Today's Market Observation 01.11.2010 Mon Tue Wed Thu Fri Kirby Archive
Clear Thought in Confusing Times
BY ROB KIRBY | january 11, 2010
How often have you heard a talking-head or pundit from the print media try to “explain” how the U.S. led global economy faltered the way it has? We’ve been dazzled and fed explanations regarding root-cause, ranging from sub-prime mortgages to credit-default swaps to lack of regulatory oversight to good-ole-fashioned greed.
While countless pages and untold face-time has been devoted to the aforementioned topics in the main stream financial press, precious little has been articulated in the mainstream that irredeemable fiat money is what lies at the heart of our economic woes.
This past weekend, Dr. Edwin Vieira, Jr. was interviewed by the formidable Swiss publication, The Daily Bell. In this interview, Dr. Vieira was asked what were the two most pressing domestic problems facing America? Vieira replied,
“The foremost problem… now plaguing this country-is the inherent and ineradicable instability of the present monetary and banking systems centered around the Federal Reserve System.”
Ladies and gentlemen, our present monetary and banking system centered around the Federal Reserve System, summed up, “IS” our current system of irredeemable [un-backed] fiat money. Sadly, there are few who realize or could identify this fact.
What Makes Irredeemable Fiat Money Inherently Unstable?
To gain a fuller explanation as to why irredeemable fiat money is so inherently unstable, folks would be doing themselves a favor to familiarize themselves with Chris Martenson’s Crash Course in its entirety, an audio-video primer on the shortcomings of fiat money. Chapter 4 of the Crash Course explains the faultiness of compound interest – the reality that it must ALWAYS end in geometric / infinite money growth – which is inconsistent / incompatible with the reality that we live in a finite world:
Chart compliments of Chris Martenson
Make no mistake folks; what Chris Martenson has identified in the graphic above really is occurring in the real world – from the St. Louis Federal Reserve:
The unbridled money growth depicted above represents the debasement of currency, aka monetary inflation. The effect of this inflation has other insidious consequences; domestically, it marginalizes labor / wages – trivializing effort - through reduction in purchasing power. This impoverishes large segments of the population except the elite / rich who have sufficient resources to protect or insulate themselves from the debasement. Externally, this form of debasement, in reality, amounts to a de-facto default of sovereign debt obligations which carry significant and dangerous international implications.
This is a broken system.
The Enforcement of a Broken System
It is the establishment’s unflagging commitment to continue and perpetuate this unstable / broken monetary system - which has lavishly benefited the ruling elites – that has, in the eyes of Dr. Vieira, given rise to,
“the ever-accelerating development of a first-class para-militarized police-state apparatus centered around the United States Department of Homeland Security, with its tentacles reaching down into every police force throughout the States and localities.”
Vieira elaborates,
“Fundamentally, this apparatus is not, and never was, designed to deal with international "terrorism". If that were its goal, its first task would be absolutely to secure the southern border of the United States, which it has never seriously attempted to do. Rather, it is being set up to deal with what the political-cum-financial Establishment anticipates (and I believe rightly so) will be massive social and political unrest bordering on chaos throughout America when the monetary and banking systems finally implode in the not-so-distant future-surely in hyperinflation, and probably in hyperinflation coupled with a gut-wrenching depression.”
This is what’s truly in play here folks; this is why it is so important that there be honest dialogue on the real cause of our economic malady, otherwise, we’ll never be able to prescribe an appropriate cure.
Today’s Market
Japan’s stock market was closed on Monday. North American equity markets began the week on a mixed note with the DOW ahead 45.80 to 10,664.00, the NASDAQ falling 4.76 to 2,312.41, and the S & P gaining 2 to 1,147.00. NYMEX crude oil futures fell .53 to 82.24 per barrel.
Benchmark interest rates were little changed with the 5 yr. government bond finishing the day at 2.56% while the 10 yr. bond ended the day at 3.83%.
On foreign exchange markets the U.S. Dollar Index dropped .50 to 76.98.
Precious metals ended the day higher with COMEX gold futures adding 13.60 to 1,152.30 per ounce while COMEX silver futures added .09 to 18.60 per ounce. The XAU Index added .88 to 182.62 and the HUI Index gained 2.72 to 465.32.
On tap for tomorrow, at 8:30 a.m. Nov. Balance of Trade data is due – expected -$31.0B vs. prior -$32.9B. Wishing you all a Happy and Profitable New Year!
Rob Kirby
Registered Representative
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