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Junk EconomicsSam Mathid I've just returned from the house of good friends after ending up on the outside of a juicy, organic, free-range turkey with roast potatoes, peas and carrots. After a very busy week (moving house) during which we had twice ended up dining on fast food, the traditional English Christmas Dinner was delicious in the extreme. On the subject of turkeys... though the dismal foibles and failures of John Maynard Keynes' junk economics are manifest, our governments still continue to apply his wretched nostrums. That is really what is so scary about this historically crucial time. Our Dear Leaders have so thoroughly swallowed their own nonsense that they now genuinely have no idea what to do. They refuse to even contemplate addressing the problem at its source. Our 'experts' continue to peddle the line that only more government intervention can solve the problems borne of government intervention. They throw more money and credit at problems caused by too much money and credit. They act as village lunatics who having dropped lighted cigarettes in the town barn then seek to make amends by throwing gasoline on the ensuing blaze; all whilst gormlessly staring around hoping for applause. Most (all?) of the world's economies are in truly shocking decline. Manufacturers are ceasing to manufacture, and consumers are ceasing to consume all but the bare essentials. Exports and imports are dwindling. The wheels of commerce roll ever slower, the ships of sea don't even depart their docks. The world's food stocks have rarely been lower. The politicians become ever more shrill, the announced solutions ever more pathetically unbelievable. So many Keynesian straws have been clutched at from the straw house of irredeemable currency that it is on the verge of collapse. It is not all bad news. Self correcting mechanisms will kick in. The slatternly trollops of the UK and Australia will forgo their mass breeding of children doomed to neglect and ignorance. The welfare largesse that rewards such behaviour will cease to exist in a meaningful form. We are approaching a future where it will be only the genuinely productive who will be able to afford children. Children will again be recognised as the future of the human race and will be cared for, nurtured and educated. Jolly group therapies such as global warming, used as a vehicle to while away surplus leisure time, will become as embarrassingly passé as flared pants and Brylcreem. So called mental health experts will have their billions of dollars of funding cancelled and the closed shop of conventional medicine will be but a bad memory. Gradually the US military will be forced out of their overseas bases. Such and other profligate mischief will be stopped for financial reasons, though the change of policy will be cloaked in moral righteousness. That it will all be curtailed is the most important thing. Many people realised that the utterances of our leaders were lies, but during the good times it didn't seem important except as a source of jokes. The classis 'Q. How do you tell when a politician is lying? A. His mouth is moving', sums up the past attitude. As we pass out of that era and into another the jokes no longer seem so funny. Politicians the world over have lied relentlessly about the health of 'their' economies and the strength of 'their' national currencies. They lined up to take credit for it when the going seemed good; now, when the flaws of their paper currencies un-backed by gold are exposed, they line up to point the finger at bankers, investors, speculators and other assorted crooks... anywhere but themselves.
The American Federal Reserve Bank and other central banks around the world fabricated an illusion of prosperity. They pretended that they could create prosperity forever by divorcing wealth from production. It was the equivalent of claiming that they could separate breathing from air. Governments facilitated it because it suited their own short term interests. Realtors lied about a mythical housing market that went up forever. With a nod and a wink a mishmash of derivatives with triple A ratings were flogged to unsuspecting patsies. Fund managers cajoled investors into investing their pensions in stocks on the basis that stock markets always went up over the long term. Stock markets may have gone up over the long term in the past, but individual stocks certainly didn't. Most of them ceased to exist in the long term. This time there is good reason to wonder if the American stock market itself will survive, let alone individual companies. I predicted a future DOW at 1500 earlier this year. As the year draws to a close, and after a positive flurry of political activity, I am no longer so positive. But whilst it was seemingly working, who cared whether it was immoral and dishonest? Not many. The wealthy and gullible investors who blew their money with Bernard Madoff receive little sympathy, and deserve even less. Ditto for those who are banking on the dizzy duo of Hank and Ben to steady the US economic ship of state. Those who are still involved in this gigantic paper money con game are a part of the problem, not the solution. It is not only financially prudent to buy gold and silver bullion, it is a moral imperative. The simple truth is that our paper money is crooked and is not real money at all. It has nothing of substance backing it. The edifice that has been constructed upon that crooked money is also necessarily crooked. Thus the people who operate within that system need to be crooked to succeed. The collapse that is upon us is the end of the era of blatant dishonesty. The wonder is not that it is collapsing, but that it was ever taken seriously in the first place. When the money itself is dishonest then all of society's activities become dishonest. Money is how we fairly exchange with each other. When it is not possible to exchange with each other honestly and fairly, then the whole spectrum of society becomes morally weakened. Visible evidence of this is all around today. Who can you believe? Believe the people whose views conformed with reality over the long term. Not the Johnny-come-latelies who finally twigged that something was wrong only about eighteen months ago, but the people who have cried that the Emperor had no clothes for many years.
The estimable Peter Schiff and D.R. Schoon have been oft mentioned in this regard, but without doubt the most courageous of all is the brilliant mathematician, monetary scientist and humanitarian Professor Antal E. Fekete. He called today's precise happenings in his award winning essay 'Whither Gold'. http://www.usagold.com/whithergold.html It is not hard to imagine the professional reaction that Professor Fekete endured when the article was first published in 1996. Professor Antal E. Fekete is a true intellectual warrior who stood tall against the professional peddlers of Keynesian claptrap. He spent his career disseminating the truth despite all professional inducements and incentives to not do so. His reward was the opprobrium of almost his entire profession. Now of course his views are much sought after, but it would have been far better had his call for truth and honesty in money been heeded decades ago. Despite the alluring inducement of the sirens' song, Professor Fekete remained bound to his mast of truth and, has arrived at Schopenhauer's point of self-evidency with his integrity intact. How many economists can say the same? Certainly not the many who peddled their integrity for well funded careers in government and academia. They were a disgrace to themselves and their profession. Quite simply they lied for money and prestige. Now the prestige is waning fast, and their money? ... that was probably invested with Bernie Madoff, or one of the other SEC approved crooked organisations. Does it accord with reality that a person could spend a lifetime living on borrowed money and have an honest and prosperous existence? Of course not, it is a preposterous idea. No more or less so for governments and nations. Lies do matter, whether they are at the individual or the national level. Many people have already found that out, many more are about to. Truth is that which accords with reality, no matter how hard we may wish that it were not so. We are thankfully leaving behind the world where economic truths are determined by the political process and then enforced through legislation. That version of truth is a malign and warped reality that violently clashes with truth and honesty. That which appears to be true, but in fact is not, is an illusion.
We are the last of three generations who have lived in an utterly absurd era. We have believed in absurd ideas about money and economics and been governed by absurd people. Soon the illusion will be over. Gold is money, that is the truth. Experiments with paper money divorced from a gold or silver backing have never succeeded, that also is the truth. The US$ has lasted 37 years without gold or silver backing. The US$ is going to fail. Those who remain invested in the paper money market in any way, shape or form are going to do their dough. Keynesian junk economics and the regime of irredeemable currency will destroy people far more effectively than junk foods could ever do. Merry Christmas *** Dec 25, 2008 © Sam Mathid 2006-2008 321gold Ltd |
