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In the financial world we live in, nothing is as it
seems anymore - except for one thing:
We are all operating
under the same illusion.
Well, most of us, anyway. Let me explain what I
mean.
One of the cornerstones of what we call
"reality" is that it is, by and large, the same for everyone. While
we all have different mental perceptions and interpretations of the things we
see, hear, feel, taste, and touch around us, on a strictly sensory level the
vast majority of us agree on what kind of world we live in.
The same thing should be true of what we will call
"economic reality." In a sane world, we all should be operating on
the same economic and financial signals as everyone else.
The trouble is that we don't.
The ultimate kind of signal in any economy, whether
it's local regional, national, or global, is price. The price of whatever it
is we want to either buy, rent, or sell.
I am not arguing that all prices should be the same.
That would be idiotic, of course. What I am saying is that the way in which
we as humans determine the price of anything should be reliable. It should be
determined based on a rock-solid, commonly shared, universally acceptable,
and unalterable unit of account.
And that unit of account should be physically and
conceptually inseparable from the very thing we use as payment for whatever
it is we buy or sell.
Without that absolute unity, even identity, between
the three aspects of money (medium of exchange, unit of account, and store of
value) in every respect in the very thing we use as money there can be no
reliable price-discovery mechanism.
"The market" is absolutely helpless when
it comes to discovering the price of anything if there is no mechanism that
makes the hidden costs of manipulation immediately (or at least mediately) noticeable.
When you give the power of determining the value of
what we regard as money to mortal humans, mere individuals whose judgment
will invariably be clouded by their own agenda, their own desires, their own
ideas of what is right and wrong, correct and incorrect, then you create a
financial world that resembles far more one of those computerized
"programs" humans were fed in the movie called "The
Matrix" than actual market reality.
When mere humans have the power to:
- determine the amount of currency-creation and of
the cost of borrowing that currency at will;
- decree that certain institutions (banks) are
allowed to literally loan currency into existence while being able to demand
actual, tangible collateral from their borrowers as security;
- when the right to operate the "ultimate
lender" - the "creator" of currency is farmed out to a private
corporation with private shareholders;
- when these private shareholders of such
corporation(s) are then recruited to perform the jobs of the elected
officials who are supposed to oversee the actions of their own kind,
the you have created a financial "matrix"
of such epic, such diabolical proportions that no normal human being - or
even group, organization, or nation of human beings, can be expected to
figure out what the real price of anything actually is.
It's like living in another movie called "Dark City"
where a group of "administrators" nightly changes every
individual's and family's apartment, address, furnishings, associations, etc.
while people sleep. When they wake up, they live in new surroundings, with
new people, having new jobs working for mew businesses, which keeps them so
on edge and so confused and disoriented that they can never quite figure out
what's wrong with their world.
That is what is happening to us, to real human
beings, when we participate in what we are taught to regard as the "free
market."
As long as central planners determine the nature,
the amount, the value, and the design of the currency we all are required to
earn, spend, and save, we do not live in economic reality. We are like little
kids living in "Neverland" - and you know
what happens to little kids over there.
They quite literally get shafted.
There is an easy, very visual way to get an idea how
out of whack the world is that these central planners have created for us (or
the world that we have allowed them to create for us), and that is to look at
a chart of just about any economic parameter showing how it behaved before
and after the world's reserve currency was decoupled from real money - gold.
Look at the difference in the several charts between
the periods before 1971 and after 1971:
 
To create this chart I simply picked randomly from
about twenty different time series stored in my "workspace" on
"Economagic.com". I'll bet you get a very similar result if you
pick other series.
If the various lines are seen as symbolizing the
heartbeat of the US
(and therefore the world) economy, you can see that this "patient"
is suffering a heart attack. (Better get out of that hospital, quick!)
What you are looking at is a picture-book example of
unmanageable, formerly un-imaginable imbalances being created - imbalances
which will soon kill this patient dead.
What our leaders did to the world economy by taking
all currencies off gold is akin to taking a passenger jetliner off the
"autopilot" (i.e., a gold-referenced currency system) and letting a
twelve-year old, adrenaline-crazed video game junkie take control of the
cockpit!
How anyone with half a brain wave, looking at this
chart, can still believe that our money-masters have "everything under
control" and will surely prevent a "hard landing" if only we
let them do their jobs in peace, is utterly beyond me.
But yet, such people exist. Not only that, they are
in the majority.
They are mainstream investors clutching their 401Ks.
They are the baby-boomers who are patiently hoping
that this half-crazed twelve-year old in the cockpit will
"fix social security" in time for their retirement.
They are the currency and stock day-traders who are
convinced that riding these insane market-waves up and down will bring them
lasting peace, prosperity and security.
They are the school teachers and college professors
who educate our young.
They are the politicians we elect into public office
- and the ones who elect them.
They are your banker, your cab driver, your boss,
and your coworkers and friends.
They consider the "hoarding" of gold to be
a mild form of insanity.
They will even consider having an RFID chip
implanted under their skin for future payment and identification purposes. After
all, it's so that "terrorists" can no longer fly big machines into
buildings, unannounced, right?
Yet, while "they" believe that "all
will be fine" and that paper-money is the way to go (after all, they can
buy what they need, right?), a powerful, up-and-coming, global economic force
with over one billion inhabitants, with a communist government and a freer
market than ours, with a two-thousand year history of imperial atrocities
that gave birth of the likes of Mao Tze-Dong, i sdoing its won thing.
This blooming power is telling its own citizens to
"hoard gold!"
This power has been methodically liberating its
formerly repressed gold market.
This power has had its unofficial agents buy up gold
wherever it could be found during the "terrible nineties."
This power is most likely who's buying the gold
being divested by European central banks in their attempt to ensure a smooth
transition away from the dollar-reserve system.
This power is now creating the newly licensed
profession of "gold analyst."
This power is putting out trial balloons launched by
non-officials, who talk about pegging its currency to gold instead of the
dollar (just "temporarily" of course).
Maybe, just maybe, "they" - whoever they
are - should "take the red pill" and take a good, hard, painful but
healing look at reality? Maybe they should think again, when it comes to
gold?
Get gold!
By : Alex Wallenwein
The Euro vs Dollar Monitor
Alex Wallenwein
is the editor and publisher of the financial newsletter, The Euro vs. Dollar
Currency War Monitor.
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