-- Posted Sunday, 13 April 2003 | Digg This Article
The BigFishermanTM
Copyright c 2003. Rodney C. Cook, Ph.D. All Rights Reserved.
www.obsceneprophets.com
Events continue to follow the lines of probability. The battle for Iraq playing out as expected, buoying the debt based financial markets. The Neo-Keynesians are in ascendancy and the Retro-Socialists are in full retreat. Since my last writing gold and its shares have been hammered. They are challenging the bottom of the channel, but cling stubbornly to the primary trend. Upward. Aside from the pressure on the precious metals and shares in support of the dollar, general reflation efforts have been significant but muted. Not sufficient to trigger a false dawn. At least quite yet.
Is that all there is?
The markets seem to be following the old adage of buy the rumor, sell the fact. Mr. Market discounted a swift coalition victory in Iraq, and now appears poised to sell off on the news. Despite the largely sideway action, the primary trend remains down for the financial markets. The Fed is stating explicitly its intent to purchase long-term debt, and thus drive rates down at the long end of the yield curve. No surprise here, as this has always been telegraphed as their next step to fight deflation. They have many more tools of monetization in their treasury chest. But the winds of deflation are beginning to howl. And a few sheets of plywood on the windows of the house of Keynes may not be sufficient.
Expecting a bit more of an emotional lift to the dollar with the successes by our troops, the monetary authorities have been modest in their reflation efforts. So far. But the nails are loosening on the lower edges of the plywood. And central bankers’ comb-overs are a bit disheveled as they step out side to add a few more nails to the clattering edges. And they realize the immediate need for a bigger hammer. And lots more nails.
Live Free or Die
This slogan tattooed on the arm of an American patriot in Iraq foreshadows unintended consequences for our exalted central banking elite. The neo-Keynesians have rallied the troops to their cause: American central banking, backed by the force of arms, will be the world’s salvation. Saved from the brutality of despotism and then, from the ravages of deflation. Will debt based reconstruction in Iraq will become the tip of the spear for their hegemony? Or will the taste of freedom in Iraq be of a different flavor than intended? And will that taste spread amongst the tattooed masses?
A tipping point is being approached. No longer is the honest money advocate rabidly scorned. At the grass roots level, vitriolic rebuttal is being replaced with reasoned discussion. The Founding Fathers wisdom regarding the dangers of central banking is difficult to ignore as the fundamentals of Jeffersonian democracy are resurrected. The patriots have liberated Iraq. And, in due time, they will liberate our banking system.
Strategery
So how entrenched is the neo-Keynesian perspective in the current administration? It would be a simple administrative matter to resurrect honest money: To take control of the monetary printing presses away from the despots, and return it to the Republic. The means are well known. But confronting the monetary socialist constructs that have invaded our system seems daunting. As far back as Andrew Jackson the efforts of past administrations have ended badly, providing fodder to theories of conspiracy. But now we watch the new world order globalists scurry for cover as the glare of liberty blinds their ambitions. And the task seems less daunting, as for the first time in two centuries, the slaves are becoming restless.
The current administration seems to have a knack for anticipating outcomes. They let their political opposition take collectivist dogma to the forefront, and watch it topple into a heap of pomposity. Will this pattern be repeated in the economic realm? Will the neo-Keynesian coup of the recent past be just another example of giving the opposition enough rope? And waiting for the inevitable implosion? To restore honest money?
Perhaps I dream. But in the long run it matters not. As time is the only variable. Debt based collectivists are staring into the void.
Personal Sovereignty
But timing is everything. To escape the slavery of debt, or to commit your assets to rebuilding the Republic, you must not be caught askance and become a casualty. The counter currents in play promise only volatility. And volatility can be an excuse for inaction. Or a stimulus to over-reaction.
Watch the war in Iraq. Not the military phase, but the coming financial phase. Baring the detonation of hidden nuclear weapons, the military path is term certain, and always has been. The Iraqis have now lost nearly everything, but most importantly they may have lost their burden of debt. If so, they are truly free. The coming financial dealings will be leading indicators of future global outcomes. And will guide personal strategies.
As forecast, the retro-Socialists and global collectivists are now clear losers. But much is yet unknowable. Will the offers of World Bank or IMF despots to finance the re-construction be accepted? Or will the US, in a brilliant strategeric play, feed rope to these transnational banksters and watch their collectivist efforts flounder? With private entrepreneurship raising up the people of Iraq? Then, do we dare hope to see the first steps toward an honest monetary system arise in Iraq? Much can be learned by watching these events unfold. They will telegraph the timing of your personal strategy, and enable you to contribute to rebuilding the Republic. Both here and abroad.
We will be watching with uncommon intensity.
Recommendations
Strive to liquidate your debts. Mortgage debt is the least toxic at this time, as this debt will continue to be subsidized and even monetized to avoid deflations. Build a strong position in physical gold to hedge any such debt. Even if your home is paid for, you should hold gold physical gold as a hedge against the potential of hyper-inflating property taxes. If you are renting, gold is the best store of value for your ultimate purchase of a home. I do not see dramatic price declines in gold at this time for as this would signal deflation and have a negative impact on the debt based financial markets: Stocks, bonds, and to a lesser degree, real estate. However, if the monetary authorities panic and force gold to new lows in a false dawn scenario, then your real estate position will serve well as a counter hedge.
For the investor, we continue to recommend the accumulation of North American and to a lesser extent selected South African non-hedged gold and silver miners. Plan to hold any shares accumulated for at least 18 months. The preferred horizon is 2 to 3 years, or more. A dollar cost averaging program is prudent; however, gold and its shares are by most analyses, at the bottom of an ascending channel. As such this is likely good entry point; however, attempts to disguise a dramatic reflation effort provide a moderate probability of capping gold share prices for an extended period.
At any time, unforeseen catastrophic events could cause a rush to gold and its shares. The world remains a very precarious state. Speculative potential remains enormous. For the more aggressive we recommend a basket of penny shares and one-dollar wonders. But remain prepared to weather strong pullbacks in the dollar price of these shares, as instability can elicit euphoria as well as despair.
And A Gift for True Patriots
And send the guy with the tattoo a shiny gold eagle. Or a silver eagle in a care package. Wrapped in our Bill of Rights. Or if you have Iraqi friends, a gold dinar will serve well.
On many different levels, they will understand.
-- Posted Sunday, 13 April 2003 | Digg This Article
