The Crisis Goes Forward - As Gold Goes Backward

Darryl Robert Schoon
Posted Dec 8, 2008

Systemic crises are caused by the inability of systems to respond to stress. When systems can no longer adequately respond, systemic collapse ensues. We are currently witness to the end of a system of paper money based on credit and debt, a system now in the final stages of collapse.

...All managed markets - whether managed by government allocation as under Communism or by government sponsored central bank credit as in Capitalism - are doomed to failure. The triumph of free markets over managed markets is coming.

WHEN SYSTEMS COLLAPSE
RESISTANCE IS FUTILE

…Hope that recent political changes can resuscitate the system of central bank credit and paper money is futile. The new economic team appointed by President-elect Barack Obama is but a resuscitated version of the old team, the very ones responsible for the present system and its fatal problems.

…Obama appointee Lawrence Summers' 1999 support of the Gramm-Leach-Bliley bill is indeed noteworthy as Gramm-Leach-Bliley repealed the Glass-Steagall Act, specifically passed in 1933 to prevent another depression.

…Clinton's signing of the Gramm-Leach-Bliley bill in 1999 directly led to the financial deregulation responsible for the decimation of financial markets in 2008.

…It is no coincidence that both Lawrence Summers and another Obama appointee, Paul Volker have been instrumental in the past in the manipulation of the price of gold, the very indicator that bears witness to the false promises of paper money.

In 1988, Summers co-authored a paper, Gibson's Paradox and the Gold Standard, wherein he postulated that by fixing the price of gold, interest rates could be stabilized; an assertion as absurd as believing fixing the temperature of thermometers can prevent global warming.

…Volker is less known for his remark that it was a mistake not to have earlier "managed" the price of gold.

Volker, Geithner, Summers, et. al. are all insiders in the imploding system of paper money. Appointing Volker to head the President's Economic Recovery Board may raise the hopes of the desperate but it will do nothing to stem the tides of change.

…when the present system fails - and it will fail, it will result in a far better world - a world in which we will again be free from slavery to debt, imposed by a conspiracy of bankers and politicians.

THE BACKWARDIZATION OF GOLD
AND THE UPWARDIZATION OF GOLD AND SILVER PRICES

…Professor Fekete recently posted his article, Red Alert: Gold Backwardization!!!, in which he alerted readers that for the first time in history the cash price of gold is higher than the nearest futures price, indicating that buyers value the present physical possession of gold more highly than future possession.

Professor Fekete stated that when gold recently moved into backwardization on December 2nd, a historical line had been crossed, a line which signified whether or not the present system could be saved. Now, according to Professor Fekete, with gold in backwardization, it cannot.

While the war between paper money and gold and silver is still being waged, according to Professor Fekete the outcome is no longer in doubt as the present system is now beyond redemption. This has profound implications for the future price of gold and silver and for gold mining shares.

In the last Great Depression, the shares of Homestake Mining, the world's largest gold mine, went from $4.19 in 1929 to $495 in 1935, paying a $56 dividend that year. In the coming depression, gold and gold mining shares should do just as well - and, after the onset of the depression, just imagine what they will do during hyperinflation.

THE COMING CAPITULATION OF PAPER

Physical gold and silver, whether in hand or in the ground will be the last refuge for the trillions of dollars still invested in paper assets. With an estimated $27 trillion of wealth already lost this year, the day is coming when the last believers in paper assets will finally look to gold and silver to preserve their dwindling wealth.

But when that day comes, those owning monetary metals will not exchange their gold and silver for paper money at any price, i.e. permanent backwardization; and the last believers in paper assets will be stuck with now worthless government issued coupons which previously had passed for money.

The recent historic backwardization of gold is a clear indication that sometime in the future a state of permanent backwardization will occur - and on that day, the world will finally be free from the tyrannical slavery of central bank induced indebtedness.