Risk Update: Belief That Gold Will Fall When the Dollar Climbs

by Jeff Clark – Hard Assets Alliance :

Gold and the US dollar typically exhibit an inverse relationship—when one climbs, the other tends to fall. But that relationship disappeared over three months ago.

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Why the new romance between gold and the dollar? Primarily because what has been supportive for the dollar has also been good for gold.

This trend should continue. I’m not the only one to think so:

• “The resilience of gold in the face of a surging dollar and collapsing oil price supports our view that the precious metal will recover further this year and next.” (Capital Economics head of research Julian Jessop)

Do you believe there is greater or lesser risk in the financial markets? Will there be more or less fear in the world in 2015?

If you suspect that ever-optimistic government figures are masking far uglier truths… if you understand that the US economy depends on the global economy for far more than exports… if you believe the truly historic amount of money printing in the US and around the world must eventually result in inflation… or if for any reason you doubt that 2015 will be rosy, then the best investment strategy is one that includes a meaningful amount of gold bullion.

Remember: The issue is not inflation vs. deflation, the USD vs. euro, or even supply vs. demand. It’s fear and chaos vs. confidence and stability. Whichever of these you see as the stronger trend in the years ahead should drive your action plan.

In our view, the response we’ve seen thus far in gold has been a small foretaste of the major move we can expect when the wheels come off the global financial system, whatever form that may take.

My friends, buffer your investments and way of life against a growing level of financial risk. I urge you to continue adding low-cost bullion to your Hard Assets Alliance account.

Article originally posted in the February issue of Smart Metals Investor at HardAssetsAlliance.com.

Individual Solutions: Building Home Resiliency

submitted by jwithrow.home resiliency

Journal of a Wayward Philosopher
Individual Solutions: Building Home Resiliency

February 13, 2015
Hot Springs, VA

The S&P opened at $2,089 today. Gold is checking in at $1,229 per ounce. Oil is floating around $53 per barrel. Bitcoin is priced at $237 per BTC, and the 10-year Treasury rate opened at 2.01% today.

Yesterday we examined the massive credit expansion that has been ongoing for four decades now and we noted that Austrian Economics tells us this won’t end well. We discussed building financial resiliency via a logical asset allocation model as an individual solution to the economic problems we face. But there is more to life than just personal finance.

Home resiliency is about building a self-reliant homestead, no matter the size. This entails having secure shelter with back-up energy sources and access to a reasonable supply of food, water, and basic necessities. The greater your home resiliency, the less you have to worry about external factors; be they natural disasters, financial disruptions, or simple power outages.

We are not talking about doomsday bunkers or expensive power generators; we are talking about simple and reasonable emergency back-up preparations. This is considered weird and looked down upon in modern society today but that is a recent phenomenon. The spirit of self-reliance and rugged individualism permeated American culture from the colonial days on up to the turn of the 20th century.

We see home resiliency simply as a matter of getting back to our individualist roots but it is especially important given current macroeconomic trends as we discussed yesterday. The eventual mass liquidation of debt and malinvestment resulting from four decades of fiat-fueled credit expansion will inevitably lead to disruptions within the financial system. Who knows what other dislocations this will cause in daily life? It would be far better to weather such a storm from within the comforts of your own home with adequate food, water, and energy than to risk being dependent upon external factors for these necessities.

Here are a few ideas to get you started:

Water Resiliency

  • Store as much bottled water as you can. The rule of thumb is that households require one gallon of water per day for each member of the family.
  • Exposure to sunlight will cause problems for water over time so either store water in opaque containers or away from sunlight if possible.
  • It is advisable to employ a ‘rotating’ system whereby you drink your stored water and replace it constantly as you go while maintaining adequate storage.
  • Consider a gravity water filter. These systems fit on your kitchen counter and are capable of filtering water from any source into clean drinking water. We recommend Doulton’s Big Berkey system with ceramic filters, but there are other quality systems available also.
  • Consider setting up a system to catch rain water. Rain water can be used to bathe, water plants, or to filter through your gravity water filter system for drinking.
  • Food Resiliency

  • Maintain a deep pantry. Analyze what you are currently eating and keep two or three times as much in the pantry and freezer. Replace meals consistently so your pantry does not diminish.
  • Supplement your pantry with items possessing a long shelf life like canned goods, beans and rice.
  • Consider investing in pre-packaged food specifically designed for storage. Many of these foods have a shelf life of up to 25 years and are surprisingly appetizing. Some long-term storage items are even certified organic and certified GMO free.
  • Consider planting a small vegetable garden, fruit trees, and/or nut trees depending on your location. Supplementing meals with home grown food is a great way to cut expenses and maintain health.
  • If you do plant vegetables or fruit trees it may be worthwhile to take up canning to store your own food for future consumption.
  • Consider investing in alternative cooking/water boiling sources. Propane grills are a popular option – just be sure to keep an extra propane tank or two on hand.
  • Consider investing in a solar compatible power source. These systems consist of batteries and solar panels. The batteries can be charged via a standard wall outlet or by the solar panels. Any household item can be powered for a period of time by simply plugging it into an inverter which is powered by the batteries. This is a great way to run your refrigerator during a power outage. A portable generator large enough to run the refrigerator/freezer, a few lights and a power strip to charge phones and laptop computers might also be a good option to consider.
  • Seek out local food vendors in your area – butchers, meat markets, farmer’s markets, etc. These are places where you can buy local food that is not as dependent upon the corporate ‘just in time’ process. Not only will this food not be as affected by macro disruptions, but it is also more nutritious as it has not gone through intensive corporate processing.
  • Basic Necessities

  • Make sure you have several alternate heating sources – wood-burning fireplace/stove, propane heater, kerosene heater, etc.
  • Stock up on candles for lighting the home during power outages and consider purchasing a few LED lanterns or oil lamps for lighting as well.
  • Keep a generous supply of lighters and matches on hand.
  • Keep several flashlights handy and maintain a supply of batteries.
  • Store several first aid kits and any medicines your family relies on.
  • Store extra paper towels, toilet paper, soap, toothpaste, dental floss, hand sanitizer, saline, contacts, and any other household item you use frequently.
  • Taking these simple actions will increase your home resiliency immensely. Once these action items are implemented you will:

  • Have drinking water stored for a reasonable period of time.
  • Have the ability to purify water from external sources.
  • Have a deep pantry and the ability to run your fridge/freezer for periods of time during power outages.
  • Have long term food stored away for use if your deep pantry were to be exhausted.
  • Have access to home grown vegetables, fruits, and/or nuts to supplement food storage.
  • Have access to several modern cooking sources in the event of a power outage.
  • Have alternate heating and lighting sources for use in the event of a power outage.
  • Have sufficient household items and cosmetics stored for use if needed.
  • Taking simple steps to build home resiliency does not require a change in lifestyle, and it does not require a tremendous financial commitment. Recent history shows that the majority of people in a given population are nearly 0% self-sufficient and thus experience unfortunate anxiety and discomfort when a major disaster occurs. History also shows that major disasters do occur periodically no matter where you live. It is far better to prepare ahead of time than to be one of the unsuspecting victims who find themselves completely incapable of coping with a disaster in a self-sufficient manner.

    Home resiliency is another individual solution that can help mitigate collective problems. Pair home resiliency with a resilient financial portfolio as we discussed yesterday and you will be more self-reliant than 99% of the population. Then you will be free from worry to focus on those things in life that truly matter.

    More to come,

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    Joe Withrow
    Wayward Philosopher

    For more of Joe’s thoughts on the “Great Reset” and the paradigm shift underway please read “The Individual is Rising” which is available at http://www.theindividualisrising.com/. The book is also available on Amazon in both paperback and Kindle editions.

    Individual Solutions: Building Financial Resiliency

    submitted by jwithrow.financial resiliency - individual solutions

    Journal of a Wayward Philosopher
    Individual Solutions: Building Financial Resiliency

    February 12, 2015
    Hot Springs, VA

    The S&P opened at $2,071 today. Gold is down to $1,226 per ounce. Oil is floating around $49 per barrel. Bitcoin is hanging around $221 per BTC, and the 10-year Treasury rate opened at 2.03% today.

    Ten central banks have cut interest rates so far in 2015. The list includes: Australia, Canada, China, Denmark, India, Egypt, Pakistan, Peru, Russia, and Turkey. Additionally, both the Bank of Japan and the European Central Bank are actively buying sovereign debt… with counterfeited currency created from thin air. The Federal Reserve is taking a break from this exercise after nearly six years of creating currency to shop at the U.S. Treasury and go yard-saling on Wall Street. Of course the $4.5 trillion worth of sovereign debt and mortgage-backed securities still sits on the Fed’s balance sheet in the interim.

    All of this economic intervention is a concerted effort to stave off a major credit contraction. The central bankers talk about hitting certain GDP and unemployment rate metrics but that is all part of their dog and pony show. If creating currency out of thin air could actually grow an economy and create jobs then we would already live in a utopian paradise. But that’s just not how the world works.

    Try as they may to avoid it, the coming credit contraction is inevitable. You see, the global monetary system has been fraudulent for a little more than four decades now. Gold officially anchored the global monetary system for two centuries prior to 1971. Then, in 1971, President Nixon’s administration acted to break away from two hundred years of tradition and the U.S. ended direct convertibility of the dollar to gold. Of course the “Great Society” welfare programs and the Vietnam War had a lot to do with this decision.

    “Your dollar will be worth just as much tomorrow as it is today,” Nixon proclaimed on television with a straight face. “The effect of this action, in other words, will be to stabilize the dollar.”

    Of course the exact opposite happened: the U.S. dollar fell off a cliff. Anyone living during the 70’s can attest to this. What was the price of a new home back then? A new car? A hamburger? The difference between what those items cost in 1971 and what they cost today represents how far the U.S. dollar has fallen in purchasing power.

    How did this happen?

    Well, with all ties to gold removed governments and central banks discovered they could conjure currency into existence to pay for anything they wanted. Tanks, fighter jets, food stamps, Medicare part D, $800 trash cans… no problem! So they embarked upon this historic credit expansion armed with a magical monetary system that provided them with money for nothing.

    But governments weren’t the only beneficiaries. The companies making the tanks and the bombs made out like bandits. So did all of the bureaucrats who were hired as government expanded. And the people receiving welfare benefits found the system quite palatable as well. Pretty soon smart people learned that the best business in the world was to sell something to the U.S. government because it had unlimited money to spend. So they descended upon K Street like buzzards on road-kill and pretty soon the suburbs surrounding D.C. claimed home to six of the wealthiest ten counties in the U.S.

    The champagne has been flowing up on the Hill and in the lobbyist offices on K Street for four decades now thanks mostly to the fraudulent fiat monetary system in place since 1971. The establishment hails their elastic currency system as a major success but theirs is a self-serving and short term view. Credit has been constantly expanding since 1971 but do we really think this can go on forever? Can we continue to run up debt, print money to pay interest on that debt, and then buy all of the fighter jets, disability checks, politicians, and cheap junk from China without ever having to think twice about it? If not, what happens when the credit contracts and we can no longer afford all of these expenditures?

    The Austrian School of Economics tells us what the result of this madness will be: a “crack-up boom” followed by a monstrous bust as all of the bad debt and malinvestments are finally liquidated.

    The crack-up boom occurs as the prices of assets and real goods are driven up to the moon by enormous amounts of excess currency conjured into existence in an attempt to perpetuate the credit expansion. After all, that new currency has to go somewhere. This scheme will work to stave off the credit contraction… until it doesn’t. Then cometh the bust.

    While Austrian Economics can make the diagnosis, the timing of the bust cannot be predicted. There are too many interconnected factors at play. What’s important is that there is still time to build financial resiliency in advance. The cornerstone of financial resiliency is knowledge and understanding. Understand fiat money is an illusion. Understand the difference between money and wealth. Study Austrian Economics to get a feel for what’s really going on in the economy.

    Once you understand how the monetary system actually works you can formulate a customized asset allocation model based upon your personal circumstances.

    A resilient asset allocation model will consist of cash (20-30%), precious metals (10-30%), real estate (30-60%), and strategic equities (10-15%).

    At minimum you should carry enough cash to cover at least 6-12 months of expenses. Distressed assets will go on sale when then bust hits so any cash in excess of your reserve fund can be used to acquire these distressed assets (real estate, stocks, businesses, etc.) when they are cheap.

    Your precious metals allocation should consist of physical gold and silver bullion stored at home or in a legal segregated account overseas. Never store precious metals in a domestic bank vault – Americans learned this the hard way back in the 30’s when the banks closed and FDR raided the vaults to confiscate gold. Remember, precious metals are insurance not speculation. The price of gold (and silver) will skyrocket in terms of fiat currency, but its purchasing power will remain relatively constant just as it has for thousands of years. Those who save in fiat currency will see their wealth evaporate as the credit contraction unfolds while those who hold precious metals will weather the storm. J.P Morgan testified before Congress in 1912: “Gold is money. Everything else is credit.” Don’t be fooled.

    Real estate presents a unique opportunity currently as we are living during a period of historically low interest rates and lenders are willing to offer long term mortgages at these low rates. This provides a tremendous opportunity to lock in these low rates on real estate for thirty years during which time interest rates will inevitably rise significantly.

    We firmly believe stocks should make up the smallest percentage of a resilient portfolio under current economic conditions. Stockholders have been the primary beneficiaries of the massive credit expansion and all of the easy-money chicanery over the past several years. Financial institutions have poured new money into the equities markets and publicly-traded companies have used a ton of excess cash to buy back shares of their own stock. As a result current stock valuations do not reflect the underlying health of the economy. Though stocks will run for a bit longer, we are closer to the end than the beginning of the bull cycle. We think the exception is in the resource and commodity sector, however. The stocks of well-managed companies in this sector could do extremely well over the next few years as the global financial system continues to falter.

    Nobody can control macroeconomic conditions but we can each control our individual response to them. Building financial resiliency by constructing a diversified portfolio across several asset classes is an individual solution to a collective problem. Financial resiliency is just half of the picture, however. Tomorrow we will look at what we call home resiliency.

    Until the morrow,

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    Joe Withrow

    Wayward Philosopher

    For more of Joe’s thoughts on the “Great Reset” and the paradigm shift underway please read “The Individual is Rising” which is available at http://www.theindividualisrising.com/. The book is also available on Amazon in both paperback and Kindle editions.

    Brighter Days Ahead for Gold

    by Hard Assets Alliance:gold

    “It’s a new dawn, it’s a new day.” —Nina Simone

    Those lyrics from the timeless Nina Simone song Feeling Good certainly draw a parallel to the present state of gold.

    After a rough couple of years, gold begins 2015 with a clean state. It will take time to shake off its hangover, but the yellow metal is looking good early into the new year.

    Of course, gold still has its fair share of critics. Willem Buiter, chief economist at Citigroup, recently referred to gold as a “shiny bitcoin.” Refuting such a ludicrous statement isn’t worth the digital ink. Instead, we’ll keep it short and simply say: Such a statement ignores 6,000 years of human history.

    Not all gold bears are as controversial. Most analysts pessimistic about gold’s near-term outlook cite the strong dollar, rising interest rates, and deflated energy prices as headwinds, though we would argue that each of these factors actually reinforces the need to hold gold… but that’s a discussion for another day.

    Rather, let’s take a look at what some of the sharpest financial minds are saying about gold:

    • In terms of gold price expectations, it appears that the repair of technical picture is now behind us and that a stable bottom has formed. The next 12-month price target is the USD 1,500 level. Longer term, a parabolic trend acceleration, with a long-term target of USD 2,300 by the end of the cycle.—Ron Stoferle, Incrementum Lichtenstein

    • In the long term, however, I am more bullish on the gold price than I have ever been. All central bankers want inflation, and one day they will get it. Betting on inflation is the surest thing I have ever bet on in my life.—Pierre Lassonde, Chairman of Franco-Nevada (FNV)

    • The lengthy bottoming process in gold seems to be nearing its close. The conditions that led to a decade-long rise in the gold price in 1999 are quite similar to today. Gold is not just ignored but hated by mainstream investors—it’s the Rodney Dangerfield of investment concepts.—John Hathway, Comanager of Tocqueville Gold Fund

    Optimism about gold is also showing up where it matters most: the spot price. Gold has climbed nearly 12% since its November low and is off to its hottest start since 2008. Last week’s surprise announcement by the Swiss government to sever its peg to the euro provided the latest boost. It’s yet another reminder to own gold, the only asset that isn’t somebody else’s liability. We see this as a recurring theme in 2015.

    Article originally posted in the January issue of Smart Metals Investor at HardAssetsAlliance.com.

    Silver Bullion Sales Soared in 2014

    by The Silver Institute:silver bullion sales

    The continuing appeal of silver for investors led to record sales of U.S. American Eagle Silver Bullion coins last year, topping the previous milestone established just the previous year.

    The U.S. Mint announced that 2014 sales of American Eagle Silver Bullion coins reached 44,006,000 ounces. The robust sales performance was primarily driven by a resurgence of demand in the fourth quarter last year. To that point, December sales of the American Eagles Silver Bullion coins were up 104% year-on-year.

    Sales of the American Eagle Silver Bullion one-ounce coin dramatically outpaced those of the one-ounce American Eagle Gold and Platinum coins last year. Moreover, based on 2014 U.S. Mint sales figures and annual average metal prices, Silver Eagles eclipsed Gold Eagles’ sales by 59%.

    Introduced in 1986, the 99.9% pure American Eagle Silver Bullion coins have experienced strong demand in recent years, with sales climbing sharply since 2008 and occasionally reaching levels where demand exceeded supply. As a result, the U.S. Mint was forced to stop selling the Eagles on several occasions last year as demand swelled, instituting a policy to allocate available American Eagle Silver Bullion coins to its authorized purchaser distribution network.

    Meanwhile, the Royal Canadian Mint (RCM) reported healthy demand for its silver bullion products last year, ending on a high note having sold all 1 million of the Mint’s Bald Eagle coins from its new Canadian Birds of Prey 99.99% pure silver coins series. The RCM said its flagship Silver Maple Leaf Bullion coin continues to generate solid customer interest.

    Australia’s Perth Mint reported that while total silver sales were down 13.5% year-on-year, largely due to a sales tax increase in Europe, there was an increase in buying as the price came off through the second half of the year producing 20.8% higher sales over the first half.

    Investors’ support for silver was not just limited to bullion coins. Investment in silver-backed Exchange Traded Funds (ETFs) grew by 1.1 million ounces by the end of December last year. Although a modest gain of 0.2%, when compared with the 8.8% decline in gold ETFs last year, it is clear that silver ETF’s remain a popular investment vehicle. Early indications for physical bar demand are down in 2014 for both silver and gold, however.

    While American investors continue to demonstrate support for silver, demand for the metal also increased through the year in India, where silver imports climbed 13% to an estimated 212 million ounces in 2014, setting a level of imports that surpasses the previous record volume of silver imports posted in 2013, according to analysts at GFMS Thomson Reuters. Silver has benefitted from increased Indian demand due to uncertainty surrounding government import policies impacting the gold market.
    Silver has historically been an attractive and affordable precious metal and provides investors an excellent opportunity to diversify their investment portfolio.

    The Silver Institute is a nonprofit international industry association headquartered in Washington, D.C. Established in 1971, the Institute’s members include leading silver producers, prominent silver refiners, manufacturers and dealers. The Institute serves as the industry’s voice in increasing public understanding of the many uses and value of silver, and also creates programs across various platforms that benefit the white metal. For more information on the Silver Institute, or silver in general, please visit: www.silverinstitute.org

    Employing the Infinite Banking Concept

    submitted by jwithrow.infinite banking concept

    Yesterday we examined the merits of the Infinite Banking Concept. Today let’s look at some IBC strategies to build capital and mitigate inflation.

    If you combine the Infinite Banking Concept with a fundamental asset allocation model you have the makings of your own personal central bank. If one were so inclined, just like a central bank, one could establish tangible reserve requirements and use the policy’s ever-growing capital base to purchase tangible assets. Your job as Chairman would be to continuously acquire assets based on your allocation model as your central bank’s capital base grew in size to maintain your specified reserve ratios.

    The possibilities with this strategy are endless!

    The hardest part of employing the Infinite Banking Concept is being patient enough to capitalize your policy over the first several years until the policy becomes self-sustaining.

    Imagine a world in which more people take control over their financial destiny by using the Infinite Banking Concept as an integral part of their financial plan. This strategy has the power to mitigate the boom-bust cycles created by the Federal Reserve and the fractional-reserve banks because people employing the IBC strategy would not have much need for traditional bank financing.

    The power of the Infinite Banking Concept can truly be unlocked if families were to implement this strategy generationally. For example: what if parents were to set up IBC policies for their children as soon as they were born?

    The IBC policy would have the opportunity to grow for twenty years or more, and the next generation would automatically have a large pool of capital available to them upon their maturation into adult-hood. This pool of capital could be used to finance specialized education or to start a business with no student or bank loan necessary.

    The child would also receive a substantial death benefit payment down the road when the parents were to pass on from this world. That death benefit could then be used to set up larger IBC policies for future generations so the family’s pool of capital would continuously grow over subsequent generations. Every single one of your children and grandchildren would have access to a significant pool of capital to help them build self-sufficiency and resiliency.

    Talk about an individual revolution!

    A generational implementation of IBC in this way could gradually transfer the power of the purse away from governments, central banks, and Wall Street and back into the hands of individuals where it belongs. This would cause the financial sector to shrink tremendously, which would free up capital for more productive purposes across the board.

    You see, the financial sector doesn’t really produce much of anything. It is more like the money changers of old in that the financial sector does little more than temporarily warehouse capital and then move it around, siphoning off small fees at every stop along the way. The financial sector certainly plays a very important role in a developed economy, but that role should be much smaller than what it is today.

    So how do we know that the IBC strategy will survive the Great Reset? The answer is that we don’t know anything for sure.

    But life insurance companies have a built-in inflation hedge as they can charge higher premiums to new customers on an ongoing basis as the currency loses value. Additionally, if the currency were to completely collapse, it is highly likely that life insurance companies would re-value their policies in terms of a new currency or maybe gold (we should be so lucky). Also, if you operate your personal central bank wisely and use your capital to purchase precious metals and other real assets, then you have a currency hedging strategy already in place.

    Hopefully this chapter has done the Infinite Banking Concept justice, and you can see why we think it is a powerful tool for individuals disciplined enough to devote the time and resources necessary to capitalize a policy.

    Asset Allocation

    submitted by jwithrow.asset-allocation

    Asset allocation is a necessary tool for saving money and building capital within a fiat monetary system. Within a fiat system, the purchasing power of your currency is gradually inflated away and the value of various asset classes can fluctuate rapidly based on central bank monetary policy. Thus, it is important to have a principled yet flexible asset allocation model in place.

    The concept of asset allocation is to allot a percentage of your capital to various asset classes and to maintain each allocation ratio until you deem it necessary to adjust your model. For example, a basic asset allocation model could consist of 25% cash, 25% precious metals, 25% real estate, and 25% stocks. You would then allocate your income to each asset class accordingly.

    The beauty of this strategy is that you cannot be wiped out by any wild swings in the market and you will always have cash on hand with which to purchase assets when they go on sale (when the market tanks). Of course you can always add additional asset classes into your model such as bonds or bitcoin or cattle depending upon your outlook and you may need to adjust your percentages based on new analysis from time to time as well.

    The Infinite Banking insurance strategy that we talk so much about here at Zenconomics and in our book works perfectly to house much of your cash allocation. An IBC policy serves to compound returns on your cash while it sits idle waiting to be put to use without sacrificing any liquidity whatsoever.

    As for your precious metals allocation, you can purchase gold and silver bullion from any local coin shop or from reputable dealers online or you can purchase through companies like Hard Assets Alliance which will facilitate fully allocated domestic or international storage for you.

    Of course to follow an asset allocation model you will need to save a large percentage of your income. I think 50% is a good benchmark. 75% savings is preferred. Very few people have the discipline to pull this off but those who do never have to worry about financial problems again.

    If maintaining such an asset allocation model for your household sounds extremely tedious and time-consuming that’s because it is. This is the price we must pay for living under a fiat monetary regime. In a sound monetary system we would be able to build capital simply by saving money in a bank account because our money would maintain its purchasing power over time. Instead, saving money in a bank account is a losing strategy so we are all forced to become financial analysts or have our wealth systematically transferred away from us.

    Saving

    submitted by jwithrow.Fishing Boat

    We have been hearing all about how most Americans are living paycheck to paycheck and not saving any money as justification for the brilliant (*cough*) myRA government savings plans so we felt that it would be prudent to take a deeper look at what ‘saving’ is.

    You see, we don’t think that saving is about money. Money is involved, but it is not the focus. Saving is really about storing our productive efforts.

    It goes back to the days of barter…

    Back then the fisherman would catch extra fish in the morning and take them to the market in the afternoon to trade his extra fish with the farmer for vegetables. His wife liked to have vegetables with her fish for supper so he had to trade for vegetables instead of the painted rock that he really liked.

    The fisherman had learned that fish would start to smell bad the day after being caught so he had no choice but to trade all of his extra fish every afternoon and go fishing for more again every morning.

    Until the fisherman discovered gold. Then the fisherman could trade his extra fish for gold and take the next day off. The fisherman didn’t really care about amassing gold; he just figured out that gold would let him store his production so he didn’t have to go fishing every single day to feed his family. And it turned out that three day old gold smelled much better than three day old fish – this was a bonus.

    So saving was born!

    Somewhere along the line we forgot this and started to think that saving was about amassing money. And on top of that we started to think that money was paper and not gold. We are so forgetful!

    So when saving became about money and not about production we opened the door to debt. We started to think that instead of saving we could just borrow whatever money we needed. After all, the credit money still bought stuff just like the saved money except we didn’t have to wait to use it!

    But then when we had to start using our entire paycheck to pay back all of the credit money we found out that we had to be even more productive now than before we went into debt. Our plan backfired.

    We didn’t learn from our smart fisherman ancestor and now we had to go fishing both in the morning and in the afternoon to have enough fish for our supper and also enough to trade for vegetables so our wife won’t get mad and also enough to give to the banker to pay him back for the credit money that bought us the really neat painted rock.

    Darn painted rocks.

    Why We Don’t Yet Live in the “World of Tomorrow”

    By Paul Rosenberg,

    physics

    The following is a quote from a digital currency mailing list, posted at some time in the late 90s or early 2000s:

    Consider that up to say 1970, people invented and developed Major Shit left, right and center. Jets, spacecraft, fiber, chips, laser… plastic… satellites… it goes on and on.

    In contrast, the world’s done Absolutely Nothing for a good 20 years – at best, refinement. (“TV now has OVER 100 channels! and MORE PIXELS.”)

    Indeed we presently live in a time of sort of… fantasy inventions. “Nanotech!” “Robots!” etc — all fantastic on paper, but totally nonexistent.

    However flamboyant, this statement is true. Since 1970, there have been very few primary inventions. What we do have are mere improvements.

    The Laws of Physics Are Old

    Physics has gone almost nowhere since the 1960s. Here’s a short list of developments in physics:

    Gravity: The laws were defined by Galileo and Newton in the 17thcentury.

    Planetary motion: Defined by Kepler in 1609 and 1619.

    Mechanics: The base laws were defined by Newton in the 17th century. Other specific laws were understood as far back as ancient times.

    Gasses: Boyle defined his law of gasses in 1662.

    Hydraulics: The laws and uses were developed between the 17th and 19th centuries.

    Electromagnetism: James Clerk Maxwell defined these laws in 1865.

    Relativity: Galileo defined the first laws of relativity in the 17th century; then Einstein defined new ones in 1905 and 1915.

    Quantum mechanics: Einstein expanded upon the work of Max Planck and defined the quantum effect in 1905.

    Atomic theory: The modern model of the atom was clarified by Neils Bohr in 1913.

    Superconductors: Superconductivity was discovered by Heike Kamerlingh Onnes in 1911 and clarified by Fritz and Heinz London in 1935.

    Quantum electrodynamics: Defined by Feynman, Tomonaga, and Schwinger in about 1962.

    And what has physics done since then? Not a lot. Most visibly, physicists argue about theories that require twenty six dimensions and smash subatomic particles together.

    In other words, physics has turned into a major yawn. Even the few exciting developments we have seen, such as cold fusion and high temperature superconductors, have gone nowhere. And exciting inventions like 3D printing, public cryptography, and cryptocurrencies have not only come from outsiders, but have been attacked by institutions.

    Consider the major inventions that erupted between 1870 and 1970: railroads, telegraph, telephones, electricity, radio, TV, airplanes, cars, rockets, spacecraft, plastics, fiber optics, etc., etc., etc.

    In the forty three years since – nearly half that time-span – what did we get?

    That’s right: louder speakers, more pixels, and smaller screens.

    So… either science has been hobbled or we’ve already discovered almost everything.

    The Prison of Science

    Since I don’t for a moment believe that we’ve discovered all that can be known, the obvious conclusion is that physics is being held in a sort of stasis.

    My argument has been this:

    Institutions are oppositional to individual will, and individual will is the only thing that creates breakthroughs in science.

    Albert Einstein agrees with me, by the way. See this:

    Everything that is really great and inspiring is created by the individual who can labor in freedom.

    And this:

    It is a miracle that curiosity survives formal education.

    And this:

    Great spirits have always been violently oppressed by mediocre minds.

    Within an institution, a scientist must either please the authorities or see his work jettisoned. And scientific grants always have to please authorities.

    So, who are these “authorities”? They would certainly include government bureaucrats, but the authorities that really matter here are older scientists who have given themselves over to institutional politics. These are the more common oppressors of new and different ideas.

    There’s an old joke that reflects this:

    Q: How does physics progress?

    A: One funeral at a time.

    The oppressors of new scientific theories are entrenched in scientific institutions. From there, they either allow or disallow almost every research project. And anyone who is not part of those institutions is ridiculed, excluded, and ignored.

    It was farm boys, outsiders, and self-educated people who invented radio, television, the airplane, the electric light, the telegraph, the phonograph, the automobile, radar, and much more.

    The creations of institutional science have been considerably less impressive. And those advances generally required the inventors to suffer along the way. Young Albert Einstein, after all, was rejected by all the institutions of his time. He made his great discoveries while working as a mere patent clerk.

    God only knows how many wonderful things have been lost to institutional politics.

    All of this is not because of “certain bad people” – institutional power turns good people into bad people. (Ask a grad student.)

    Is There an Answer?

    Sure there is! The same thing that worked in the 19th century: the separation of science and institution.

    If you believe the line coming from today’s universities, you’d think that nothing scientific could exist without them. But to believe that, you’ll have to pretend that the previous, non-institutional era never happened.

    But it did happen, and the pre-institution era of science produced far more basic discoveries than the institutional era.

    We may have been indoctrinated by these institutions, but that has nothing to do with truth.

    Paul Rosenberg

    [Editor’s Note: Paul Rosenberg is the outside-the-Matrix author of FreemansPerspective.com, a site dedicated to economic freedom, personal independence and privacy. He is also the author of The Great Calendar, a report that breaks down our complex world into an easy-to-understand model. Click here to get your free copy.]