Savings, Just What The Doctor (Paul) Ordered

"All the perplexities, confusion and distress in America

arise not from defects in their Constitution or Confederation,
nor from want of honor or virtue, so much as downright ignorance
of the nature of coin, credit, and circulation." 

John Adams in a letter to Thomas Jefferson, 1787

I know I hammer on this subject a lot, but it is because I believe it is the "smoking gun" of our economic problems.

Here is the situation...accepted current economic theory, belief in Keynesian economics, is characterized by a belief in active government involvement in economic matters.  Keynes argued that the solution to economic depression was to stimulate the economy through government expenditures as well as reduced interest rates.

How has this been working out for you?

The antithesis of Keynesian economics is Austrian economics, which predicts that a free market, in conjunction with a stable money supply, (e.g. gold and/or silver), will provide the environment with a growing economy and standard of life.  It is basically the opposite of debt.  In other words, our economic woes can be explained in a simple way if you can only understand the "nature of coin, credit, and circulation."

A perfect example of Keynesian thought is this statement by Joe Biden, at an event sponsored by the AARP.  Seriously?  "We need to "spend money to keep from going bankrupt?"  And he had the balls to say this to a bunch of old people.  If you voted for this buffoon, ask yourself if you understand the "nature of coin, credit, and circulation."

 The cold, hard fact is that paper money comes into existence and is perpetuated by debt.  Gold and silver coins come into existence by sweat, labor, capital investment, and minting at the US Mint.  No debt is associated with its creation.

Now, in any debt based system the beginning is always good times.  Imagine you are 18 years old and you get your first credit card and go off to college.  Pizzas and beer and only a $15 payment next month.  Wow, you are killing it, until you graduate and find out there are no jobs and Joe is telling you we all need to spend more.  The credit is nothing different than a heroin fix; get another fix and you will feel better for a short while until the effects drop off.

In this example, no labor or production was required on the part of the borrower, only spending, which did juice the economy for a minute.  The pizza store and and beer company make a profit, but the resulting debt required more money than was actually spent, the interest that the bank gets.  A day of reckoning ensues.

So we see that in the Keynesian approach, spending is all important.  How else are the banksters supposed to make out if you aren't borrowing?  In case you don't know, banks make money by loaning it.  Therefore, paper money is a debt-based system that benefits the government and banksters.  Government has no limit on spending so deficits become the norm.

In the Austrain economic model, what is necessary is SAVINGS, not spending.  The reason for this is....if you aren't going to use debt to artificially juice the economy, the only thing left is savings.  Savings is then invested, either by the saver or the bank, in businesses that grow the economy, not in consumer goods made in another part of the world.  Jobs are then created locally because of the availability of saved capital.  Business and laborers make out, banks get a small cut, (savings interest at 5%, loan money at 8% or so), and government has to watch its budget due to an inability to borrow/print money.

Is Austrian economics just a theory or is there a real-life example?  We need look no further than the United States economy in the late 1800s.  From the National Bureau of Economic Research, we find out that wages rose across the board 50% from 1850-1899.  www.nber.org/chapters/c2486.pdf p. 462.  If you care to research CPI or the Consumer Price Index, you will see that during this same time prices fell 22%.  Rising wages and lowering prices along with ZERO income taxes while government remains tiny, sounds good to me.  Experienced during this time was the greatest rise in the standard of living in the history of the world, this in spite of the population tripling with a Civil War thrown in for good measure.  After the Constitution was created and before the Civil War there was ZERO paper money.  Except for Lincoln Greenbacks and Confederate money printed during the war, the paper game didn't get going until 1913 and the creation of the Federal Reserve.  Gold was king.

If you save money at this point you really have to be ignorant of the nature of currency.  Chase bank will give you .5% on a 13-month CD right now and you will be taxed on the proceeds.  Are you a masochist?  Saving does the government and banksters no good, it is debt and spending they need to perpetuate their very existence.

It is my belief that we live in a real, physical world.  Unredeemable debt-money, paper money passed around as if it had worth has failed in all cases in history.  I believe that math and physics will win this time as it always has in the past, the only issue is timing.

You can save other things though and still do OK.  Gold was up 30% last year and this is the 11th year in a row that gold is up measured in paper dollars.  Silver was up 82% last year and has been up 8 out of the last 10 years.  Last year central banks became net borrowers of gold for the first time in 20 years.  You haven't bought gold yet because it looks high to you.  Central banks are saying it looks cheap.  What are you waiting for?  Your choice is to hold your paper money and watch it get crushed.

Since Obama has taken office, gold has moved from $850 to $1530 while silver has moved from $10 to $36.  We have way too much debt.  The heroin either kills the host or the host cuts off the heroin.  There is no 3rd option.  Protect yourself now, Barack Obama or Joe Biden will not protect you, they are protecting their bankster buddies who got them elected.  And take physical delivery while you're at it.  Or maybe you prefer the heroin?

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
– Napoleon Bonaparte, 1815

Finally, here is a 2-minute video of Ron Paul talking about gold 13 months, or 20%, ago.  Just what the doctor ordered.  Let me see...13 months, 20% return or .5% return.  Which one do you like best?  I can tell you which one the government and banksters like the best.