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The Time Has Found Us
"It is not in numbers, but in unity, that our great strength lies; yet our present numbers are sufficient to repel the force of all the world." Thomas Paine (1737-1809) The above quote was taken from the book "Common Sense," written by Thomas Paine the year - 1776. To paraphrase Paine; all men who believe something will happen will calculate the time, and may vary only in their opinion of when, in order to remove mistakes we should take a general survey of things, and endeavour, if possible, to find out the precise moment. But we need not go any further the question came to a close for the time has found us now. Thomas Paine was speaking about the establishment of a new country - United States of America. This brings me to this moment in time. One of the harms we have today (one that we've always had perhaps) is in believing there is a political answer to all questions or we expect all questions to have an easy answer. Not so. The easy answer (or so we thought) to all of our woes over the past decades was for politicians to throw money at every problem, unfortunately it has been money we now cannot afford. We need not go far for the time has come and found us - a world deep in debt. Paine furthermore stated, "Debts we have none and whatever deal we may enter into that deal will serve as a glorious memento of our virtue (benefit)." That was written in 1776 two hundred and thirty years later how virtuous is it to owe $7,929,658,283,890.28 ($7.9 trillion, 1 Sept 2005) and another estimated $40 trillion plus if taking into account all entitlements; Pension Plans, Medicaid, Social Security, etc... plus continue to service infrastructure, and interest on the debt? The problem is that the world cannot mop up that amount of debt the most powerful nation in the world has created without causing major havoc to the entire human race. Of course we don't have to - do we? Does government debt ever get paid off? Paine had written on the subject of time and at that point in time he was referring to (unknowingly) the beginning of a great nation, today our leaders are thinking about time - and how long before something else breaks. We've reached another point in time when a great nation can't plan, they cannot be proactive - they are just reactive. When an individual gets into debt over their head they have a tendency to only meet their commitments, they don't plan or cut the financial fat. At that point the squeaky wheel gets the grease. Can governments do otherwise? The interesting mania is that until this time the governments have cut back on nothing. It reminds me of a person who has lost their job and yet have not adjusted their spending habits. Most of us don't realize one major problem; by governments lowering interest rates they encouraged man to borrow, to borrow more, and go deeper into debt. The governments learned that they can have what they want by going into debt and now have taught their citizens to do likewise. This common quick fix or slow death should implore people to save and invest. Of course some will say, "If we all save, our economy will drop into recession," to that I say, "So be it, but don't worry, be certain if you prepare for what's ahead others will make up for your lack of spending." Common sense is we cannot get out of debt by borrowing more. To paraphrase Paine, "The debt we may build up does not deserve any consideration if the work is to be accomplished. No nation ought to be without a debt. A national debt is a national bond; and when it bears no interest, is in no case an intrusion on our future." Today Paine would have a different view and tell the electorate not to be stupid about debt, that it has its limits, and that it will be dealt with positively or negatively. Times change. We are a world on credit steroids. Common sense tells us something has to change. I know, you know and the government knows that we cannot pay off this debt nor can we continue to inflate without it breaking - the first question is when and the second question is what can we individually do about it? We have to invest with some sense of urgency, and we have to invest wisely. Today we have many problems in the world - floods, war, rising prices of food, and oil, and all energy, too much money, not enough savings, and so on. I've been writing many articles stating that nature's commodities will be rising in price during a time when we've been deceived into believing we can live cheaper by borrowing more money. This belief that we can live cheaper is soon coming to an end as man made goods out of China, India, South America, etc... will begin to rise in price along side of nature's possessions. Paine stated, "We need not go far, for the time hath found us." I couldn't agree more. Different times Mr. Paine, different circumstances. Many have worked hard for hundreds of years to build an incredible country with phenomenal infrastructure - infrastructure that we now have to repair, replace, rebuild and live with at great expense. My guess is that we will have to live with it and we will have to change due to changing weather patterns, rising oceans, increasing heat. Just as our forefathers challenged the natural elements we're now faced with dealing with the natural and essential elements at a much greater cost. They had no debt but lots of physical hardship we have excessive debt and lots of financial hardship. Hardship has many meanings one being physical another - "lack of money." Yet another hardship today is we have too much money! What a contradiction - too much money and lack of money. People do not understand this statement. How can we have too much money? We are printing (creating) too much money and this is why money is losing it's value against natural goods and no matter how fast we print we cannot keep up with this conundrum. It creates inflation and people cannot run that fast - we're rowing up river against a strong current trying to stay ahead. As quoted from "Common Sense," - "Let us, in order to remove mistakes, take a general survey of things, and endeavour, if possible, to find out the very time." We have to add to that the event. Exactly what is it that we will have to face? The time has come to take stock of where we are in the world - too much debt, too much printed money, not enough savings, people trying to get rich quick, cars that have to be cut down in size, we have to invest into technology that has more meaning than just an earplug that plays twenty-hours of music on an I pod, we need conservation of water, and oil, gas, and so on. Our idea of a happy life will have to change to that of enjoying nature. We need balance in our lives. We need investing into things that grow, into alternative sources of energy and natural resources that will protect our standard of living. Paine wrote, "A national debt is a national bond; and when it bears no interest, is in no case an infringement." And I agree, when there is little debt or interest there isn't any encroachment on our lives, however, when it rises to $7.9 trillion as it has in the United States and it does require interest payments it becomes a financial violation of world freedom and an encroachment upon our children's expectations of independence. One of the problems we have is that we look across the border (being Canadian) and think they have the problem - well let's not get too smug their financial dilemma has now become a world problem and will affect every living person on earth in some fashion - the financial world has become so entwined. In all portfolios gold should now be a part of an investment strategy why, because it's a currency that cannot be inflated - you cannot print gold at will. There are people who are gold bugs - failing to meet that test, I am a person who understands that money is only paper and it loses value as they print more. Gold is money and can get into very short supply with haste and its value will increase against all paper currencies over time.. Hard assets offer greater protection against inflation and the more paper they print the greater value hard assets offer. Caveat emptor - don't run out and buy gold without consultation with someone who understands what to buy, how to buy it, in what form, and why. Certain investments have been designed to protect assets against the impending dangers of an inflated world and should be a part of an investment program. People don't have to go to great risk and try to time the markets; also it should be stated it is impossible for interest rates to earn enough to beat the two evils; taxes and inflation. They have never been designed to do so, why should we believe they will now? Time has found us, our world, our nations, our people, our society on stage and deep in debt and going deeper into debt. Time has found the world with rising oil prices, decreasing base minerals, an impending shortage of drinking water, increasing demand for natural products, it has found many countries with major impending pension payouts with increasing numbers of beneficiaries and decreasing numbers of contributors, found our time on earth with inflated money. Paine stated (as mentioned above), "A national debt is a national bond." Yes, it is Mr. Paine, it is a common bond - it's a bond unlike any other and now the entire world will have to pay. I wish I could say, "Pay it off," and know it could be done. This is where society fails to understand that if the U.S. owes $7.9 trillion 'the world' because we live on earth has to participate in the pain and be part of the plan (if there is one). We will participate in higher energy prices, higher oil and gas, higher food costs. A person should not be negative at this time during this cycle what they should be is cognizant of is where the world will roll, how the world will adjust to these higher prices, and be certain to understand that we will find yet another time that will be different again. The following is another paragraph from "Common Sense" in which Paine is talking about building a navy I could not resist putting it in this article (although long). "No country on the globe is so happily situated, so internally capable of raising a fleet as America. Tar, timber, iron, and cordage (cordiality) are her natural produce. We need go abroad for nothing. Whereas the Dutch, who make large profits by hiring out their ships of war to the Spaniards and Portuguese, are obliged to import most of the materials they use. We ought to view the building a fleet as an article of commerce, it being the natural manufactory of this country. It is the best money we can lay out. A navy when finished is worth more than it cost. And it is that nice point in national policy, in which commerce and protection are united. Let us build; (and) if we want them not, we can sell; and by that means replace our paper currency with ready gold and silver." End of quote. Isn't it bizarre Paine had so much foresight in 1775 at the beginning of 230 year history of such an incredible nation to also state that in the end should we build and want to get out of our financial positions we could exchange our paper currency for gold and silver? What incredible foresight. I would not be surprised to see them the U S government turn a good portion of their existing paper money into such. Will gold once again back the US dollar? I have no idea - who knows, it may or it may not. It will however at some point be used as a hedge against deprecating currencies around the globe. When? Will it be in ten days, ten months, or ten years? Again who knows - I suspect it will be sooner rather than later. Let me say something about pessimism. The problem we have in our society is that we have always associated the word optimism with pessimism and visa versa. A similar example might be, if you don't have good luck you have bad luck - that's ludicrous. If we don't agree with parts of the economy and we don't have a positive opinion about a currency are we negative? Must we be labeled optimistic or pessimistic? How about comparing optimistic with being realistic? Example; we may not have good luck but that doesn't mean we have bad luck - it may just means we are working harder with a different understanding. And with that I'll end this article with a thought. People often retire their money before they do - money cannot afford to retire. So those of us that work in the financial industry have to understand that fact. We cannot change the debt, the interest rates, the price of gas, or the cost of food. We cannot change the future direction of the world by writing a few scripted words. Paine positively changed, through his writings, the direction of those he touched - perhaps including those he didn't. How many didn't believe what he wrote? Did some say he was too optimistic, and others say he was unrealistic? Common sense would make me believe some thought Paine was a pessimist! I purport he thought other countries wouldn't fare as well - so he must have been a pessimist to some. Today if the words we write changes the direction you take, your direction may have an impact on your children, or your children's children. Two years hence or two hundred years hence who knows where the road will have taken us? Paine, I'm sure, had no idea how right he could have been. I'm certain he didn't know how good things would have become nor how deep in debt the world would ultimately be. Personally I believe it is the velocity of the growth of debt that is so worrisome - this is perhaps the most difficult to determine; when do we run out of time? That is a question that none of us know the answer to (yet) however one that we would expect our politicians to be discussing and looking for a solution. Perhaps they have - any time there is major economic uncertainty gold has become the currency of choice, do you suppose there is anyone in a government position that would possibly be thinking about bringing out a stable currency? Paine was a positive thinker after all didn't he say, "Let us build; (and) if we want them not, we can sell; and by that means replace our paper currency with ready gold and silver." I guess he was one who thought it might come to this end. Gary Robertson, CFP
321gold Inc |
Gary Robertson, CFP