Blogs For Victory

More and more people are coming to the conclusion that, ultimately, we must have a hard currency which cannot be manipulated by central bankers and bureaucrats – here is an excellent run down of why from Davos Okst over at Zero Hedge:

…During one of these FOMC meetings Bernanke asked about a chart showing the value of our dollar losing 10 percent per year. Ask yourself: Just how that plays into the Fed’s dual mandate of maintaining price stability by preserving the value of “our” currency? Just where can you put the savings from your flat, circa 1970s wages, to work and get 10% per year?

No small wonder why gold was up 29% last year and silver was up 89%.

The long bond (30 year) is tanking, the 3 decade old bond bull market is finished! This is evident because the yield busted the 10 year moving average when it blew above 4.75%.

Money moves out of bonds when central banks print.

Money flows into hard assets, gold, silver and commodities when central banks go berserk…

People with money can be stupid in a lot of ways, but one thing you’ll find rich people clever about is ensuring that they remain rich no matter what happens. When the Federal Reserve prints up bags of money, then money will flow away from dollars and in to things which hold their value. But what about you and I? If you are worth millions, then you can still spend a million dollars buying gold at $1,300 an ounce…but what of the poor guy who’s only got $5,000 in the bank? Doesn’t work out quite so well for him.

Nor does it really work out for the economy. 100 years ago we were solidly in gold and silver currency and were the wonder of the economic world. There was no limit to our manufacturing capacity and there was no indication that our economy would ever be anything other than a powerhouse. Then we created the Federal Reserve and slowly went off gold…until we finally cut the ties in 1971. Fake money has been printed in ever large batches since then, the value of our money has dropped like a rock and easy money has led to reckless borrowing – not just by government, but by the people. Meanwhile, real wealth has been shipped out of the United States as the return on manufacturing, mining and farming has paled in comparison to the return on playing the markets, especially when making, mining and growing things is increasingly punished in the tax and regulatory codes. Why make a 3% profit in manufacturing when you can make 8% by shuffling money around on Wall Street? That its fake money doesn’t matter – if you pile it up fast enough, you can use it to buy real things, and too bad for the suckers who don’t pile it up fast enough to buy million dollar New York apartments and yachts.

The switch back to gold would not be easy, but it can be done. It will require a re-valuation of our currency (probably at a 100-1 ratio…turn in 100 fiat dollars to get 1 gold dollar). It’ll have to be managed with care to ensure that speculators are not able to take advantage of it. But it has to be done – we need to have assurance that a dollar today is worth a dollar tomorrow, and next year, and 50 years from now. Only this way can genuinely rational business decisions be made. Only this way can our economy become, once again, an entity which rewards hard work, savings and careful investment…and, once again, becomes the economic wonder of the world.