Why Standards Have Always Collapsed

Once again people are confusing a GOLD STANDARD, which is the FIXING of a price for gold, with the fact that gold is a TANGIBLE value that is freely floating in value. The former never works while the latter has been in place for thousands of years.

See Political Self-Interest Defeat Pegs & Standards

Government by Crisis & Attempting to Manipulate the Future

We are facing a very serious crisis in the year ahead. There is no changing the course of government. They will continue to borrow every year. This is far worse than printing money and it is why we will not see hyperinflation. This is actually the greatest transfer of wealth in the history of human existence. This is not Marxism, but Marxism squared. We are not taking from the rich and giving to the poor. There is no paying your “fair share” in any reasonable manner. We are taxing and spending our resources to keep the debt rolling. This is systemically destroying the productive forces within society and transferring that to the bondholders. This is why everything will collapse. It is not the leverage problem of 2007, it is the bloating of pretended pensions that all presume Sovereign Debt is less risky that corporate paper and stocks.We are in a serious state of affairs – see Manipulating the World Economy.

Gold – the Rally?

Gold rallied right up to the Daily Bullish Reversal at 1757 reaching 1757.7 closing at 1755.3. The long-term still looks quite interesting. The question that remains is just when will the Sovereign Debt Crisis hit. Europe is starting to show the ancient cracks. In Spain, there is a separatist movement brewing that is along the lines of the two kingdoms that merged to give birth to Spain – the marriage of Ferdinand and Isabella. In England there are the Euroskeptics rising calling for a referendum to withdraw from the EU. There are divisions emerging between north and south in Italy. Economics is the great engine behind civilization – its makes it or breaks it.

Against this backdrop, gold is still churning for it is the hedge against government. The problem is, they know that and are starting to pay attention to the gold trade.

See Charts:

Liquidity

The greatest problem we have is that liquidity is down by more than 50% still since 2007 on a global scale. Governments are getting so aggressive with taxation they are killing the global economy causing capital to just hoard. This nonsense of terrorism has created a global tax gathering process that is unbelievable. Hotels in Europe will not allow you pay a bill in cash over 1500 euros. You cannot wire 100,000 SF. The banks tell you to write a check. They call it money laundering making everyone prove it is their money and by the way, did you pay your taxes. Elliot Spritzer and the hooker was picked up as “money laundering” that prompted the investigation. All governments have money laundering agencies that cooperate among each other.

All of this is shrinking the global economy ensuring that a crisis will take place. The more governments follow every cent, the less money moves and the lower the economy spirals down. You need rising liquidity and freedom of movement of capital to create more jobs for the youth. Unemployment in Spain among the youth is over 50%. They are migrating to Brazil for there is no future in Europe.

It is the Sovereign Debt Crisis that is destroying everything. With almost 70% of national debts amounting to accumulative interest, the socialists who hate the rich cannot see what their policies have done. They blame the rich for having anything so they can grab it and do what? Pay the bond holders to keep the debt going? This is the greatest transfer of wealth that would even make Marx vomit.

Government has kept interest rates so low to reduce their deficits. But this policy has robbed the elderly of their income to retire on. Government such up everything destroying the entire economy in its wake. There are few jobs for the youth. Buying a home for your retirement is out the window. Saving money for retirement does not work. Government sucks in everything competing with the private sector. Of the $16 trill in debt, can you image how many jobs would have been created had there been no borrowing?

The city of Mainz is a prime example of what awaits us.

•By 1411, gov’t expenditure was 48% due to annuities it had previously issued.
• By 1437, gov’t expenditure was 75% going to the creditors and interest rates continued to rise.
• By 1448, Mainz was forced into bankruptcy when there were no longer buyers for its new debt to pay off the last issue.
The city of Mainz defaulted. They had raised taxes so much the rich left as they are doing today. When there was not enough revenue to pay the creditors, they sacked the city and then burned it to the ground. We just never learn from the past.
History repeats because the passions of man never change. A politician just can’t keep their hands out of everyone’s pocket. If someone comes into your home at gun-point and demands your wealth, it is called robbery. When government enters, it is called your obligation. Of course they spend and it is your obligation to pay whatever they sign for with their special interests on which you were never consulted. That is not an Athenian Democracy. That is a Roman Republican Oligarchy.