-- Posted Tuesday, 27 March 2007 | Digg This Article
One of my most favored charts is that of the risk premium (interest rates) paid on paper money compared to gold. Gold, "inflation's thermometer", can throw off quite a fever when paper money premiums get out of whack with the risk of holding paper compared to supply. Trees to make paper, and ink supplies are pretty well assured, yet gold is not. Gold mined increases on long term average by about 1-2% per annum. US paper has been clipping along at an 11%+ growth.
We haven't had a government-decreed recession for some years now. Recessions in general election years ordinarily are not allowed, but 2008 may be different. Bush is all but flattened road kill, but congress is not. Give them time (and money) and the "new" Democrats will come around to getting behind the new Amero currency planned for us. I'm beginning to feel that the Amero will be praised and lauded as a godsend to get America out of a Fed/US Treasury-induced recession.
I bought a home in upstate NY in 1978 for 56K and sold it in 1999 for 135K.
Tom's Inflation Calculator tells me I should have gotten 150K, just to stay even with inflation. Had I bought gold instead for that same period I would have paid $170, and sold it in 1999 for $245 - - a real loser of a deal. Yuk. I did better on the home because I bought at a time when interest rates two years later were to begin a multi-decade decline having come off historical highs - highs necessary to restore that "risk premium" to paper, and superficially at least, appear competitive with the safer haven of gold. Gold fever was threatening to blow as the whole world was stampeding out of paper promise IOU's.
Paper monies must retain the characteristic of being a store of value to retain credibility. The US dollar along with all others have lost that appeal. Even Americans intuitively have realized that and now have a savings rate of minus .1%. Real estate has been their refuge, not savings accounts or Christmas Club coupon books. The US dollar is only still viable as an entity of commerce as it is still accepted as a medium of exchange for goods and services - by war and force as necessary. Dollar imperialism is coming to an end. There is not a paper money on this earth upon which I would place my trust to ensure my economic well-being. But, it won't be the end of sound money substitutes. Bankers are creative as well as dishonest. The Amero is being created as our salvation. It must be matriculated during a crisis, deliberately created by the bankstas to be welcomed by a depressed public who will soften-up their congressman to urge acceptance as our new ticket to posterity.
It's now an open secret that the world's central banks' gold vaults are nearly empty. Gone, squandered, just as our own Treasury squandered away over 2 billion ounces of the people's silver. To remain in power over us banks with governments as their agents, will have to either reduce paper money supplies to align with the 1-2% annual increases in gold, or just go out and steal it from their citizens; and regulate & tax (gold ETFs) what they can't find so as to remove it as a competing medium.
What do you think will be their choice?
"If you don't know where you've been, how will you ever
know how you got to where you're at, or how you'll
get to where you don't know where you're going?"....CV
-- Posted Tuesday, 27 March 2007 | Digg This Article
