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The progress of the 2009 monsoon seems to be 29% below normal. This may be adversely affecting food prices. In the latest available data, inflation based on CPI-IW has surged back to values near 10%. (This is the three-month moving average of the rate of change of seasonally adjusted CPI-IW). Ila Patnaik has an article in Indian Express analysing the implications of this situation for monetary policy. India really needs an `inflation report‘ institution. In America, a land of plenty, the economy is in the gutter, incontinent government spending is coupled with out of control budget deficits resulting in ballooning debt, bankrupt States, skyrocketing unemployment with benefits ending is compounded with manic-depressive politics while commercial real estate is imploding, earnings of publicly traded companies are cratering, the remaining liquidity in the financial markets is illusory from the likes of program trading via Goldman Sachs and there is a new weekly event called ‘bank failure Friday’ with the FDIC now bankrupt and would be insolvent but for its line of credit with the Treasury. The solution from Wall Street and Washington appears to be quantitative easing which is doomed to failure as they intentionally exacerbate the greater depression. Consequently, for good reason the general sentiment for the Federal Reserve Note Dollar (FRN$) appears to be particularly bearish. FUNDAMENTALS The FRN$ is doomed. It is intrinsically worthless and like all other fiat currencies will be relegated to the annals of history. But the FRN$, a mere figment of people’s imagination, is still a strong hallucination. It is this misplaced trust, confidence and reliance that leaves it with a bid. Perhaps it is the pragmatic irrationality based on the human action of billions of individuals that leads to a valuation for this worthless illusion. So while the ultimate consequence is predictable, complete worthlessness, the timing is unpredictable. This is like the Heisenberg Uncertainty Principle from quantum mechanics which states that certain pairs of physical properties, like position and momentum, cannot both be known to arbitrary precision. That is, the more precisely one property is known, the less precisely the other can be known. It is impossible to measure simultaneously both position and velocity of a microscopic particle with any degree of accuracy or certainty. The merger of State and corporate powers is fascism. In the blink of an eye the remaining remants of free market capitalism was eviscerated and at the stroke of a pen on the bailout bills the democratic Republic was replaced with rule by an oligarchy. But fascism desires unity as even the symbolism of the fasces suggests strength through unity: a single rod is easily broken, while the bundle is difficult to break. Currency controls are used to force ‘unity’ and in the modern age the creation of new FRN$ illusions is done by punching buttons on a computer and they have no basis in reality.
TECHNICALS If China were to diversify away from the FRN$ or significantly reduce their holdings then it would be, in the eyes of America, tantamount to declaring financial war. While China may be rising economically, as its monstrous increase in official gold reserves shows, it still has a long way before it catches the United States militarily. The massive FRN$ holdings by China and Japan gives them tremendous leverage in the market.
But the United States is the world’s sole superpower and as explained in John Perkins’ Confessions Of An Economic Hitman its resolve to respond to financial, geo-strategic or political threats, either overtly or covertly, is extremely strong. Perhaps the greatest threat to the American Empire is the central bank gold price suppression scheme. The USD Index, which is composed of about 60% of the Euro and another 20% from the UK, Sweden and Switzerland, has undergone a tremendous decline this decade. Europe and the UK, with the Bank of England engaged in quantitative easing, are in worse condition than the United States. The critical 70 level was even briefly breached in early 2008. The massive Sichuan earthquake was the 19th most deadly in history leaving about 70,000 dead, 18,000 missing and about 375,000 injured. Shortly afterward the USD Index had a significant bear market rally.
But in June 2009 the 50dma and 200dma crossed and the 200dma has now turned negative which has led to much of the bearish chatter. But I doubt the Chinese either want to see the value of their reserves decline further or start a financial war by dumping their FRN$ reserves. As the New York Times reports: China’s main complex for making nuclear warhead fuel, codenamed Plant 821, is beside a river in a hilly, forested part of the earthquake zone. It is some 15 miles northwest of Guangyuan in Sichuan Province. The vast site holds China’s largest production reactor and factories that mine its spent fuel for plutonium — the main ingredient for modern nuclear arms. … North in an even more rugged and inaccessible region, nuclear experts said, China maintains a hidden complex of large tunnels in the side of a mountain where it stores nuclear arms. “It’s very close to the epicenter,” said one specialist, who spoke on the condition of anonymity because, to the best of his knowledge, the exact location of the secret complex had never been publicly disclosed. But surely this massive 8.0 earthquake, the effect on China’s nuclear program and the subsequent rise in the FRN$ were merely coincidences and not the result of the HAARP program as asserted by Benjamin Fulford, Asia-Pacific Bureau Chief for Forbes Magazine from 1998-2005. But such a tale would make a great script for a fictional movie like The International or GI: Joe. After all, the United States wears the fascist white hat to spread democracy and would never intentionally murder hundreds of thousands of innocent civilians in an effort to defend their fiat currency and banking oligarchs. The FRN$ appears to be reaching some critical technical points where a severe breakdown could happen. But when there are key technical levels rest assured that the American Empire will likely move heaven and earth in an attempt to perpetuate their power. GOLD Until about 2005 the price correlation between gold and the FRN$ was extremely strong with an r-square value around 90%. As the currency collapse has continued the r-squared value has declined. While the FRN$ and USD Index may rally gold will not necessarily decline. Gold, silver and platinum are money and extremely safe and liquid assets in which to store capital. These are prime characteristics sought by investors during The Great Credit Contraction. Nevertheless, this will be played out over years and there will be undulations as there are periodic periods of bullishness accompanied by risk taking by those who mistakenly act upon the green shoots diagnosis. What is important is to keep the key ratios in mind and use them to make purchases after the coming market crash. CONCLUSION The American Empire is still the sole world superpower. Its economy is withering, banks are failing, currency is collapsing and banking oligarchs are looting with reckless abandon and bankrupting for profit. The dissipated rule of law does not even provide an unintelligible answer to What Is A Dollar? Gold and other monetary metals stand as the bulwark for capital preservation despite the often empty rhetoric about inflation versus deflation. While the fundamentals for the FRN$ are terrible the technicals seem to suggest there may be a bear market rally coming. If that occurs then there may be a decline in the FRN$ price of the monetary metals. But taking the risk by moving up the liquidity pyramid into less safe and less risky assets in the hopes of profiting may be a fool’s errand and preparations for survivalism in the suburb and learning how to vanish may be a wiser allocation of capital. America is ground zero for this currency collapse, which has only just begun, and if you think she is a rogue elephant on the world stage now just wait until she is truly panicked. DISCLOSURES: Long physical gold, silver and platinum with no position in the problematic GLD or SLV ETFs.  Join the forum discussion on this post - (2) PostsIn my earlier post on the Mechanics of Cartels, I opined towards the end that being a good guy might actually be a reasonable strategy in a competitive world. In an environment where everyone else is being a cutthroat, it seems unreal to be decent and trustworthy. But in this article, I am going to show that there are unique benefits to being a good guy, being trustworthy, and not stabbing people in the back. George Herbert once said, “Honor and Profit lie not in one sack”. And indeed, we read many stories about how the honest person lives a life of penury, whereas the dishonest crook is always rolling in wealth. However, I believe that the dishonest person can only go so far. After a point, they cannot get any richer without becoming honest. It’s like a chess player who has great talent, but hasn’t studied strategy. They can be great club players, but to reach the top league, they have to learn hitherto un-studied theory. Image Credit: godchased
In cartels, we have seen how doubt about another person’s trustworthiness can cause the cartel to break up. As an example, in India, the iPhone was released by two major companies (Airtel and Vodafone) almost simultaneously. When I say almost, I mean that Vodafone released it one day after Airtel. In the United States, the iPhone costs only $200. However in India, it was released for $775 by both companies. They had obviously come to an agreement beforehand that they were going to release it together at that price. Perhaps someone here who knows more can enlighten me as to whether or not they could have been taken to court for that for violating anti-trust policies? In any case, it must have been an interesting negotiation complicated by the fact that Vodafone released the iPhone one day after Airtel committed to selling it at $775. If the next day Vodafone had released the iPhone for say $300, Airtel would have been devastated. No way anyone was going to buy it from Airtel for $775 if Vodafone released it for $300! Vodafone had a chance to cheat on Airtel and capture the entire iPhone market share. Yet they did not do this. Why? Were they too decent? Did they feel sorry for Airtel? Did they feel that they can’t let Airtel down? After all, I’m sure there was no written contract. That would most certainly be illegal. I am confident that Vodafone did it because they have to be perceived as trustworthy – not only by Airtel, but by the whole world. If Vodafone had reneged on it’s implied contract, they would lose their image as a trustworthy business partner. In the modern day world, large portions of wealth are created by partnering with others. And these partnerships frequently require that each party stick their necks out for the greater good. No one wants to do business and form a partnership with someone who is untrustworthy. Vodafone gave up some of it’s short term profits in order to gain long term credibility. How can you make sure that other people view you as a credible person? After all, they cannot look inside your head. They have to gauge you by your actions. I had written an earlier post on how people use signals to form their opinions. By not letting Airtel down, Vodafone signaled to the rest of the world that it was a good and trustworthy business partner, and thus laid a stronger foundation for it’s future business practice. So we see that,at least in this case, selflessness is just another way of being selfish in the long run. Of course, it’s much easier to be selfless if you really feel like being selfless. Maybe this is why nature has given us the capability to feel this way. Perhaps this is why nature has implanted us with concepts like righteousness, trustworthiness, and honor. Because as I said, in the long run, they pay off. J S Mill wrote: “The laws and conditions of the Production of wealth partake of the character of physical truths. There is nothing optional or arbitrary in them. … It is not so with the Distribution of wealth. That is a matter of human institution solely. The things once there, mankind, individually or collectively, can do with them as they like. They can place them at the disposal of whomsoever they please, and on whatever terms” (Principles of Political Economy, 1848, II,1.1). In 1983, Friedrich Hayek commented that this view of J S Mill “is really an incredible stupidity, showing a complete unawareness of the crucial guide function of prices …” Hayek explains: “We must face the truth that it is not the magnitude of a given aggregate product which allows us to decide what to do with it, but rather the other way around: that a process which tells us how to reward the several contributions to this product is also the indispensable source of information for the individuals, telling them where they can make the aggregate product as large as possible” (Conference paper published in Nishiyama and Leube, “The Essence of Hayek”, p 323). This must have been one of the most intemperate remarks that Hayek ever made about anyone. One of the things I have learned from Richard Reeves book, “John Stuart Mill, Victorian Firebrand” is that Karl Marx was also unimpressed by Mill’s attempt to separate the laws of production and distribution. Marx viewed this as “a shallow syncretism” (Reeves, p 210). He thought Mill was attempting to reconcile irreconcilables. How silly were Mill’s views about distribution? In order to answer this question I think we need to understand Mill’s views about property and inheritance. I see a lot of merit in much of what Mill wrote about property. For example: “The institution of property, when limited to its essential elements, consists in the recognition, in each person, of a right to the exclusive disposal of what he or she have produced by their own exertions, or received either by gift or by fair agreement, without force or fraud, from those who produced it” (“Principles of Political Economy”, II, 2.2). It is when Mill writes about “landed property” that I begin to see problems: “When the “sacredness of property” is talked of, it should always be remembered, that any such sacredness does not belong in the same degree to landed property. No man made the land. It is the original inheritance of the whole species. Its appropriation is wholly a question of general expediency” (“Principles of Political Economy”, II,2.26). Given that land can be exchanged for other goods I don’t see how it is possible to argue that rights to ownership should not be recognized as the same for land as for other goods. The problem that Mill had with “landed property” seems to be associated with the potential for a relatively small number of families to have a disproportionate amount of wealth and to exercise disproportionate political power. He was against the inheritance of “enormous fortunes which no one needs for any personal purpose but ostentation or improper power”. Richard Reeves points out that Mill was particularly concerned to distinguish between “earned” and “unearned” income. Mill viewed inheritances as “unearned” and argued that it would be socially beneficial to impose a limit on the amount any person could inherit. Mill’s views about redistributive taxation were also influenced by his aversion to inherited wealth: “To tax the larger incomes at a higher percentage than the smaller is to lay a tax on industry and economy; to impose a penalty on people for having worked harder and saved more than their neighbours. It is not the fortunes which are earned, but those which are unearned, that it is for the public good to place under limitation. …I conceive that inheritances and legacies, exceeding a certain amount, are highly proper subjects for taxation: and that the revenue from them should be as great as it can be made without giving rise to evasions … such as it would be impossible adequately to check” (“Principles of Political Economy”, V, 2.14). It seems to me that Mill’s claim that distribution of wealth should be viewed as entirely separate from production was silly – and contradicted by his own views about the adverse consequences of progressive taxation. Mill’s idea for an upper limit on the amount that anyone could inherit also seems extremely silly. I can see some wisdom in his views about taxation of inheritances, but even here it seems to me that he was fooling himself if he thought that inheritance taxes would impose no disincentives to working and saving. Despite all this silliness, however, Mill still had many sensible things to say about property rights and taxation. Join the forum discussion on this post - (1) PostsSomasekhar Sundaresan has written in Business Standard on the proposed Financial Services Appellate Tribunal (FSAT). Deepshikha Sikarwar has written in Economic Times on the proposed movement towards Regulatory Impact Assessment (RIA). These ideas come from the Mistry and Rajan reports. These words — financial services appellate tribunal; regulatory impact assessment — sound like true bureaucratese, and these kinds of issues tend to get ignored by both practitioners and economists. However, this is where the rubber hits the road, this is where economic reform actually gets done. Join the forum discussion on this post - (1) PostsOne element of responding to the fiscal stress that India is now facing consists of the creation of the Debt Management Office. I have an article in Financial Express titled What is the right time to build a DMO?, and there is one in Economic Times by Siddharth Shah, Chittaranjan Datar and Nirvaan Gupta titled Is India ready for debt management office?. Also see this editorial in Financial Express on the new Cash Management Bills. I have kept my super secret system a secret for many years, but I have to let you in on it now because a great calamity will befall gold shortly – once it breaks $1000 it will be downhill to $500. The chart below does not lie! I then realised that one cannot study gold patterns until 1975, when it was no longer illegal to own gold. This allowed for human emotions to show up in prices. I then realised that the speeding up of information began in 1996, because this was the year that the Internet really began to take off. With this insight, I found this pattern and have kept it to myself to make massive profits but now the charts foretell collapse. You have been warned, get out now.
PS – As you can tell from the above that I don’t put much store in reading tea leaves, sorry, charts. There is a legitimate use of them, but I think a lot of people choose timescales and see patterns just to reinforce their preconception. On 12 August 2009 I interviewed (mp3) John Rubino of DollarCollapse.com for the 48th episode of the RunToGold Podcast about economics versus political dogma, the two paths for the FRN$ currency crisis, the Fear Index and potential solutions individuals can take to protect and preserve their wealth during the transition and increase of political risk. INTERVIEW Trace: Your book was originally published back in 2004 and the title was “The Coming Collapse of the Dollar” and can you tell me a little bit about why the title was changed in 2008?
John: Well, that was the publisher’s idea actually. Their sense was that the collapse of the dollar was not coming anymore but it had arrived. And the so they dropped the “coming”, and just called the book, The Collapse of the Dollar. And that turned out to be a bit premature cause the dollar’s holding on still, but not grossly premature. I think the amount of currency being created is going to cause the imminent currency crisis that is going to put the dollar on the front page of a lot of newspapers. We’re going to see headlines that include dollar and collapse in the same sentence. So, the time is coming. POLITICAL DOGMA V. ECONOMICS Trace: Many people are squawking especially the politicians and bureaucrats in Washington are squawking about how nobody saw this coming, that “we couldn’t have saw this coming”, And yet, we’ve got a book here where the title of the book is a coming currency collapse, and then in 2008 we actually had to update it. How has this study of economics versus the political dogma that comes out of Washington and the bureaucrats affected the average person and how can people be able to profit from it if they understand the real laws of economics that are at work? John: One of the really strange things about big turning points in history is that the people in charge are generally clueless at the turning point and this is a prime example of it. All the basic indicators of a coming crisis were there, you know, we had a massive series of financial bubbles that built up to the housing bubble which is the biggest of all. And the amount of paper currency that was being created around the world was through the roof and debt levels were soaring. And anybody who was able to step back and not be involved in the day to day operations, such as by making of money from derivatives and things like that, should have been able to see that we were heading off a cliff. Everybody in charge in, maybe, 2006, if you had ask them the consensus would have been that every thing’s fine. You would watch CNBC and you’d never see anything that would raise an alarm or listen to C-Span all the people in government were talking about – “How to expand spending?” and get more tax revenues and they weren’t worried. It’s a very hard thing to explain. But to James Turk and I when we were writing this book back in 2004, it was pretty obvious that we were in deepening financial trouble and that there wasn’t really a solution since we borrowed more that we can ever hope to repay, so that turned out to be true, and its becoming more true everyday. And so, the people that who are talking about recovery and we’re back on track and green shoots are again missing the big picture which is that we’re continuing to accumulate more debt at an accelerating rate, and we’re creating the conditions for an even bigger crash further down the road, this time it will be a currency crisis probably in which the dollar tanks, and interest rates spike and the financial sector once again collapses, but all due to basically the same process, which is excessive debt creation. Trace: It is like they think that the cure for a hangover is more alcohol and throw in a little morphine. John: Exactly. We are giving the heroin addict more heroin to fix the withdrawal symptoms but the eventual effect is that we need even more heroin down the road and it will kill the patient. Trace: Right. TWO PATHS John: We’ve reached a point where a currency crisis is unavoidable. There are basically two horrible scenarios: One is the 1930’s style, deflationary crash and the other is Weimar Germany style hyperinflation and there is really no middle road because we’ve taken on so much debt that we only had the choice of collapsing under the weight of it or inflating it away (EDITOR’S NOTE: I attempt to merge, academically, these two potential paths into one in The Great Credit Contraction). There’s no other solution so, we have a very, very difficult ten years ahead of us, or an interesting ten years depending on your point of view. I guess it depends on how much gold you own? THE FEAR INDEX
Trace: Well, there would definitely be a lot of change in which change comes the opportunity to profit from it. Though, one thing that I have noticed is that a lot of people are scared of change and the dollar collapse you mentioned something called the fear index, can you please give a brief overview about what this fear index is, and how it’s changed from 2004 till the present? John: Sure. The fear index was an indicator that was created by James Turk, twenty five or so years ago. It basically measures the relationship between outstanding paper currency in the U.S. and gold reserves at Fort Knox. And when the amount of paper is increasing in relation to gold, that means that we’re basically increasingly afraid of what is going to happen in the future. And it flashed a screaming buy signal earlier in this decade. The markets are becoming more and more worried about what is going to happen in the future and capital is beginning to flow into precious metals, and the indicator has only gotten more positive over time as we’re printing more and more paper dollars out there so, the buy signal was flashing, I think it was 2000, but it might have been 2002, and it’s still saying buy gold, and short the dollar to this day, and its even more extreme. It has flashed buy signals about five times since James Turk created it. And each time, gold has spiked after the buy signal, and this time was no exception. Gold was, I think, in a 300 range when it flashed the buy signal in this decade, and since then it’s tripled and the indicators are still saying buy gold because we are headed for a currency crisis because the dollar is still be debased. Because it has been such as reliable indicator its one more reason to load up on precious metals and look for ways to avoid exposure to dollar or actively short the dollar. THE SIMPLE SOLUTION Trace: Yeah and I know a lot of people think, “Oh, gold isn’t money, because we don’t really use it anymore in this day and age. But actually last week, I was engaged in a transaction, a six figure transaction where I settled and extinguished it using physical gold bullion through GoldMoney. And so, now, when we’re moving into this new transitionary age, what role do you see these digital gold currencies playing in competition to the fiat paper franchises? John.: Well, yeah gold has been societies’ money of choice for maybe three thousand years, and only in the last 30 or 40 years have we gotten away from that, and gone to a completely paper money system. That is putting the politician’s in charge of money creation and is an inherently flawed idea for a lot of obvious reasons and we’re paying the price for that now. So, when paper money fails, which it is on the verge of doing, then the market is going to start looking around again for something to replace paper. Society needs something to function as money as a crucial tool to modern society. We are starting to look again at gold and silver which are older forms of money which can’t be created in infinite quantities by government on a printing press. Their rarity and slow increasing supply of over time means that they hold their value. We will come back to gold in some form and start treating it once again as money in terms of exchange as well as storage of value which we always used before. The attractiveness of a GoldMoney account will rise in relation to a standard checking account and more and more people will choose to keep their spare cash in that form, instead of FRN$ cash as the dollar continues collapsing. And its possible that we just see a gradual migration to digital gold currencies which turns into deluge, as everybody figures out that this is the better way to go and society, via the free market, returns to gold because it is more efficient. That would be a nice peaceful way for this process to progress. And a more disruptive way might be that we have a massive currency crisis that leads to a financial collapse. Then there would be discussion about what money is and how best to structure the monetary system of the world. The digital gold currencies which have survived and prospered throughout the process may become the focus of the discussion and could be adopted by government decree. We will see. One way or another we’re gonna have to go back to some form of sound money and gold is the most logical choice. Trace: Right. And now with these digital gold currencies as you say, they can be adopted first as alternative and eventually become a substitute to the current monetary system. While the situation is serious the prescient can take preemptive action to order their affairs in a way to minimize disruption. For example, there is a bank holiday but you could still exchange your values through the GoldMoney system because GoldMoney is built from the ground up to be solid, in the sense that there is no fractional reserve and it is not based on a fiat currency. John: Yeah. I mean that system has been thought through like you said from the ground-up to be the opposite of a fractional reserve fiat currency system. Probably GoldMoney and the other electronic gold payment systems will keep o0perating even if there’s a disruption in the fractional reserve banking system. If that happens the publicity will be really favorable for digital gold because you will see a lot of media articles about how Bob Smith in De Moines is not having any trouble even though all the banks in his town are closed because he still has his GoldMoney. He is still be able to transact and buy food. Trace: Right, and engage in ordinary daily transactions. John: Yeah. And once that happens, the system could, via the market, switch over almost overnight where everybody just flows into these currencies that clearly work better than the systems that the governments and fractional reserve banking industry are running. Trace: Right. And with the speed that it can happen. For example, people start “Twitting” about it, they go through Facebook, and the next thing you know we could be seeing quite a revolution. People can fight a revolution either with the power of the purse or with the power of the gun. I am not that favorable of the option of trying to fight a revolution with a gun. But as far as using sound money to protect against these despotic inroads by government the use of sound plays a critical role and I see gold playing a key role. These digital gold currencies are rising because of the negative economic environment and help us protect ourselves. After all, this currency collapse is the largest in history. John: Yeah. THE GOLD CLAUSE Trace: So while a currency collapse is happening there are solutions. Another option is for people to build gold clauses into various contracts. For example instead of a CPI adjustments for rent they can add gold clauses into their rent or debt issuances. If they rent they could have a gold clause in there to protect against this currency debasement. [NOTE: If a gold clause is written into the contract then you may want to include a residual effect clause for illegality. For example, if gold contracts are made illegal then the amounts will revert to silver and if silver is also made illegal then platinum, etc. Of course this is only general advice and not meant to be neither investment advice nor legal counsel. Consult your attorney for individual application.] There are many alternatives for people to take to protect and preserve their capital. They could also buy silver. John: There is a wild card though. Just because we are painting a picture of a peaceful market driven transition the governments are not going to like this transition because it threatens their control over the money supply which is the main source of power that has been accumulated over the years. John: All kinds of crazy things could become possible when goverments really start to panic. They could make much of these solutions illegal. They could go after GoldMoney even though it is domiciled in a very safe place. They could make gold clauses in contracts illegal like they have done in the past. Trace: Yeah. You know, they both made the gold clause contracts illegal and attempted to confiscate the gold. Fortunately under current federal law gold clauses in contracts are enforceable and we can legally possess gold. It will definitely be interesting to see what exactly the governments attempt to do because their tendencies are to do the exact worse thing possible for their creators the constituents. John. Yes. We are at the beginning of one of the all time greatest government panics [NOTE: You may be interested in Survivalism In The Suburbs]. When they find out that this monetary system is not working anymore then we are going to see some stuff that will shock even you and I who are looking for this kind of stuff. Trace: Right. If we think these criminal gangs costumed in government regalia that are owned by the banking industry are a rogue elephant on the world stage now we need only wait until they truly panic. OTHER SOLUTIONS AND POLITICAL RISK John: And the solution becomes diversification because there is no one way of attempting to get your money away from the government to where it is going to be completely safe. Like we were talking about before this call started foreign real estate is an option[NOTE: We were also discussing my other website How To Vanish]. Buy some property offshore and that may put some of your capital beyond the reach of your home government. Store gold or silver bullion in another country, open a digital gold account and foreign stock accounts. There are many things someone can do to insulate their capital. Then the likelihood that your capital survives the government tactics increase. Trace: I agree. Having diversification among political jurisdictions and an alternative to the current monetary system, such as GoldMoney, is a wise move. I remember last time at the Cambridge House Conference event where we had a special get together with about 50 of us and the main topic for 45 of the 50 minutes was political risk. I agree that minimizing that political risk is extremely important in this day and age. I also recommend the listeners read your book The Collapse of The Dollar. John. Thanks, Trace. DISCLOSURES: Long physical gold, silver and platinum with no position in the problematic GLD or SLV ETFs. The Rasmussen Consumer Confidence Index, rose to its highest reading so far this year on Wednesday. At 79.9, the index is now at its highest level since just a few days after the Lehman Brothers collapse — which many analysts mark as the start of last year’s financial crisis. The consumer index (which is refreshed daily) is now up 20 points from the start of 2009. The Rasmussen Investor Index, also spiked up two points on Wednesday. The investor confidence guage is now up 23 points from the beginning of the year. The consumer reading is more evidence that Q3 GDP growth will likely be much stronger than most economists expect or are currently predicting. The Chinese concept of the Way, or Tao, was current before Confucius lived or taught; the Books of Odes and Rites tell of Heaven, and reveal beliefs in ancestor-spirits and a supreme being with a human face. However, Tzu-kung reports that “one cannot get to hear [Confucius’] views on human nature and the Way of Heaven. (V, 13, 78) Confucius does not conjecture about the nature of God or Heaven, but he felt the full force of Heaven’s Decree upon him, and suggested that shame is the feeling of falling afoul of the Way of Heaven: “When you have offended against Heaven, there is nowhere you can turn in your prayers.” (III, 13, 69) The subject of Confucius’ teaching is not the nature of man, but man’s conduct. It is not the Way of Heaven in the sense of ultimate truth about the universe, but rather in the most down-to-earth sense of each person and each state acting dutifully, benevolently, in compliance with the Rites, outward form conferring inward grace. Confucius’ Way is in no means mystical. It can be learned, and taught. “The Gentleman . . . goes to men possessed of the Way to be put right. Such a man can be described as eager to learn.” (I, 14, 61) The fact that Confucius’ conception of the Way relies on learned forms rather than mystical revelation does not make it any less a matter of life and death:
When the ruler governs according to the Golden Mean, observes the Rites, and follows the Way, he brings his state to a condition of harmony, for “when the Way prevails in the Empire, the Commoners do not express critical views.” (XVI, 2, 139) In this dialogue with the senior minister of the State of Lu, Confucius asserts that the Way is all the ruler needs, rebuking the Legalist School of philosophy and every gang of thugs and killers to assume power from his own time down through the ages:
With his reverence for precedent and antiquity, his abiding conservatism, and his conception of a hierarchical society led by benevolent example, Confucius could be either an instrument or an impediment to the rulers of China. To some, he was both at the same time. |
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