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May 02, 2008

Free Markets - Do They Exist
by Douglas V. Gnazzo

Free Markets - Do They Exist

"There's something happening here.
What it is ain't exactly clear.
There's a man with a gun over there,
Telling me I got to beware.
I think it's time we stop, children, what's that sound?
Everybody look what's going down." [1]

Abstract

There is something definitely going on, and what it is ain't exactly clear. How prophetic were those lines? Recently in the news there have been stories about food riots in different spots around the world. People are scared, people are hungry, people are suffering, and people are mad. So what's going on?

Isn't there a new world order in place? Aren't things under control? One look at our real estate market and the subprime/debt debacle and it's obvious that there are some serious problems sloshing around - about $3.3 trillion worth of them, a.k.a. Federal Reserve Notes.

"There's battle lines being drawn.
Nobody's right if everybody's wrong.
Young people speaking their minds,
Getting so much resistance from behind.
It's time we stop, hey, what's that sound?
Everybody look what's going down." [2]

What's going down?

Interest rates are going down. House prices are going down. Since the beginning of the year the stock market has been going down. But what's going up?

Food prices are up. Gas prices are up. Oil prices are up. College tuition costs are up. Health-care costs are up, if you can get it. Hey, even the price of water is up. Imagine that, you now get to pay for water. I wonder when they'll start packaging the air we breathe. Yes, I'm sure there are plans.

But don't worry, be happy, there's no inflation: just don't eat, put gas in the car, or send your kids to school and you'll be fine. It's the American dream in drag.

So what the heck is going on? Ground control to Major Tom - what's up dude? Maybe that's what the Presidential candidates should be debating about.

Congressman Ron Paul asks and answers that question - not that the news media ever allows us to see and hear him say it, but hey - that's all just part of the new world order.

Order Out of Chaos

So what the heck kind of order to we have here? Real estate is falling off a cliff. The financial sector, the banking sector, and the housing sectors of the economy have fallen into the abyss. Maybe they're just trying to catch up with the U.S. dollar, which is near the bottom of the pit.

Whatever it is, it doesn't sound like order comes from out of chaos; sounds more like chaos is coming out of order; and a bunch of things are wallowing in the brimstone, while we're left with the taste of wormwood. Yuck.

Remember when Japan was taking over the world, they were buying everything is sight; you had to be a millionaire to pay for the taxi ride from the airport. Then look at what happened: their stock market crashed, and crashed some more; and then burnt, and burnt some more. Maybe it was one of those bubbles Sir Alan never saw.

Remember when Russia was going to take over the world. Then what happened? Oh yes, the rubble fell off a cliff. But wait - Chuckie is back, and he's got lots of oil with him this time.

Now China's next up at bat they say. But wait, how much is their stock market down this year - could that be right? - 46%.  Whoa dude - pull the parachute.

A few years ago I wrote a paper titled: The New Paradigm. The following is taken from the article:

The Age of Fiat

The age of paper fiat blossomed during the twentieth century. Granted it had started much earlier, but the advent of the Federal Reserve in 1913 was the defining moment in the annals of paper fiat money. The Fed and an elastic money supply of paper fiat go hand in hand, like death and taxes.

But the belief in paper was not limited to just Federal Reserve Notes as circulating currency or cash. Paper took on a life of its own, as paper represented the extension of credit or money substitutes - fiduciary money. Unfortunately, with the extension of credit and money in paper fiat land, debt expands just as fast.

First there were notes, bills, and bonds, mortgages of different types, then interest only loans and principal only loans, collateralized loans, futures, options, swaps, derivatives, and SDR's. They are fast using up the letter combinations of the alphabet as names for the paper investment vehicles conjured up by the wizards of finance.

The Latest Paradigm

History can be seen to be full of change, a fluid process whereby the past flows into the present, the present into the future. Man has experienced many paradigm shifts throughout the ages. And we may just be beginning to enter upon one of titanic proportions.

As stated earlier, man progressed from direct exchange to indirect exchange. Eventually another shift occurred from the use of silver and gold as money to paper bank notes as money; first backed by specie, to eventually not being backed by anything except promises - to pay; sometime in the future, the means unknown.

Credit, debt, and money morphed into one basic entity. The age of paper fiat was born - the paradigm of debt servitude as a way of life was born.

But people are beginning to question the validity of such belief in paper fiat debt-money, and the enslavement thereof. The United States has gone from being the largest creditor nation in the world to the largest debtor nation in the world. Why? The answer is most obvious - debt.

Now two parents have to work to provide a living that used to be had by one parent working. The purchasing power of the dollar bill has lost 95% of its value since the Federal Reserve took control of the monetary reigns in 1913.

It doesn't take a rocket scientist to know that something is amiss. Opinions are starting to question the old regime. Belief in debt is beginning to be doubted. A shift in awareness is commencing.

Selling the future of our children and their children, to be condemned to a life of work to pay off the debt that we are presently accumulating is not progress; it is the antithesis of progress.

A paradigm shift from the belief in paper debt to the belief in real assets such as gold and silver is at hand.

Tectonic Shift

Unfortunately, some of that has come true. Commodities have been going through the roof, until their recent correction, which is normal for all bull markets to do. Gold has gone up to make all time new highs, once again, until its recent correction, which was more than needed and is a buying opportunity in my opinion, but don't take my word for it. Just take a look around at what's going down and decide for yourself. Which would you rather have - a piece of paper market Federal Reserve Note or an ounce of gold?

But, lest we not forget - I still have answered the question: what's going on? Well, let's start with the food riots. Now what is that all about? Is it all because of shortages of food, or could it be something else? What is our number one export - inflation is.

The Federal Reserve under the auspices of Sir Alan and now Big Ben, have created more credit and debt than the rest of the world has any time before it. In the process they have destroyed the purchasing power of the dollar for an incredible 95% loss. Put that on your job resume and see how well you do. Hey dude - hire me. I'll bankrupt your company faster than white on rice.

All this money is producing inflation around the world. Prices of stuff are going up everywhere. So, it's not that there isn't enough food to feed the people, it's that the food has gotten so expensive that the people and the suppliers have a hard time getting the supplies they need, as they have to outbid the highest bidders in a rigged gain of casino-royal.

The Big Question

Now, the big question is: do they know what they're doing or don't they? We are talking about the rulers of the universe here, just in case it isn't clear, which it isn't always.

Last year I wrote a paper titled: China's Nuclear Threat - the U.S. Dollar. It goes into this question in detail. The short of it is, yes, unfortunately they do; although at times they make it appear as if they don't - but do.

People act different when they're hungry and starving and suffering and scared. They suddenly become very grateful for any kind of helping hand. So if big brother shows up on the spot and offers to put some food on the table, and heat in the house, and to restore order in the streets, people become very amendable - to almost anything, as almost anything is better than starving and freezing to death with riots in the street. And if that isn't enough to convince you - they'll probably bail you out of your mortgage, but watch what they offer in return. If it sounds too good to be true - it's because it isn't.

Temperature is Rising

The public becomes willing to accept any new leader that can lead them out of their hunger and fright. Just read the history books, the pages are full of such sad stories: remember that guy named Hitler, or Mussolini or Draco?

Back in the days of the ancients they called them tyrants and such. As a matter of fact I think that word is in our Declaration of Independence somewhere?

Do you get the feeling that perhaps some entities might believe that order can come out of chaos?

"What a field day for the heat.
A thousand people in the street,
Singing songs and carrying signs,
Mostly say, "Hooray for our side."
It's time we stop, hey, what's that sound?
Everybody look what's going down." [3]

Summertime is here, so I guess the heat is supposed to be rising. I just hope there isn't a drought of sorts, as water will go higher and all the stuff that's made with it, which is just about everything.

Maybe they'll figure out how to use corn instead, but isn't that part of the problem now? Or is it supposed to be the solution? Is black white and white black?

"Paranoia strikes deep:
Into your life it will creep.
It starts when you're always afraid.
You step out of line, the man come and take you away." [4]

Shifts

So, first we had the big shift into paper fiat money, when right there in the Constitution it states that only gold and silver coin is to be accepted by the state as legal tender. Check out the Constitution some time, you'll be amazed at some of what it says. Who would have guessed?

Was any of this stuff planned for and figured out by anyone? I'm not sure, but if I had to hazard a guess I think I would pick: yes, it was. Why? Take a look at the words under the pyramid on the back of a one dollar bill and ask Johnnie's school teacher what they mean? Then ask - how come she doesn't know the answer?

But the best question to ask is Cui Bono? - Who benefits? That's the trick. Follow the money. Wherever it goes - it goes; and it always seems to flow back to the same houses, all through history, since Babylon and before.

And that's what gold has been trying to tell us - hey dude, wake up, take a look around and see what's going down. For What It's Worth - a whole lot more than that paper crap.

Notes:
1-4. For What It's Worth, written by Stephen Stills

Come visit our new website: Honest Money Gold & Silver Report
New Book Coming in 2008 - Honest Money

Douglas V. Gnazzo
Honest Money Gold & Silver Report

Douglas V. Gnazzo is the retired CEO of New England Renovation LLC, a historical restoration contractor that specialized in the restoration of older buildings and vintage historic landmarks. Mr. Gnazzo writes for numerous websites, and his work appears both here and abroad. Just recently, he was honored by being chosen as a Foundation Scholar for the Foundation of Monetary Education (FAME).

Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly, Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.

Douglas V. Gnazzo © 2005-2009
All Rights Reserved Without Prejudice

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