Total Pageviews

Sunday, March 13, 2011

Japan and the Black Swan and Gold II

Another remarkable aspect of the Japan Disaster can be seen in the "lessons" that are being learned in the press. The major lesson we can all take away, as we hear every ten minutes, is the amazing structural planning of Japan's Architects and engineers, who made disaster preparedness a central facet in their architectural design.

In fact, we would consider an architect who didn't plan for natural disaster to be something of a fool.

Odd then that not one commentator has observed that another lesson might be that economists should also plan structurally to accommodate disaster.

Odder still that we consider an economist who plans for disaster to be a fool. "You can't plan for disaster." "You can't live your life expecting disaster." "Seize the day!" "Live in the moment." This is conventional (and juvenile) wisdom, promulgated by the vast leisure and entertainment (and beverage) industry, that has been seized up by economic planners serving both individuals and governments.

So, how do you plan to accommodate disaster? Through savings. Why would this be anathema to economic planners? Because savings can't be exploited to generate revenue.

And, when disaster hits everyone knows that governments can simply print more money. So why do they need savings? What a quaint idea. They can just generate debt that will never be repaid.

Unfortunately individuals can't go down to their basement and print money. They'd get thrown in jail. The only way they can protect themselves is to acquire a reserve currency that can't be eroded by their government. Yes, that would be gold.

It's this attitude towards disaster that creates a tremendous bull market in gold. Not the disaster. The attitude.

No comments:

Post a Comment