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Op-Ed Contributor
Gold and Swine Flu Economics
By James West
The irony of the emergence of a Swine Flu pandemic amidst an economic contraction brought on by glutinous gorging on credit and real estate in the United Casinos of America is surely not lost on barbed minds.
The insistence by the World Health Organization that it be termed the far less ominous sounding H1N1 is evidence of our collective predisposition to avoid calling a spade a spade if it has negative implications. That predisposition will be viewed by posterity, should there be any, as a terminal flaw in the human character of our era.
The manifestation of a Swine Flu pandemic in the midst of a global economic meltdown does not bode well for the 'recovery', which, depending on who you listen to, is either well under way or years away. Our insistence on ignoring the simple solutions to both problems may yet herald the biggest historic instance of mass delusion and subsequent extinction of our kind.
Close the airports, and unwind the global entanglement of trade temporarily pending a recalibration of its mechanisms, and enjoy the inevitable return to mental and physical health, albeit amidst diminished financial circumstances.
Such simplistic yet idealistic pontificating sounds feasible superficially, but we've devised and installed such a pervasive metaphysical infrastructure of mis-information, that its only on our death beds that we catch a brief glimpse of the reality behind our fabulous global amusement park.
Economists, (the academic variety, I mean - not the "one who acts economically" of archaic definition) are the copywriters for the tanned and coifed anchormen who translate economic data from mathematical complexity into street form.
"Stocks Rise on Renewed Optimism."
"Gold Down as U.S. dollar rallies."
"Green Shoots of Economic Growth Seen".
It's as if the real driving forces of economic fluctuation are too menacing to identify plainly. Instead they must broadcast in the language of kindergarten students.
More realistic headlines are conceivable.
"Swine Flu Pandemic Caused by Too Many Pigs"
"Stocks and Gold's Daily Price Fluctuation Irrelevant to Bigger Picture"
"Economy Won't Recover Until Transparency Across Derivatives, Commodities and Credit Implemented".
It's not so hard.
The Swine Flu outbreak is being compared in the press to the Spanish Influenza outbreak of 1918-19. That outbreak was caused by "an unusually virulent and deadly Influenza A virus strain of subtype H1N1", according to Wikipedia.
The Swine Flu outbreak of 2009 has been described as a virus "that was produced by reassortment from one strain of human influenza virus, one strain of avian influenza virus, and two separate strains of swine influenza virus.
The Spanish Flu outbreak was not Swine Flu. At least, that's what the Center for Disease Control in Atlanta says. The question is, then "why are they being labeled identically?" The same question could be asked of currency and gold. Gold is money, and currency is merely paper printed with a value that fluctuates according to its perceived value. Gold takes gargantuan effort to produce from mines, which explains its cost and value, whereas paper money is fabricated with a minute fraction of the effort.
Why, then, is paper currency accorded the same utility as gold?
Historically, paper money evolved from the fact that you stored your gold with a banker, and he issued you pieces of paper acknowledging the fact that there was gold that you owned stored in the banker's vault. That evolved into governments issuing currency backed by gold in the government's vault.
Through various manifestations the Gold Standard determined the value of the world's currencies, until Richard Nixon terminated the relationship with the end of the Bretton Woods Agreement that governed the last albeit bastardized version of the original gold standard.
The motivation for the United States Government in adopting a floating currency backed by nothing but the willingness of a counterparty to accept its face value is obvious enough. Gold takes enormous effort to produce, and is limited in quantity.
Confidence is manufactured comparatively easily, and is limitless under the right conditions. The inherent value of gold undermined the confidence game required to perpetuate the U.S. dollar into the global reserve currency, and so it evolved that it was against the government's interest to have a global Gold Standard, and very much within its interest to have a global U.S. dollar standard, which is what we have now.
Unfortunately, the same inability of humanity to temper its responsible stewardship of currencies throughout history has once again manifested itself in the virulent fabrication of U.S. dollars, facilitated by the media. No currency has lasted more than a hundred years in history, and it appears that the inflation of the U.S. dollar supply should soon enough lead to a Weimar-esque price hyper-inflation, where the price of a loaf of bread doubled every 15 seconds that will spell its doom.
Unfortunately, or fortunately, depending on your position in the food chain, the information distribution apparatus that has been hijacked by the richest of the rich and the power hungry mob in three piece suits is now so powerful, that even in the face of irrefutable tangible plain-as-the-nose-on-your-face evidence to the contrary, the U.S. dollar continues to appear strong, and gold performs weakly.
For those of you entranced by the information apparatus so described, here are a few basic facts that should help you prepare for the worst.
1. Gold is money (So is silver). Currency, especially the U.S. dollar, is not.
2. There is no recovery underway, and won't be for at least another 2 years, if even then.
3. Swine Flu, despite its emerging 'preferred' name H1N1, is still Swine Flu.
DISCLOSURE: The author owns some gold and some U.S. dollars but no pigs.
SOURCE: http://www.midasletter.com/commentary/090501-1_Gold-and-swine-flu-economics.php
Tags: Gold and Swine Flu Economics
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