up orderly to purchase something against the deflating US dollar, would there be premium of 12-15%+ on top of the spiking gold prices?

Ask yourself as a rational person - when supply is unlimited with the case of the Federal Reserve Bank - would there still be a demand for US Dollar in 6-12 mo