|
Gold has shot higher in the wake of European panic. But the fireworks
are only just beginning... Europe will eventually be followed by Japan and
the United States.
Does
anyone know how to contact the Inter-Planetary Monetary Fund – the
"IPMF"? I'm hoping maybe Alpha Centauri has some spare credit lines
we can tap. Because if not, we could be in some seriously deep kimchee
here...
Seriously
though. When the government runs out of money – or rather, the
credibility to keep on printing it with abandon – who is left?
Keynes
in Six Words
Keynesian
economists believe that public sector intervention is the key to curing
private sector ills. That's why they were so supportive of the bailouts. In
fact, one might argue that "when in doubt, bail them out" sums up
half a century of Keynesian thought in just six words. Private sector woes
got you down? Let the sovereign entity (i.e. the government) leverage up its
balance sheet when times are tough.
Defenders
argue that the great man (John Maynard Keynes) never intended for his ideas
to be abused this way. As a balance to all that counter-cyclical spending,
governments were also supposed to save when times were good... the equivalent
of the squirrel storing up acorns for winter, rather than gorging all year
round.
But
what good is a theory that works on paper, yet utterly falls on its face in
practice? This is one of the reasons ivory tower economists are so useless...
and so dangerous. They insist on clinging to ideas that appear seaworthy in
the textbooks, only to be shipwrecked by human nature in their application to
the real world.
Consider
the above chart, which shows total U.S. debt (public and private) as a
percentage of GDP (gross domestic product) dating back 140 years. Note, in
particular, the nature of the curve since 1970 or so. It has gone close to
vertical since then – starting right about the time Tricky Dick Nixon
declared, "We are all Keynesians now."
Of
course, it is not the United States that is in the spotlight at the moment.
Europe is. But what is happening in Europe is merely a prelude – an
opening act, if you will.
This
tech breakthrough made America’s hottest 2010 consumer product
fabulously successful. It’s now a 10-bagger dream stock!
Touch-screen
technology is the next big thing. This company is a little-known, 800-pound
gorilla in this exploding
industry. The facts are jaw-dropping. Here’s why you
could turn $10,000 into $110,000. Get all the surprising details about
this touch screen
technology.
The
Sovereign Debt Domino Chain
Picture
a sovereign debt domino chain. With each domino that falls, the stakes grow
successively higher. Greece was just a little domino, they said. Just 2% of Europe's GDP, they said. But little
dominoes can topple bigger dominoes.
After
Europe's unsustainable debt regime wholly implodes – something that is
happening right now, as you read this – Japan will likely come next.
And then, after that, the Big Kahuna... the United States.
"It's
not rocket surgery," as the ex-Deutsche bank derivatives trader Boaz
Weinstein liked to say. Common sense says that you can only pile up debt for
so long before it gets to be a problem. The great Western nations (and Japan)
have put off this simple concern for decades, hoping to outrace the
consequences of spending more than they saved.
As we
can see via Europe – where a trillion-dollar "shock and awe"
campaign all but vanished into the morning mist – it is now less than
five minutes to midnight.
Europeans
Flock to Gold
In
another sign of things to come, gold went parabolic in recent days as
European savers panicked. The gold and silver dealers in the old
country are, literally, running out of product.
The
Austrian mint has seen its reserves raided by buyers seeking shelter from the
euro. Meanwhile, the precious metals online retailer Kronwitter had to take
down its website and post a note more or less saying, "due to the
enormous number of orders, we have temporarily shut down... if you have
already ordered, your coins have been shipped."
The
whole fiat money system is based on faith, and faith has a breaking point.
Faith can be strained and stretched and abused for a good length of time. But
when the breaking point finally comes, events do not unfold in the smooth,
linear fashion that academic economists are used to.
In
recent days, your editor had contact with a businessman from Eastern Europe.
He explained how his firm had switched their client billing terms to $USD
only, as the exchange rate risk of the euro had become too great.
And
yet, eventually the exporters of the world will find that $USD is not much
good either. Nor the Japanese yen for that matter... and the Chinese yuan is
still far from ready for primetime.
Will
You Be an “FX Dagger” Millionaire?
Because
we want you to take advantage of the hot new “FX Dagger” currency
niche market... we launched a brand-new service, Currency Profits Trader, with a single
objective: To help you turn $5,000 into $1.2 million in the next 12 months.
Space strictly limited. First come, first served.
Follow
this link to find out how you can becomce a currency
millionaire.
A
Shining Set of Attributes
Those
who criticize gold – who still see it as a "barbarous relic"
– sniff that the yellow metal is good for almost nothing. You can't eat
it and you can't earn interest on it. So why mess with it?
Because,
quite simply, if gold is good for almost nothing, then the world's fiat
currencies have proven themselves worth less
than nothing over time. That is to say, trusting in the faith of
paper currency over the ages has been a guaranteed way to become poor.
You
have heard the bottom-line attributes: Gold is the only "neutral
currency" not subject to a printing press. It is the only financial
asset that does not count as someone else's liability. In a world where all
the major fiat currencies stand at risk of being destroyed, those are
attractive attributes indeed.
Don't
forget to follow us on Facebook and Twitter
for the latest in financial market news, company updates and exclusive
special promotions.
Justice
Litle
Taipan Publishing Group
Justice
Litle is the Editorial Director of Taipan Publishing Group
|
