Saturday, August 18, 2012
There's gold at the source of DeNial
For 5500 years of recorded history gold has been the source of monetary stability.
Since Nixon took the first world off the gold standard in 1971 Gold has been the prime hedge against monetary instability.
Alan Greenspan famously boasted that the US would run its monetary policy AS IF pegged to gold.
Ha Ha Ha.
This statement hilights the tremendous DENIAL that lies at heart of the human condition.
Without the discipline of gold, politicians and bankers are free to plunder world economies by creating currency out of thin air and awarding it to themselves.
There is no way around this. That's why the founding fathers stipulated in the constitution that ONLY gold and silver can be used as money.
The fundemental DENIAL of the fact that given the opportunity Governments and Banks will plunder world economies gives rise to a myriad of other incredible (or all too credible) feats of DENIAL:
A) We have a capitalist system. A system with a central bank that creates money is the definition of a socialist system.
B) The Free Market which doesn't exist (when you have a central bank that controls the issue and distribution of money) will solve all problems
C) The claim that any current politician is concerned in any way with debt. Ryan and Romney's budget increases the debt. Obama's budget increases the debt.
D) Cutting taxes for the wealthy magically puts money into the economy. Yes, cutting taxes in a surplus economy with a 70 percent tax rate, will lead to investment. But cutting taxes in a massive deficit economy with a 35 percent tax rate will lead to massive capital flight. Nobody but a rank moron would invest when demand is collapsing.
E) You can borrow you way out of a Debt problem.
F) You can have a monetary union without a political union.
G) You need massive military spending when the world economic system is collapsing. For what? Which wasteland should we invade next?
H) The idea that human society is always and ever improving (Positivism), so all problems are bound to be solved. (See Dr. Pangloss).
When all these absurd exercises in DENIAL are resolved our monetary problems will be resolved and the bull market in gold will be over.