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The success of the multi-year
machinations of the U.S. Government and the Federal Reserve's attempts to
manage the fiscal crisis can best be summarized in a single word - and that
word is ephemeral - yes, ephemeral! This beautifully succinct word,
ephemeral, is defined as "lasting for only a short period of time and
leaving no permanent trace." Yes, indeed, what better word is there to
describe the Government's so-called rescue plan than ephemeral - here today
and gone tomorrow - and without a trace of lasting benefit!
While I tend to be short on
words and to the point, as my previous articles* will attest, trying to
achieve both accuracy and brevity on this subject was difficult to achieve
but what follows should provide a reasonably fair and complete assessment.
Myriad of Statistical Measurements are Being Manipulated and Massaged
There have been a myriad of
statistics presented by analysts attempting to quantify the short- and
long-term impact of the economic and fiscal policies deployed over the last
couple of years. Gauges, such as the contribution to GDP expansion in
relation to government spend, earnings growth of publically traded companies,
the status of bank balance sheets, etc., have all been factored into some
sort of scorecard for the state of the economy. In the segregated and
insulated world of government policy makers, Fed officials, well-connected
bankers and other sundry insiders, these manipulated and massaged statistical
measurements have been designed to serve as the basis for public
pronouncements as to how we are to see the world around us. Unfortunately,
due to a dearth of inquisitive and competent financial journalists, the
alliance of powers at the global economic helm have been free to make
erroneous and unchallenged declarations such as the sighting of "green
shoots", or an "officially declared" emergence from recession,
or "officially documented" resumption of sustained economic growth.
In the real and tangible world, however, the statistics don't support
reality.
The Blind Begin to See
Many of the economists who
relied upon deceptive government-generated economic statistics to tout a
questionable recovery are now becoming increasingly pessimistic as a
consequence of mounting evidence of collapsing consumer confidence, punk
retail sales, and a fierce resumption of housing's descent. They are
adjusting their forecasts down and some are even suggesting that normal
economic activity will not resume until 2015 or beyond. What remains to be
seen, however, is if a nation that is so massively indebted, top to bottom,
will be recognizable after such a prolonged period in the tank.
America's Socio-Economic Transition is in its Final Stage
What has emerged from the
financial crisis, and the officially sanctioned choosing of winners and
losers, is a clear picture of the evolving two-tier global social order. Now
that those beneficiaries of official favor have succeeded in off-loading
their losing wagers onto the general public, there is no longer any urgency
on behalf of Washington or the Fed to alleviate the suffering of those
unfairly saddled with the burden of payment. What will be implemented are
schemes that require further surrender of individual liberty and the
extinguishing of any prospect for building personal wealth in exchange for
worthless promises of government supplied sustenance and protection. In place
by 2015 will not be renewed economic growth in the traditional sense, but an
economy that has devolved into a confluence of the worst elements typically
associated with socialist Europe and Central/South American banana republics.
Preservation of Wealth Today is a Prudent Course of Action
Simplistic investment axioms
passed off as wealth management, such as "buy and hold equities"
and "real estate never goes down" (see chart below), have failed
miserably for the past decade. Preservation of wealth until the storm passes,
in lieu of squandering hard earned dollars chasing yesterday's investment
themes, appears to be the more prudent course of action. In the not too
distant future, once the unmitigated misallocation of capital is reckoned
with and artificially supported sectors of the economy are vanquished, t here
will be great opportunities to be realized. The key to survival through this long
dark period is proper positioning of one's capital now, surveying matters
with a strategic mindset, and great patience.
Gold and Silver - The Ultimate Refuge
Although derided as useless by
those with a vested interest in preserving the privileges accorded those who
steal wealth and gain power via a fiat monetary system, gold and silver have
historically served as a refuge when such a counterfeit system is threatened
with degradation or collapse. Our mirage of a money system is facing a
challenge to its viability right now. Should the Feds irredeemable paper
scraps experience further loss of purchasing power, or global repudiation,
gold and silver holdings will come through such a debacle intact and still be
in possession of intrinsic value tradable for goods and services globally.
Conclusion
The model portfolio has always
included a measured position in gold and silver (to learn precisely how much
please visit http://www.munknee.com/2010/07/how-much-bulli...inst-inflation/
) and such an allocation should be regarded as a long term store of wealth
and not as a position for short or intermediate trade.
Given that we are
hurtling headlong into what the Chinese would call "interesting times,"
it makes sense to grab hold of something that has been here before and has
consistently come out intact - physical gold and silver.
Chris Blasi
Neptune Global
Chris Blasi is President of Neptune Global Holdings LLC (www.NeptuneGlobal.com) and a guest contributor to both www.FinancialArticleSummariesToday.com and www.munKNEE.com
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