Wednesday, March 20, 2013

C’mon people take the red pill.

There has been a war against saving. People have been deceived into living and spending  like there is no tomorrow. Who can blame them? But it is not because we worry less about the future or planning for tomorrow, it is because the system has been set up such that for decades, saving has been a losing proposition whilst leverage and debt have been winners. 

Low interest rates and endless money printing stimulate production and consumption and decrease savings. Savers get a zero to low nominal interest rate which in reality is a negative real interest rate. The incentive is to borrow and spend, not save. 

We have been corrupted and enticed with cheap credit into becoming the perfect consumer. There is no trade off, foregoing current consumption for future consumption. With cheap money we can have it all, now and later. The latest smart phone, the newest computer, no worries put it on the credit card, just make sure you have the latest version of this or that technology. 

This is an illusion intentionally created and stimulated by central bankers to keep the system going. Short term gains over long term stability. Live today don't worry about tomorrow. The government will look after you anyway. Won’t it?

But what has enabled governments and the banks to do this? Was it lack of regulation or deregulating the banking industry? Was it unbridled capitalism? Was it greed? .....Forget it! 

The enabler has been a centuries old unholy alliance between government and their bankers. We haven’t had free markets and capitalism for hundreds of years. First we have the creation of central banks with government granted monopoly on the issuance and creation of money is not capitalism. That fits right in with the central planning of communism. 

Then came fractional reserve banking, which in reality is nothing less than fraud. This allowed the system to be dangerously leveraged and bankers to accumulate enormously wealth.

Last was the bait and switch tactic of any good con. The original backing of paper money with gold and silver, which was necessary for people to accept paper money, was removed. Dishonest money backed by nothing removes all restrictions on government spending and erodes incomes and savings.
Why is it that the need for separation of state and religion is easily understood, but the need for the separation of state and the economy is not understood at all?

None of this would have been possible in a free market where these same banks would not be guaranteed by the governments they are in bed with. If banks were allowed to fail and people had a choice of what to use as money, these banks would have failed and people would get their money out of the governments’ (bankers) monopoly money and into the real currencies of choice, gold and silver.

Fortunately it is not possible to suppress and manipulate the market indefinitely. The market will eventually override flawed policy. This is what we see happening today. It began as a slow process, with the smart money leading. The market is choosing gold and silver as the preferred currency.
Do not wait for governments to sort out the mess and move back to honest money. They won’t. They can’t. Faced with the choice between them and you they will always choose their own survival and go Cyprus. 

This is the paradox of democracy. In order to be elected they need the majority of votes. In order to get the votes they need to give more in entitlements and take less in taxes. How is it possible to spend more than you take in forever? You can borrow but there is a limit to how much you can borrow before nobody will lend to you anymore. The best way is to print the money (monetize debt). This is an invisible tax called inflation. The only difference to any other tax is it erodes the value of your earnings and savings rather than confiscating a portion.

Desperate governments will do desperate things when their backs are against the wall. We have seen this in spades if we care to look. "Quantitative Easing", "stability levy", nice terminology for what is in fact more accurately called counterfeiting and theft. 

We need to rescue ourselves and take charge of our financial future. We need to personally make the move back to honest money by getting out of their dishonest system. How? Simple:

Reduce consumption. Most of what we buy is stuff we don’t need. Buy gold and silver with the savings from the reduced consumption. Move all your existing savings into physical gold and silver
You cannot change the system politically. Not enough people understand what is going on. The change has to be on an individual basis, waking one person at a time. Remaining in their FIAT currency and keeping your savings in the banking system just puts it on a platter ready for the taking.
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.”

― Charles MacKay, Extraordinary Popular Delusions and the Madness of Crowds
‘There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” ― Ludwig von Mises, Human Action

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