Commentary - 01/11/2008

Jim Rogers Does Understand

"The Federal Reserve is totally out of it. They're destroying the currency and driving up inflation, which will result in higher interest rates and a worse economy. We now know the Fed doesn't understand markets or economics, but is just trying to bail out its friends on Wall Street at the expense of 300 million Americans; nay, of the whole world." - Jim Rogers
Obviously Jim Rogers doesn't know me, but when diverse people come to the same conclusions from entirely different directions, there must be some substance to their way of thinking. Back in 1889, the Great Red Dragon book contained this statement, right up front:
"The Imperialism of Capital, in our time, stretches the arms of its power over the whole earth: it alone sways the nations with pre-eminent rule. It buys all of the products of the earth: it fixes all prices of all commodities without regard to the law of supply and demand, by its own arbitrary will. It is Imperial over industry and trade, and none can resist it. It is rapidly progressing toward its ultimate aim, of possessing itself of all the world's wealth and all the world's property."
What Jim Rogers is pointing out is that the end-game, of centuries of effort, is now playing out in front of our eyes. People in high office have sold their souls to be in their positions at this time and are showing that, whether or not they now have empathy or a conscience, it's too late for them. It is NOT too late for the rest of us if we wake up from our programmed sleep and reclaim our natural self-defense of mind, body and soul. Owning gold and silver instead of promises is one means of self-defense. By the way, AP posted this today: Gold Hits Record $900 an Ounce.

Economics is dismal because it was purposely made difficult to study, not because the subject itself is difficult. Once you gets past all the smoke and mirrors surrounding the subject, you'll realize it's all based on promises. In fact, my breakthrough in understanding this was because back in 1938, Harry Scherman wrote a book titled "The Promises Men Live By, A New Approach to Economics." I found this book over 20 years ago, and it's just as informative and current as the first day of publication. There's a book review from the March 28, 1938 TIME magazine, titled "Easy Economics."

Substitute the word "promise" for bank accounts, certificate of deposits, corporate bonds, treasury bonds, Federal Reserve Notes, and so on, and you will start understanding economics real fast. It doesn't matter whether its mortgages, commerical paper, derivatives, collateral debt obligations, options, swaps, futures, and so on, they're all essentially promises. Times are good [expansions] when most promises are being kept, not so good when promises are being broken [recessions]. There is no counterparty promise in physically owning gold and silver, which is precisely why it becomes more valuable during times when promises are NOT being kept. Like right now! Today, AP also posted this: Stocks Slammed by Bad Credit Fears.

The reason promises are so damn important is that we all make promises to others based on the fact that we expect others to keep their promises to us. That's why its so important that promises be kept. Historically, most people keep their promises, unless promises to them are not kept. Individual promises are concentrated in banks, which in turn are concentrated in central banks, which in turn are concentrated in governments. Unfortunately, governments historically have a bad record of keeping their promises. There is too much lying, stealing and murder, which is the major substance of our history books. This was neatly summed up a few centuries ago:

"The history of the great events of this world are scarcely more than the history of crime."
Voltaire (1694 1778)

Sometimes The Dragon Wins

2008 by Edward Ulysses Cate
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