Gold, Silver, and the Sins of the Past

By: GE Christenson | Tue, Jul 30, 2013
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Consider these thoughts on "the great lie," our strange world, its unstable financial system, overwhelming debt, exponential growth, inevitable collapse, fractional reserve banking, counterparty risk, and gold - from highly intelligent individuals who think beyond the traditional:

From Karl Denninger: Detroit: The Shape Of Things To Come

"If you make political promises that can only be met through increased tax rates, now or in the future, you begin the process of slitting your own throat. That outcome is inevitable when you agree to political promises that have escalating expenses over time as pensions, medical benefits, salary "step" increases, bond issues that have a payment schedule longer than the useful life of the asset bought and similar.

There is no way out of this box other than to repudiate those promises."

From Richard Russell: (subscription service)

"The compounding debt is the monster that is eating the U.S. The only way out is to renege on the debt or try to pay it off with inflation or hyperinflation. The bull market in bonds is over. From now on, we are dealing with a bear market in bonds, at which time natural forces will drive bonds down, and as bonds fall, interest rates will rise."

"It's taken almost two centuries for bankers to pull the wool over Americans' eyes, but today you and I are working for intrinsically worthless paper that can be created by bureaucrats - created without sweat, without creative ability, without work, without anything but a decision by the Federal Reserve.

This is the disease at the base of today's monetary system. And like a cancer, it will spread until the system ultimately falls apart. This is the tragedy of the great lie. The great lie is that fiat paper represents a store of value, money of lasting wealth."

From The Burning Platform: Trying to Stay Sane in an Insane World - Part 1

"The immense forces of normalcy bias and social inertia have led millions to refuse to understand the mathematical certainty of the coming collapse. The worldwide banking system is like a great white shark that needs to keep moving or it dies. Exponential growth and continuous credit expansion have been the essential ingredients to expanding the American empire, but the growth has stopped, while the debt keeps growing. Infinite growth on a finite planet is impossible. As natural resources deplete and become more expensive to obtain, while the planet's population continues to grow, the fractional reserve banking system and the nation states who continue to pile up trillions in debt will suddenly suffer a catastrophic collapse. We are in the end stages of a confidence game. Your government will not give you warning. We need to come to our senses one by one."

"Since the 2009 low, the household net worth of the wealthiest 7% has grown by 28%, while the other 93% have seen their net worth decline by a further 4%. The profits accrue to those who run the show, buy the politicians, write the laws, command the media propaganda machine and control the currency... The oligarchs thank you."

From Bill Bonner: Why Gold is the Only Money that Works

"When you have a system based on credit, rather than bullion, deals are never completely done. Instead, everything depends on the good faith and good judgment of counterparties - including everybody's No. 1 counterparty: the US government. Its bills, notes and bonds are the foundation of the money system. But they are nothing more than promises - debt instruments issued by the world's biggest debtor.

A credit system cannot last in the modern world. Because, as the volume of credit rises, the creditworthiness of the issuers declines. The more they owe, the less able they are to pay."

"Naturally, everybody loves a credit system... until the credits go bad. Then they wish they had a little more of the other kind of money. Wise governments, if there are any, take no chances. They may feed the paper money to the people. But they hold onto gold for themselves. Throughout history, the most powerful governments were those with the most gold."

But suppose much of the government and central bank gold is gone. As Eric Sprott concluded, after considerable research,

"Our analysis of the physical gold market shows that central banks have most likely been a massive unreported supplier of physical gold, and strongly implies that their gold reserves are negligible today."

It seems likely that the western governments and central banks have sold (or leased to a bullion bank who sold it to a buyer in China, India, Hong Kong, or the middle-east) most of their gold. Germany recently requested the return of their gold from the Federal Reserve Bank in New York but was told they would have to wait seven years to get a portion (only 300 tons) of it. It is clear there is more to the story - and the obvious conclusion is that the Federal Reserve Bank can't easily return what it no longer possesses. In non-banking circles, this could be called theft or embezzlement, but in the banking world it is called "leasing" or rehypothecation, and it is legal.

Bill Bonner:

"But if they (central banks) have sold such massive quantities over the last 10 years, how much do they have left? Maybe not much.

Which wouldn't be surprising. Western central banks are committed to their credit-money system. They intend to stick with it. And they know that unraveling this unruly skein of credit would be extremely painful.

Selling gold into the bull market of the last 12 years probably seemed like a very smart move. We'll see how smart it was later, when the credit-based money system blows up."

But, I ask you, who formerly owned the gold, and who is quietly amassing a vast horde of gold to increase global influence in the future? This process of selling gold and converting it to paper promises has been occurring (so the evidence indicates) for several decades and appears to be working well for now. The "game" appears to be:


Conclusions

Politicians and bankers work together to benefit themselves at the expense of the people actually producing something of value. Politicians increase their power and influence by spending ever-increasing amounts of paper currencies. The bankers enable the process by creating the paper currencies (from nothing), loaning those newly created dollars, euros, yen, and pounds to the politicians, governments, and businesses, and collecting interest. This process succeeds until the debts must be paid. Then:

Review the cogent thoughts from The Burning Platform, Karl Denninger, Richard Russell, and Bill Bonner. Then ask yourself:

Having considered your beliefs, do you think it would be wise to convert some of your paper assets to real gold and silver? If so, I encourage you to purchase gold and silver from a reputable dealer and store them safely outside the banking system.

Also worth reading: All the Gold in Fort What's-Its-Name

Also worth reading: Ten Steps to Safety

 


 

GE Christenson

Author: GE Christenson

GE Christenson aka Deviant Investor
www.deviantinvestor.com

GE Christenson

I am a retired accountant and business manager who has 30 years of experience studying markets, investing, and trading futures and stocks. I have made and lost money during my investing career, and those successes and losses have taught me about timing markets, risk management, government created inflation, and market crashes. I currently invest for the long term, and I swing trade (in a trade from one to four weeks) stocks and ETFs using both fundamental and technical analysis. I offer opinions and commentary, but not investment advice.

Years ago I did graduate work in physics (all but dissertation) so I strongly believe in analysis, objective facts, and rational decisions based on hard data. I currently live in Texas with my wife. Previously, I spent 20 years in Barrow, Alaska, the northernmost community in the United States, 330 miles north of the Arctic Circle.

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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/