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Today’s daily is a bit longer than usual, but there is a lot to discuss that can’t wait.

I just received an Email from Backwoods Jack. He is doing a pretty good imitation of (the recently departed) Cactus Jack. Here are his thoughts, followed by my reply:

Looking out my window this morning I saw a bright shinning haze on the meadow.  The corn is high too!  The Tea Party is now unified and will gain control of those idiots in Washington.  Our community organizer “goofus” aka “dickhead” will not be reelected, rest assured.  Among most others on main street, he has lost the independents as well as the college crowd. Even employed minorities, blacks particularly, are opposed to him. Our financial rating will go down slightly to AAa, but that`s where it should have been for the past three years.  It will enhance our credibility and serve an impetus to restore to a triple A rating. Contrary to the persistent desire of Gold dealers, the economic collapse they claim we are now witnessing and enduring, will not occur.  Look for Perry. Bachman and maybe Romney to outlast other election contenders. I think the Dow will be 13,000+ by year-end with Gold at 1750.  When the Republicans win the White House and Senate the Dow will soar, as the loopy entitlements are rescinded and new business law is established to enhance employment a and growth in our economy. An old and wise gardener told me that next spring you will see the beginning of new growth in our economy. Consumer confidence will slowly emerge and patriotism will be stronger than ever. Unemployment will always be 5+% since we have two or more generations who have never worked or intend to do so. Cutting back federal and state payrolls will save us untold billions of dollars. Not a whole lot for most people to be happy about these days, unless they own some gold and silver bullion, but never enough! In spite of the horrible floods and drought and unemployment, our nation, with all the emotional and physical consequences, will endure. Keep your eye on our Flag and what it stands for!!!!!!!!         

Backwoods Jack

Dear Backwoods,

When I looked out of the window this morning, it was overcast and within an hour, it started to pour, and it rained all day long.

If we have to wait until 2013 to try and straighten out this mess, it won’t matter who wins the White House.

Don’t make light of a credit downgrade to AAa. That will increase borrowing costs for small businesses and increase mortgage rates, both of which will be a further drag on the economy – that you expect to heal itself by year’s end. It is not the gold dealers that write about the failing economy and debt problems, it is the newsletter writers who have nothing to do with the gold industry. Do you really think that the only reason I share my views is to increase Miles Franklin’s business? If that were the case, then I would not be fully invested (over 90%) in gold, silver and mining shares. My view of the economy and America’s future would be the same whether I sold jock straps or industrial paint (both of which I did in the past). Since my income is derived from my gold and silver business, I am already LONG gold and silver, so the sensible thing for me to do would be to diversify and NOT be long physical gold, silver and mining shares. But I choose to put all of my eggs in the precious metals basket and have not one minute of doubt about my decision.

I don’t believe the Dow will hit 13,000 by year’s end, though it could but if it does, it will not be on the winds of a strong economy, it will be due to PPT manipulation and massive new QE3 funding via the Fed. That has been the fuel for the stock market’s rise in the past two years. In an election year, they may well resort to the same old tricks and games again this fall.

Put simply, since our economy is consumer-driven (70% of GDP is funded by the American consumer) and the consumer is tapped out. Where, pray tell, will the spending come from to drive the economy? Much of the growth of the past decade came from increased debt – from second mortgages on rapidly rising real estate values. That is no longer in play. Wage increases are far, far below inflation, so where will the consumer find the extra money to spend on non-essentials to fuel a recovery? And who cares if Fortune 500 companies have a boatload of money sitting on the sidelines? They won’t invest it in new plants and new hires until the DEMAND is present first. Where will the extra demand come from?

You talk about 5% unemployment as being permanent. We may never get back to 5%. Unemployment is now running over 20% (John Williams, Shadowstats) and rising. Pick a realistic number, and it is certainly NOT 5%. It could hit 30% before it hits an honest 10%.

Cutting state payrolls will happen, like it or not, because the states and municipalities must balance their budgets, but that will only increase the drag on the economy with rising unemployment obligations, larger Federal deficits and less money left to be spent in the economy as unemployment rises. You make my case here, not yours.

I truly hope that you do not take the advice of that “old wise gardener,” because if you do, you will have a hard time affording fruits and vegetables next spring.

Take a look at today’s economic numbers – The ISM manufacturing survey tumbled to a two-year low in July from 55.3 to 50.9.

The number is an embarrassment to the Street’s expectations. Bloomberg poled 80 economists and the lowest guess was 52.0. Every component of the index indicated slowing growth… and new orders fell into outright contraction.

Whether Congress votes on this deal to raise the debt ceiling or not… there’s plenty of real concerns in the economy.

Backwoods, one can be patriotic without endorsing the policies of the Democrats or Republicans. Neither party’s track record is worth a damn. And so far, the Tea Party is only one tearing down legislation, not coming up with any new solutions. Anyway, they are not strong enough in numbers to push through legislation.

I am sending you articles by Andy Hoffman and Larry Edelson. Andy puts the current antics of our elected idiots in proper perspective. Edelson lays out what needs to be done to fix the mess we find ourselves in. But I have NO hope that Edelson’s solutions will be enacted.