It would be nice to think that the Fed leadership is just not insightful, or perhaps just inept, when it comes to monetary policy, wouldn't it? Any other ideas would be horrible to contemplate, wouldn't they?
Remember the story of "The Emperor Has No Clothes"? Wasn't it a commoner in the court who saw things as they were, didn't buy into the lie, and just spoke what he actually saw?
You see, in order to be lied to, you have to first believe the lie. You have to convince yourself that the other person is right while you, yourself are incorrect, and that what you are seeing is not really what you are seeing. What happens if you don't buy into the lie?
So, how do you use a naked Emperor to make more profit?
First, you must know what the truth is. What is the truth about monetary policy? In our country, as in all others around the world, debt is money. The world’s monetary policies, the making and creating of money depends solely on people going into debt. Second, you must realize that monetary policy depends solely on people and governments borrowing and paying back the money they’ve borrowed using more borrowed money. All major governments of the world are heavily indebted, and the answer to that debt, they think, is to debase their currency. You must also realize that even forming a more perfect union in Europe won’t rid themselves of debt, as Gerhard Schroeder suggested on September 5, 2011.
So, you can see that monetary policy will not work if there is no debt, for if there is no debt then there can be no money growth. Therefore, governments and monetary officials the world ‘round must, absolutely MUST print more money.
On September 1, 2011, CNBC presented a brief look at gold and the history of gold. James Grant, a CNBC guest that day, reiterated for those of us who’ve forgotten that gold is an objective standard by which humans have measured everything for thousands of years.
People instinctively know that fiat currency is worthless at best and we humans crave an objective standard by which to measure all other items of value. We humans have for over 6,000 years know that the valuable item is one that is rare, one that requires time, effort, and energy to produce or gather. We humans know, as if it were engrained in our DNA that gold IS that objective standard by which we measure the value of all other things. Gold is our North Star. Gold is the one fixed element, the objective standard by which we’ve valued everything else.
In the meantime, some people are shouting from the mountain tops that the Emperor has no clothes. So, this is how you turn that small, but significant detail into more profit for you –in other words, this is how you use their model for your own purposes: Their model depends on you and your country borrowing more money. If you stop borrowing money their model fails. The model stops working if you and your country cease borrowing to finance your spending. Sooner or later people will figure this out.
Buy gold, now while it’s cheap. If you are on a budget consider the Junior Miners Paramount Gold and Silver (NYSEMKT:PZG) and Great Panther Silver (NYSEMKT:GPL). Both of these companies have mines that are in relatively safe non-rioting countries.
I even like some penny-stock miners, but cannot mention them on Seeking Alpha.
Disclosure: I am long PZG, GPL.