Guest Post: Why The Full Faith And Credit Of Governments Is Inferior To Real Assets And How We Can Fix It Once And For All

I used to think like a statist, and I used to agree with them. It's appealing to redistribute wealth, especially when it's not fairly achieved. But what I've realized is that the solution to creating distortions in the market is not to create more distortions by attacking the symptoms. What ends up happening when you do that is that you create a hugely complex set of rules and regulations that hinder the market, make it inefficient and most importantly makes it ripe for abuse via regulation in favor of those who make the right campaign donations to the right politicians. This is the situation we find ourselves in now: A very broken market setup to benefit those who've made the right political moves. On the other hand, you can simply end the sole cause of the problem to begin with. That sole problem is bad monetary policy. You might say that we should replace everyone in charge of the Federal Reserve with the "right" people. But even if you were able to do that, it's really a temporary fix. So how do we fix this? Sound money, debt forgiveness and a truly free market that isn't guided by the hand of the government and is instead determined by what the aggregate investor pool thinks is the right direction. Gordon Gecko was wrong overall, but he was right that greed is good. The profit motive is the key to good decisions and long-term thinking. That doesn't mean we need to be miserly dickheads who only care about ourselves, but self-enrichment and the unfettered ability to be as successful as possible is the only route to a truly higher standard of living.

 

 

 

The Only Thing We Have To Fear Is Fear Itself... And Governments Telling Us What To Fear: Why The Beginning Of The End Started With FDR's...

As is well-known by now, following America's collapse in the first Great Depression back in 1929, one of the first decisions undertaken by president FDR, not even a month following the first of four inaugural speeches (in which he notably said that "the only thing we have to fear is fear itself") was to respond to the rolling bank runs and shutdowns, by doing something unprecedented: confiscating the gold of American citizens. And then he logically followed up by doing the only thing that insolvent governments know how to do: he debased the US Dollar overnight by 40% by changing the official exchange ratio of the USD to gold from $20.67 per ounce to $35.00 per troy ounce. Alas, since exchanging such gold would be impossible until 40 years later, nobody could take advantage of this generous offer. It is this point in history that to William Buckler of the famous Privateer newsletter marks the transition of American government from republican (on behalf of the people) to being authoritarian (in control of the people). It also begs the question: what did FDR offer in return for gold confiscation - after all if gold confiscation is not "something to be feared" then there is a quid pro quo. Why he gave us Social Security and the Welfare state. The same "welfare" state whose unfunded obligations amount to roughly $80 trillion, and whose increasingly tangible insolvency is precisely the reason why ever more capital is shifting right back to, you guessed it, gold. Perhaps FDR should have added that in addition to fear itself, the one other thing everyone should fear is governments believing they they know what they are doing when transitioning to central planning an an authoritarian regime based on nothing but faith.

 

Asian Shares Open Down After Wall Street's Drop; Kospi Down 2%, Nikkei Falls 1.4%

 

 

S&P Futures Down 9, As Gold Kneejerks Over $1890

Nothing surprising in the premarket action with ES open for trading despite Labor Day, down about 9 points at its worst, following weekend concerns of yet another European apocalypse. Elsewhere, gold is enjoying the fact that the only bearish downside is potentially a technically overbought formation and is surging right off the bat passing $1890 on the kneejerk then reconfirming slowly. As a reminder, a nervous Japan arrives on the scene in 2 hours, followed by an insolvent Germany, and no US-based HFT available to rescue the world tomorrow.

Today's Politically Incorrect Laugh:
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Hugo Salinas Price's presentation to GATA's London conference

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