... real, intrinsic money
Richard Russell
Dow Theory Letters
Feb 12, 2004
Extracted
from the Feb 11, 2004 issue of Richard's Remarks
After every
primary bull market there comes a primary bear market. The greatest
primary bull market in history ended during 1999-2000. What we're
seeing now is an attempt by the central banks to hold off the
forces and the effects of a primary bear market. Duncan gives
us the words and the numbers of what's happening to ward off
the bear. And what's happening is almost unbelievable.
The central
banks of the US and Japan are attempting to hold off the bear
market by printing "wealth." And as I've said all along,
no power on earth can "manufacture" true wealth out
of "thin air." Wealth is created by the brains, the
brawn, the risk-taking and the creativity of man. "No,"
says the central banks, "We control money and when we say
the dollar and the euro and the Canadian Dollar and the Australian
Dollar and the British Pound are money, that's it -- believe
it."
Of course,
sane men know that all a government can do is make a pronouncement
about currency. Governments don't create wealth. A government
can simply say, "Here's our paper. We declare that this
is "legal tender" for the payment of all debts.
But is legal
tender manufactured in endless quantities by a central bank actually
money? Of course not. The very concept of a government "printing
non-intrinsic money" is both absurd and immoral.
And Alan Greenspan,
who was a staunch defender
of gold
during the '60s, is today one of the participants in the great
money scam. So instead of denouncing fiat money as a fraud, Greenspan
has become a chief participant in the paper-money fraud.
On top of everything
else, we now witness a phenomenon never seen before in world
history. We see half of the population of the world now entering
the global economy as new members. And instead of being a force
for consumption, the populations of China, India and Asia have
become forces for cheap production, or I should say cheap over-production.
Ironically,
this new force of over-production has also been a force for world
deflation in prices. This the entrance of Asia on the world economic
scene has accentuated the deflationary forces that normally accompany
a bear market.
In the end,
the power of the primary bear market will prevail. When this
happens, I believe we'll see total disillusionment and disbelief
in the value of paper money. This could set off a panic to move
out of fiat money and into real, intrinsic money -- gold.
But the situation
will have to be solved. How it will be solved I honestly don't
know. It may be that in order to revive faith in paper money
-- paper money will again have to be backed by gold. At what
price gold I don't know -- perhaps gold at $1,000, $2,000 or
more an ounce.
Will those
who hold actual gold be allowed to keep their gold?
How will it
all be resolved?
I'm sorry to
say that I don't know, not does anyone else at this point.
More follows for subscribers
. . .
Richard Russell
Dow Theory
Letters
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