Thursday, March 26, 2009

Gold and Silver Can Protect Your Stashed Value From Really Wild and Crazy Far Out Stuff

The lower the gold price is when you buy, the better it can protect you down the road. It can make some wild moves to the upside and leave you standing there, not on the gold train, wondering what happened.

CNN uses this "Road to Recovery" and sometimes now a days this "Road to Rescue" concept, one of those fuzzy concepts to refer to, misslead about, the governments current financial moves. If the US government's "rescue" (which is an impossibility) can be graphically illustrated, it has been:


"Road to Rescue" visualization.pdf

The more wealth a person has or a group of people have,
usually the higher the standard of living they have.

Wealth is goods and services people are willing to pay for.

Wealth is not money, currency or government fiat tokens.

However, money, currency and government fiat tokens can be stores of value.

Value can be converted into capital.

Savings has to happen before capital creation happens.

Capital is the means of production.

Capital plus the use of minds and hands can create wealth.

There is no theoretical limit to the creation of wealth.

Statist governments screw up this process time and time again. Sometimes they stomp on it particularly badly which is what is going on in the US right now.

In reality the "rescue" being attempted is the consumption and the destruction of capital. The US government is doing nothing to promote savings which can be used to create more wealth, assuming savings is used properly. This is one thing governments know nothing about and are only concerned with the short term. In fact the last thing the US government wants, as well as some others, is for the public to begin saving wealth. The saving of wealth is necessary for real wealth creation (an increase in a standard of living) but that is the type of thing that does not artificially increase GDP, something politicians do not like. Real wealth creation can take some time. They like a faster phony growing economy, a set of circumstances that creates a phony sense of well being, a phony sense of getting ahead amongst their constituents, as long as they can keep it going because many/most of their dumb constituents do not consider their own net worth, only what material things they have some degree of control over. But, at some point the economy can take on only so much debt. If an economy could take on any amount of debt, then people could exist without working by borrowing only.

I guess there is a significant percent of people in the US that believe that work, the creation of value, is not necessary for survival; and/or, that workers will put up with any amount of theft of their property for the purposes of it being tranfered to those that do not work. At least this is suggested by yesterday's poll results showing about a 60% approval of Obama's overall performance and an about 50% approval for his financial/economic efforts. They can't see/comprehend one of the biggest thefts/heists in modern history currently underway by a tiny select few on "The Street" that has major control of the Fed/US Treasury/White House/Congress and Senate. This is despite the large number of information sources telling it like it is, providing the facts. Never mind the Net, this is even going on to a significant extent in the traditional mass media.

Man uses his mind and his hands to create value. Hopefully more than enough for survival. If more, he saves the excess value and usually lends it or invests it with those that are capable of creating even more value (wealth). When savings are put into the hands of those capable of creating more wealth (goods and services that people are willing to pay for) it becomes capital. Businesses that increase the standard of living of people in a large way need large amounts of capital to start up.

Capital is necessary to create and increase wealth in a radical way.

Money, currencies and tokens are not capital itself (the means of production). It is true that they are stores of value, something that can be converted to capital. Just because someone creates tokens out of thin air does not mean that wealth has been created/increased. It seems that most people do not understand this. Thus, along with some other reasons, most of the US and most of the rest of the Anglo Saxon world (and some other parts of the world) are going into another philosophical and intellectual dark age or endarkenment. Economically this means third world, banana republic status. It is too late for the US to avoid it. Too much debt has been taken on. Never mind the huge amounts of debt that is continuing to be taken on by the Treasury and the Fed. Too much capital has been consumed rather than maintained and increased.

However, not everybody is taking it hard. Some are making out like bandits.

The Goldman Trough
"I just finished reading Goldman Sach’s latest Form 10-k annual report. As of the end of November 2008, they had cash and cash equivalents of $122 billion."


Peter Schiff, one of the few telling it like it is, explains "Why the Meltdown Should Have Surprised No One". About 2 hours long but worth it:

Mises Institute's 2009 Austrian Scholars Conference


But after the economic revolution which may be dated at 1787 (the year Jeremy Bentham’s “Defense of Usury” was written) we know this argument to be false. During the 19th century the economies of Britain, America and several other countries made more progress than had been made in the previous 3000 years, indeed than had been made since the beginning of the human race. We found out that the human capacity for producing wealth, if properly organized and harnessed, is so amazingly large that economics does not have to serve as a limit on the human population. This refutes the argument that war is necessary to keep the population in check. To take one simple example, when the American settlers reached the Great Plains, they found the land infertile. The soil was so tough that the type of plough needed to turn it was so heavy that it could not be pulled by a team of oxen. Enter John Deere. Mr. Deere invented a plow that was strong enough to break this soil but light enough to be pulled by a team of oxen. Today the Great Plains are the breadbasket of the world.

In 1798, Thomas Malthus published his Essay on Population in which he argued that population expanded faster than the food supply thus leading inevitably to famine and disaster. His timing could not have been worse. All history up to that point seemed to support him. All history since he wrote has served to refute him. During the 20th century the world’s population multiplied by a factor of 4 times, but the food supply multiplied by a factor of 5 times. With the same amount of arable land in cultivation, the average farmer was able to grow 5 times as much food. To prevent the extra grain from going to waste, it was fed to meat animals, and more humans were able to eat meat. (In 1928, the Republicans bragged that they had put “a chicken in every pot,” meaning that they had made it possible for just about every American to eat meat every day.)

Clearly this economic revolution removes the economic reason for war. However, this revolution occurred only once in human history. There are over a hundred different human societies on earth in every generation. Going back 300 generations to the invention of agriculture this gives us over 30,000 different societies. Only one, the Age of Reason which occurred in the Anglo-Saxon world in the 18th century, gave us such a revolution. Quite clearly, it is not a type of thing that humans are likely to stumble upon by accident. It represents a unique achievement, and the men responsible for it are some of the greatest geniuses in human history.
..." - from PEACE
by Howard S. Katz


There is some grand grand grand theft (of stored value in US dollars and USD denominated financial instruments) going on, the whole point to the existence of a central bank, a huge transfer of unearned wealth. Gold and silver are protectors in this situation.

Recently, Fed credit has been pretty constant at a little over $800 billion. Based on their most recent actions, the Fed is aiming to increase it to about $3 trillion. That is roughly a good 2 thirds devaluation of the US dollar over the next few years. The gold price and the silver price will automatically protect owners of gold and silver from the dollar devaluation actions of the Fed. This is already in the pipeline. It could be just for starters. The BIS's total for derivatives is over $1 quadrillion, over $1,000 trillion. A really scary thought is not having any gold and/or silver.

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