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Those that could not see the disaster coming, and grossly
underestimated its magnitude once underway, have been loudly proclaiming an
economic rebound is underway. Such proclamations, spewing from establishment
channels, are so blatantly short on truth that it reveals a disturbing level
of desperation to raise confidence. Furthermore, the straight-faced
dissemination of such transparently amateurish "official analysis"
being served as a substitute for tangible economic growth clearly shows
that the damage to the national economic infrastructure is so great that past
practices employed by the Fed and Government to goose the economy to revival
are now futile at best and most likely counterproductive.
No such thing as a jobless recovery
Only the generation of millions of private sector jobs
producing a legitimately saleable product or service is a reliable indicator
to herald real recovery. Unfortunately, the country foolishly embraced
an economic model based on consumption over production. As such, there will
be no healthy and sustainable growth until the populace somehow improves its
personal cash flow, pays down previous consumption, builds some savings, and
re-establishes a manageable line of credit. That said,
parsing through all the official gibberish about the "V" shaped
recovery, however, I can find no irrefutable data to confirm that such
confidence-building job generation is, in fact, developing.
We are in a short intermission before act two
The economy may appear to have stabilized but this is
a brief respite on a long journey down. The trillions of stimulus,
nationalization of GM, etc. should have halted the slide and jump-started the
economy but, instead, such action has just provided a short intermission -
with a heavy price to be paid down the road. All that has really been
accomplished is the official establishment of trillion plus dollar deficits
going forward, with no end in sight. This recurring annual budget
shortfall is actually modest in comparison to the multi-trillions needed for
unfunded entitlements, Obama-care, debt servicing, and the legions of
upcoming bailouts for state governments and union pensions.
Remedies are being politicized to our detriment.
Of course, a crisis demands governmental
action. True to form, those that thirst for power seized on the
perverse opportunity they helped create and are grinding out legislation that
does nothing to honestly curtail future abuses. Instead, it burdens the
innocent and productive sectors of society with oppressive, intrusive and damaging
regulation. Unfortunately, there has not been one iota of legislation by
government - or dollar spent - in response to this crisis that has not been
politicized. Consequently, the economic, regulatory and judicial
distortions associated with heavy and far-reaching governmental intervention
guarantees an ever diminishing standard of living.
One dim bulb and one bright spot for financial
refuge
In a speech earlier this month Ben Bernanke treated
us to a demonstration of his understanding of money as one beholden to the
fiat monetary system. A couple of the pearls of ‘wisdom’ he
uttered were:
“Other commodity prices have fallen
recently quite severely, including oil prices and food prices… So gold
is out there doing something different from the rest of the commodity
group.”
"I don't fully understand the movements in the
gold price, but I do think that there's a great deal of uncertainty and
anxiety in financial markets right now."
No Ben, gold is NOT so much a consumable commodity
as it is a monetary metal and, yes Ben, there IS a
lot of anxiety in the financial markets. Net, net, there is too much
limitless paper and not enough finite gold, ergo the falling value of paper
to gold.
That simple exercise in cause and effect could have
saved the Pride of Princeton the embarrassment of appearing visibly perplexed
about the basic tenets of money. What do they teach in Ivy League
economics?
Contrary to Ben's befuddlement, there is clear and
unambiguous precedent for coping with the demise of a paper-based, and
thoroughly abused, monetary system. The options for financial refuge in
such an imploding economic and monetary environment are few.
Historically, gold has served in this role and appears to be asserting itself
for the position again. This can be witnessed playing out across the
globe in all major currencies.
Conclusion
Don't be waylaid by the clueless conformists.
Talk of a gold bubble is coming from those who made the same assertions when
gold broke $400 an ounce. Except for its justifiable 4X price rise over
the previous decade, there is no evidence of the typical bubble
characteristics attached to gold yet.
Unlike the behavior of "investors" in the
dot.com and real estate manias, the masses are not running out to buy gold at
any price. Indeed, if you talk about investing in physical gold bullion
at a cocktail party, you can still count on being subject to ridicule. For
contrarians, such an environment is ideal. It is setting the stage, aside
from the occasional periodic normal price pullback, for gold to ascend to
much greater heights.
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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