"Qu'ils mangent de la brioche" or "Let them eat
cake" has become a phrase used to denote the obliviousness and
selfishness of the ruling establishment. Well, with a slight twist it's
apropos in the case of paper debt-backed paper currency regimes under stress.
Cranking up the debt presses to ease the nominal pain of asset price declines
destroys the savings of those who are conservative with their money. Such a
monetary system, when in its terminal phases, forces citizens of the world
into a dangerous casino to maintain the purchasing power of their savings.
We are all speculators precisely because the value of our
savings is constantly at risk due to the over-the-top glut of paper promises
coming out of every government and central banksta orifice. Staying in cash
may feel like a victory during a 3 month market crash or when the U.S. Dollar
Index goes up for the day, but this is a fool's game over the longer term.
When a paper-promise, debt-based monetary system is under stress
due to economic difficulty, there is only one play in the playbook - defile
the currency. Drop the interest rates, guarantee everything in sight, print
new public debt to replace the private debt gone bad, "stimulate"
the economy (i.e. steal prosperity from the future to make a small segment of
the current population feel good), take over and bail out corporations and
entire industries (i.e. fascism by definition the way practiced in the U.S.,
since the profits are not shared but the losses are), "create" jobs
(HAHAHAHAHAAAAAAA!) and by all means punish anyone who tries to speculate to
keep ahead of the currency destruction.
Let the sheeple eat the paper we have created for them. Never
mind that the paper promises they already hold from the past are now worth
much less - we will just create new paper to replace that older paper. Please
don't misunderstand the end game. Never forget it when looking at daily
squiggles. Remember the lessons of the 1930s and 1970s - when all else fails,
create a new monetary system that screws everyone counting on the integrity
of the "outdated" currency system.
If you don't hold actual physical precious metal at this point
in the economic cycle then you haven't read your history. If you aren't
additionally invested in the Gold patch via paper Gold proxies and/or Gold
mining equities, then you believe "this time is different." Do you
think the brain trust that makes up the current federal reserve is anything
more than a band of self-serving thieves? Do you really believe
"they" are anything more than cunning enough to "look out for
number one" but not necessarily smart enough to "avoid stepping in
number two" when it comes to the integrity of the country and its
You will eat their paper. You may not like it, but you won't
have a choice if you insist on being a paperbug. You won't have a choice
unless you are invested in real, tangible assets that retain their value in
the setting of an economic depression. Real estate is out (unique individual
opportunities aside). Stocks in aggregate are out when inflation-adjusted
returns are of interest. Commodities are a question mark during an economic
depression. Gold is money and we are in a bear market, so cash is king. But
hold false money and you are playing with fire, especially once a depression
has begun and the only play in the apparatchik playbook is needed to stop it.
The paper promises will be multiplied again and again before
they collapse. Greece will be bailed out and so will Portugal, Ireland, Italy
and Spain. In addition to these countries, pigs will also be bailed out by
the debt press (i.e. UK, US and Japan are the pigs, not smaller European
economies!). Greece is to the US/UK axis as a pimple is to a patient with
terminal, rapidly progressive cancer. Gold will triumph over paper this
cycle, as it always does during an economic depression, because markets (i.e.
human behavior and mood) are cyclical and paper bubbles collapse during
secular credit contractions.
Don't eat paper. Buy Gold and protect yourself. Once you're
protected with adequate physical metal insurance (10, 20 or 50% or your
liquid net worth depending on risk tolerance), then and only then does
investing in other things make sense at this point in the cycle. The Dow to Gold ratio will
go to 2 and may well go below 1 this cycle. Since we're around 9 in the ratio
right now, that means more than 300% gains for Gold in terms of stock
purchasing power and it shouldn't take more than 5 years to achieve these
gains. Even paperbugs should understand how good such gains are over so short
a period of time.