Zero

from LeMetropole cafe

Profit taking? That's what we are being told today is all about in the stock market. Technically, the MACD lines are about to crossover to the downside as a result of two weeks or more of sluggish momentum. Fundamentally, (you know, the real meat and potatoes of investing) could not be worse on a global basis for equity investing. As I mentioned last week, I smell smoke billowing from the back rooms of financial institutions. What has happened, (and been happening for at least 10 years) is that the government has meddled in the markets for so long and to such a degree that the "gears" if you will, are no longer aligned properly nor even running in the same directions.

What they have done, has been to run around putting out fires and managing perceptions without ever considering the longer term consequences. The beauty of capitalism is (was) that it is a "self correcting system", if you make a bad investment, you lose. You go out of business and learn a lesson. Capital will always seek the undervalued and exit the overcrowded, this is the most basic tenet of a free market. When you artificially entice, prod, or even (GOD FORBID!) manipulate markets, you create "mal investment" that shouldn't (wouldn't) normally exist. Investing is always "weighed" or tempered with risk in mind. RISK, is what the world forgot to factor in while "things were good".

In my opinion, risk was masked, hidden, and delayed by the Fed , Treasury, and the administrations in general since 1988 when Pres. Reagan formed the "Working Group on Financial Markets" otherwise known as the Plunge Protection Team. Since the 1987, the U.S. economy has been forbidden from having a real recession that would have cleaned out bad debt and mal investments. Instead, the bad debt was allowed to pile up like a garbage dump that finally reached its boundaries. We could have avoided the current situation had the 1991, 1997, or 2001 recessions been allowed to run a natural course, they were not and now the Piper will get paid no matter what the government wants.

Had markets been left alone to reward the smart and kill the ill informed and ignorant, 2003-2007 could never have happened. After the tech bubble blew up, the Fed HAD to have another debt bubble because they feared the current outcome (debt contraction). The current situation has been postponed for so long and to such an extent that the problem is now far, far, bigger than the Treasury, Fed, and all other world Central banks and Treasuries combined by a factor of at least 10. I know you have heard me say this before but, had the price of Gold been allowed to move freely and not been suppressed all these years, the alarms would have sounded as far back as 1996 about the over issuance of money and credit.

As stated many times before, we will have a new currency, probably very soon. This will amount to a devaluation of all fiat paper versus real goods. All the lies, manipulations, managed perceptions and expectations will be accounted for in one fell swoop. The scales will be balanced, and assets, liabilities, production, consumption, and yes, even money, will all be completely revalued to reflect "the new reality". Once the creators of fiat lose their "power" to obfuscate values, reality will return. I believe that every human being that has used fiat currency will be shocked to some extent as to where some of these new values level out at.

We have heard all sorts of projected numbers for the future "Dollar" price of Gold, Sinclair $1,650, Bill Murphy $3,000-$5,000, Alf Fields $6,000-$10,000. If we are going down the road of fiat destruction as I think we are, ANY Dollar price will make no sense whatsoever. Just look at Zimbabwe, $10 billion for a loaf of bread, what does an ounce of Gold cost, $10 trillion? The point is, the "Fiat masters" are losing the system and we are watching it first hand. If I had any cash left, I would surely invest in a "Zero factory" since 0's will be the most commonly used number in all of history (can you imagine the demand?). Think about it, multiple 0's will follow a number for the price of all sorts of common goods and a single, lonely 0 will be used for what once had been the foundation of society, PAPER. I know this sounds a little off the wall, but what value do you put on a currency when it is no longer accepted? Yes, that's right ZERO!