Trust

I've been harping on the idea of trust - or confidence - in the markets. It can not be stressed enough that our entire financial system is built on trust. Every single financial transaction, no matter how banal involves a tremendous amount of trust:

Trust that whatever is being purchased is as described and fairly represented.

Trust that both sides of any transaction intend to fulfill the transaction and not somehow use the transaction, or information gained through the transaction to harm, use, or abuse the other party.

Trust that the terms of ongoing transactions will be honored.

Trust that the money used in the transaction is legal tender. Trust that the money used in the transaction - even if legal tender - will serve as a fair store of value over a reasonable amount of time.

These are all things completely taken for granted. At the point that some or all of these things must be questioned before any and every purchase, the entire financial system breaks down, no matter how vast and sophisticated the system may appear to be.

Right now the banks in collusion with the politicians are sorely trying the trust or confidence of the American citizens. Over the last three years Three trillion dollars have been directly confiscated (By George Bush and Paulsen) from the American public and given to the banks. Trillions more have been confiscated by the dilution of dollars through quantitative easing. And trillions more have been confiscated through the knowing issuance of rotten debt instruments. And trillions more though legal schemes such as high frequency trading.

This constitutes the greatest transfer of wealth in the history of humanity.

Roman emperors used to confiscate estates to augment their personal wealth. They couldn't touch the audacity of modern US bankers.

The bankers - and politicians owned by them - are extremely fortunate that the incipient anger of a tremendously undereducated population can be directed - temporarily - against the age old bugaboos of SOCIALISTS and FOREIGNERS.

When people understand that a CENTRAL BANK is the main lever of socialism - that socialism is an economic system the benefits the Central Bank and its member banks through the issuance and control of the flow and cost and value of money - and that for socialism to exist the politicians of all parties must kowtow to the central bank - they will begin to direct their anger not at the foreigners (and the foreigners within), but at the bankers.

And when that happens you will be wanting to own a little gold.