- I grew up, was educated - and worked professionally in
the US. Five years ago, I left America because I no longer had any faith
in the future of the American economy - and hence - American society.
-
- I spent many years as an economics and business journalist
- but two years ago I switched subjects and became the editor of a business
magazine covering natural resources companies.
-
- The reason for the change is that in late 2002, I became
a gold bug. Essentially, I saw what all the other gold bugs out there
were saying - and decided it was true. So, I bought a fair chunk of the
shiny stuff - and decided that I would not only invest in the precious
metals sector - but also devote my professional talents in journalism to
reporting on natural resource companies.
-
- It all started a few years ago - I came into contact
with the notion that the US economy was going to face hard times in the
years ahead - and why I should invest in precious metals. The idea the
US was in bad shape economically was foreign to me. I grew up thinking
the US would always be a superpower. After the Soviet Union fell, it was
said the US was the "only superpower" left. At least that's
what we were told.
-
- So, how come the world's only superpower is broke?
-
- You got me - but that is what the mainstream financial
press is saying these days: the US is broke.
-
- Who would have thought of that happening - just five
years ago? Ten years ago? Ever?
-
- Yet today that is the case. Not a day goes by in the
world's business press that the enormous size of the US public, private,
and government debt isn't emphasized and pointed to as a huge cause for
concern.
-
- Interesting how what was considered a "conspiracy
theory" a year ago is today a "mainstream" topic.
-
- The mainstream press never used to talk about this subject
- of how much the US government is or isn't in debt, and how it has become
so bad that the IMF recently commented that "the US is broke."
A year ago it was a 'conspiracy theory" to suggest the US was awash
in red ink. Today it is common knowledge.
-
- Another fact that is widely reported today is that the
US can simply "print up money" on demand and use it to pay its
obligations. That very apparent fact of life never appeared in the press
until fairly recently. How and why the dollar was an "international
currency" was never an issue with business and economic editors. Suddenly
- it is.
-
- Eight months ago, if someone suggested that the major
strength behind the US dollar was that it had "international current
reserve status" which no other country can benefit from. No matter
how many dollars the US government prints- as long as they are used outside
the country- they will create no inflation for the American consumer. This
idea of the US currency being a "world reserve currency" was
known to economists but such things were never discussed for the benefit
of the masses.
-
- A year ago, the mere mention of "Peak Oil"
was restricted to a very small number of websites, such as From the Wilderness.
Magazines like Business Week or Fortune would never run articles suggesting
such. Today, the concept of "Peak Oil" appears all over the mainstream
media.
-
- The last time I saw a conspiracy theory become that mainstream
that fast was in late 1999 when the "year 2000" bug roared onto
the world stage. For the longest time, Y2K was also exclusively the domain
of "conspiracy theorists"- and such views did not appear in the
likes of USA Today.
-
- So, something profound has changed in the world media.
What exactly - or what to call it - I don't know.
-
- All I know is that since 9-11, the world's "tension"
dial has been turned on to full. The goal seems to be to weaken the dollar
- and thus never have to pay a price for all the debt that has been created
via Treasury Bills and Federal Reserve debt (from issuing all that money).
-
- Let's be honest. In the end, why is it so terrible if
all these Asian countries who were only able to have such trade surpluses
with the US (remember when the US used to have trade surpluses with foreign
countries?) because they took the US debt paper in return - lose some of
that value?
-
- Who cares? If they were stupid enough to sell their finished
goods to America in return for "US paper debt", good luck to
them. While America may lose its luxury of having the dollar be the world's
currency reserve- in the end life in America shouldn't change very much
if the value of US debt instruments - and the dollar- tumble outside American
borders. Yes, imported goods will become more expensive but that may actually
be a blessing in disguise for America's decimated industrial sector (or
what's left of it).
-
- Fact is, despite what the "conventional wisdom business
media" says, the world's economy isn't and doesn't have to be considered
to be dependent on the US economy for growth. The establishment economists
and mainstream business publications always tout that line...that the US
economy is the engine for the growth of the world economy. It isn't. If
the US economy goes down the tube, the rest of the world will survive without
it. Nobody has really ever given much proof of why this necessarily has
to be the case. Nevertheless, the viewpoint is accepted as gospel. .
-
- Perhaps this is the "new spin" the mainstream
business press has been given to hand the masses but we "alternative
economists" should know better. If the US exited the planet earth
tomorrow, the rest of the countries in the world would go on existing just
fine. So, refute all attempts at convincing you that if the US dollar and
US economy falls the international economy goes with it. It doesn't have
to be that way.
-
- Gold is not just a hedge against the weakening US dollar.
So how does that relate to the price of precious metals? Well, let's look
at how the mainstream press is presenting the bull market in gold.
-
- Personally, I can't stand reading about how the price
of gold is only about the amount the US dollar losses. That is not right.
There are long-time structural shortages in both gold and silver. The price
has been held back for a long time by forces that should not be able to
manipulate the price of gold to their advantage.
-
- As more and more countries decide to back up their currency
with additional purchases of gold - and the Chinese consume more and more
gold - gold can only rise in value as the supply is limited and the demand
increases. If demand for gold as an investment vehicle rises - then it
will not longer be true that gold is "just a hedge against the weakening
US dollar".
-
- Listening to the mainstream press, one would have to
conclude that there is a definite agenda to have the world believe that
the only reason anyone would want to buy gold is as a pure hedge against
a weakening US dollar. When presented as a legitimate investment sector,
the case for precious metals is never given a fair hearing.
-
- Lately, the approach seems to be to just tell the people
"it ain't worth more than what the US devalues - so, as you earn US
dollarsit really doesn't make a difference to you as much because even
if you buy it with your weakened dollars you are going to lose. So just
forget about it.
-
- Perhaps what needs to be done is to have a price of gold
set in something other than US dollars - based on basket of world currencies
including the dollar. Wouldn't that make more sense all around? Then the
direct linkage to the US dollar can be diminished- which would serve all
precious metal producers and investors better than the current situation.
-
- There is no inherent reason why the price of oil has
to be valued in US dollars and then in all the other currencies. It is
obviously that way because it serves US interests but that argument, too,
would be considered "a conspiracy theory" just a few years ago.
-
- Until fairly recently- the majority view didn't except
the notion that anything there was any connection between the price of
gold and "US interests." Even just last year where did you read
about how important it is for the price of oil to be in US dollars in order
to create demand for the US dollar? Not long ago, that would have been
a view only "conspiracy theorists" accepted. Today, one sees
these viewpoints plastered all over the establishment press.
-
- _____
-
- Joel Stern is a former American who decided five years
that the future of America is not a given - and currently resides permanently
in the small island state of Cyprus in the eastern Mediterranean.
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