President Obama said last week that we need to increase tax rates on the wealthiest Americans to obtain an extra $100 billion in tax revenue, and he blamed the failure of Congress' supercommittee on the unwillingness of the Republicans to increase tax rates. Do you agree?

If you think increasing tax rates on the "rich" is the correct economic policy, then you also need to believe the following seven fantasies, each of which is like believing in the Tooth Fairy:

Back in the mid-1920s, the head of the German Central Bank, Herr Hjalmar Schacht, went to New York to see Germany's gold. However the NY Fed officials were unable to find the pallet of Germany's gold bullion.

The Chairman of the Federal Reserve, Benjamin Strong was mortified, but to put him at ease Herr Schacht turned to him and said "Never mind, I believe you when you say the gold is there. Even if it weren't you are good for its replacement."

But that was then and this is now. In the eyes of the Germans - and who can blame them? - America has lost its mojo to such a degree that it can no longer be trusted honor its debts, even in the unlikely event that it were financially capable of doing so.

Which is why, following in the footsteps of Venezuela's Hugo Chavez (who may be an idiot but is definitely no fool), Germany is repatriating its gold from the New York Federal Reserve, which will now be stored in Frankfurt.

Now, why in the world would they do that?  Don't they trust Obama with their gold?

As I unquestionably make the best piña colada in the known universe, I am compelled to start the HFR with the thrilling medical news released Wednesday (4/11) that Drinking Alcohol May Significantly Enhance Problem Solving Skills. 

Researchers at the University of Illinois demonstrated that two pints of beer or two glasses of wine enable guys to think more creatively and solve brain teasers more quickly.  Since my piña colada , in addition to a fully sufficient quantity of rum, contains Durk Pearson's brain nutrition formula, it's got to do better than a couple of brewskis.  Too bad it's so early in the day.  The sun won't be over the yardarm for hours.

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From Norkland, comes what is surely the week's most hilarious news.  It can be lethal to embarrass and humiliate a god - or someone who believes he should be worshipped as a god.  A 28 year-old kid who's trying to step into his grandfather's and father's megalomaniacal shoes and establish his own godlike personality cult now has the whole world laughing at him.

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Speaking of embarrassment... the world's biggest scandal is currently engulfing Norkland's giant neighbor, China.  There are hundreds of millions of Chinese, inside China and overseas, transfixed by it, with literally thousands of websites and blogs commenting daily - for the story is like a script from a Hollywood blockbuster movie.

Last week (11/16), the Cato Institute held its annual monetary conference. Speakers included high-ranking officials from the Federal Reserve and monetary experts from the academy, think thanks and financial institutions.

There was unanimous agreement that the world monetary system is in deep trouble, which is obvious to anyone who keeps up with the news. It is easier to observe the problem than to come up with a solution.

The problem is that the major world governments are in the process of destroying the value of the money their citizens hold.

• Has Al Qaeda Surrendered?
• President Pander.

The world is moving step by step towards a de facto Gold Standard, without any meetings of G20 leaders to announce the idea or bless the project.

Some TTPers will already have seen the GFMS Gold Survey for 2012 which reported that central banks around the world bought more bullion last year in terms of tonnage than at any time in almost half a century.

They added a net 536 tons in 2012 as they diversified fresh reserves away from the four fiat suspects: dollar, euro, sterling, and yen.

Gone is the illusion that the euro would take its place as the twin pillar of a new G2 condominium alongside the dollar. That hope has faded. Central bank holdings of euro bonds have fallen back to 26%, where they were almost a decade ago.

Neither the euro nor the dollar can inspire full confidence, although for different reasons. The euro is a dysfunctional construct, covering two incompatible economies (northern vs. southern Europe), prone to lurching from crisis to crisis, without a unified treasury to back it up. The dollar stands on a pyramid of debt. We all know that this debt will be inflated away over time - for better or worse. The only real disagreement is over the speed.

Shanghai.  "Air in many China cities remains highly polluted." No, this is not a headline in the Onion (satirical newspaper), but the front-page lead headline in the Shanghai Daily on Nov. 8.

Shanghai is a city of 23 million people, which at first glance appears to be the most modern city on the planet. The architecture is spectacular and varied, with some of the new edifices exceeding 100 stories. It looks prosperous - nicely dressed people; wide, tree-lined streets; well-maintained flower beds; and the world's newest auto stock on its many crowded expressways. To a lesser extent, the same thing can be said about Beijing and other Chinese cities.

China, arguably, has today more people with a middle-class or higher standard of living than any European country and even Japan, only trailing the United States. However, more than 80 percent of its people have yet to enjoy most of the fruits of this prosperity. It is a bit ironic that a country that calls itself communist has, perhaps, the greatest income disparity on the planet.

China is both rich and poor at the same time.