Wednesday, December 14, 2011

Debt is the Money of Slaves

Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants - but debt is the money of slaves -Norm Franz, "Money and Wealth in the New Millenium"

So, then, who doesn't have any debt? Not many, if any. The generation born in 1970s and who began work in the 1990s have always had credit readily available. Debt wasn't seen as an issue for most back then, just put it on the credit card and pay it back later. Even houses were 'affordable' with long-term debt. Debt was your friend and always repayable in the future.

But sometimes friends turn nasty and sometimes those you love can hurt you the most.

Norm Franz is correct. Debt is the money of slaves. Take the position of most middle-income earners. Prices are moving upwards, the result of large macro-economic debt forces. Too much money printed with not enough production to support it. Money printed in order to pay back debt used by politicians to keep their social games going and their power intact. Plus these earners are caught in their own debt traps. Too much on the credit card and continual use of the house as an ATM. OK, there is some responsibility for those caught here, they can step out of the norm and do something crazy, like, sell their house, pay off all debt and rent for a while. Put the balance in hard asset investments perhaps.

But this is as difficult to do for most people as it is to wear pink at an All Blacks rugby game. You stand out, you may get ridiculed.

But back to debt. Here's a statemnet by Frank Guistra, founder of Silver Wheaton:

"The bottom line is that the money needed to bail out Europe and to fund America’s spiraling debt and future unfunded obligations is in the ten of trillions. IT DOES NOT EXIST. It has to be created by printing money in massive quantities, and despite all the rhetoric you will hear against such policies, in the end it’s the path of least resistance. Printing money is an invisible tax on savings, much easier to initiate, than, say, raising taxes or cutting back on services and entitlements."

Those who think for a minute that the problems in Europe have been solved will need to think again in my view. What is being communicated is a restatement of the same confidence trick that has been desperately peddled to the masses for the last 40 years. The bottom line is, the mountain of debt will not be paid unless money is conjured out of thin air or it is repudiated (but don't hang out for that one).

To back this up, look at the update from Ben Bernanke over at the Federal Reserve this morning. This from Yahoo Finance; "Many observers believe the Fed will step in to take steps to stimulate growth in 2012, first through communications measures that drive home their expectation that interest rates will not rise for along time, and then through more bond buying."

First through 'communications measures'! Read: trying desperately to talk up the positives about the system to keep us all buying more stuff on debt. Don't fall for it. Also, 'more bond buying'. Read: money printing. Debt is increasing and it is just too darn large to pay back. New money will be created. You will have your wealth stolen.

Slavery could be your future.

Gold in New Zealand dollars: $2156.45 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $40.42 per oz
Previous all-time high: $59.19
per oz (30 Apr, 2011)

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