It’s a little too early to say for certain, but the latest jobs figures just might have finally awakened the gold market. Posted by James Randolph on July 08, 2011
You will need gold investments to weather the “final and total catastrophe.”
July 08, 2011 – It’s a little too early to say for certain, but the latest jobs figures just might have finally awakened the gold market. By this time it is surprising, however, that anybody was surprised by the news.
The Wall Street Journal reports that “economists surveyed by Dow Jones Newswires had forecast payrolls would rise by 125,000.” Close. The real figure was a whopping increase in non- farm payrolls of 18,000. And the jobless rate continued its upward crawl for the third straight month, now at its highest level since last December.
“Manufacturing employment remained weak, adding 6,000 jobs … employment in professional and business services, which had shown strong gains in previous months, rose by 12,000 … government employment fell by 39,000 … Americans’ incomes … edged lower … the housing sector remains a big drag on the economy … policy makers have few tools left to stimulate the economy.”
And so goes the “recovery.” No surprises there, only the cold hard reality of the state of our economy. It just bears out what Irving Fisher said in “The Purchasing Power of Money” back in 1912: “Irredeemable paper money has almost invariably proved a curse to the country employing it.”
“Fiat-money injection increases consumption out of current income at the expense of savings, and, in addition, leads to higher investment, so that the economy enters an inflationary boom, living beyond its means,” says Thorsten Polleit in the Ludwig von Mises Institute’s Daily Mises.
Left to its own devices the economy would react with a recession and quickly reach equilibrium, but central banks jump in to fix the problem, lowering rates even further and fueling another round of credit expansion. Whether that is due to a grandiose self image or acquiescence to public pressure is irrelevant – the upshot is trying to douse the fire with gasoline.
The cycle repeats, with debt load expanding faster and faster relative to real income until the economy passes the point of no return. Ludwig von Mises, one of the most notable voices of the Austrian School, wrote this in “Human Action: A Treatise on Economics” in 1949:
“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.”
Apparently Bernanke and the government have chose the latter option, and that makes gold investing more urgent every day.
Senior Staff Writer – Certified Gold Exchange