-- Posted Monday, 31 August 2009 | | Source: GoldSeek.com
Written by Martin Armstrong - Former President of Princeton Economics
Gold has been one of the most misportrayed mediums of wealth since the 1970's. Usually it has been marketed as the hedge against inflation during the good old days of the 1970's and 1980's. However, this has been a great misconception of the role gold truly plays. It is coming into its own and is still poised to rally to at least test the $3000 level if not much higher. But this portentious view harbors within a lot of correlations on a global scale that truly needs some in-depth understanding. Gold is not about to make such a rally without critical developments in government. Gold is not the hedge against "inflation" but against the "collapse in the confidence of government". Government holds power only for as long as the people allow it. People are complacent and will not tolerate much. During the 1970's and the days of OPEC, I will never forget a riot in Philadelphia of white middle class workers overturning cars and setting them on fire because people could not even get to work. There is a thin line between civilized conduct and a mob. When people can no longer function in a basic way, holy hell breaks loose.
The US political government has just become the greatest threat to our way of life, it is hard to understand how we have degenerated with no sense of posterity. This recent incident going after UBS is a very serious departure in the entire rule of law. Switzerland has existed with its secrecy banking laws for a very long time. It was neutral during the world wars and its own rule of law has been respected by all nations until now. Why has the US now sought to destroy the civilization as we have known it? The refusal of government to live within its means is destroying every- thing. Instead of reforming, they are lashing out against our own people as well as the whole world. They justify their actions by their own self-interest. Whatever they decree the courts merely rubber stamp. We have no one left in our corner to prevent the economic suicide that is taking place.
In the last issue, I explained in a bit more detail the Correlation of Cycical Perspective, which I have defined as the Sixth Dimension of complexity. For the first time, I will now show the 51.6 year Economic Confidence Model aligned to the United States and we will see the dollar in a new light.
I have provided charts of the empirical Cycles of American Business that we first published back in 1979. This begins post-Civil War and clearly illustrates the struggling economy for there were more people killed in the civil war than most other wars combined.
Our first chart begins with 1870 one year after the famous Panic of '69 where Jim Fisk and others tried to corner the market on Gold sending its value at the time to $162 per ounce. Adjusted for inflation, that price today would surely be closer to the $10,000 level in contemporary dollars...
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