Complacency & Miscalculation Vs Hindsight & Foresight

There is more courage and heroism in defying the human impulse, in taking the purposeful and painful steps to prepare for the unimaginable. - Malcolm Gladwell

The day of the great panic is arriving and when it does arrive, do you believe that a fistful of dollars in a bank account will carry any respect and value? The currency of the nation will not be the dollar any longer. It will be the cent, because that is what everyone will get back from their savings and investments - cents in the dollar. In the mad scramble that will ensue, it will be dog eats dog as the payment system alternately freezes up and then gyrates.

There is only one fact that should keep you awake at night and that is the fact that the USA has run up more debt than is possible to repay. I repeat that is a fact. It's not hyperbole or slander. The question is therefore, "when will everyone understand the ramifications of this on their savings, investments and future?" The answer is, "when it is too late."

The day is approaching when governments everywhere will have to wipe the slate clean to avoid implosion. The timing is dependent externally on China's speed of preparation for that day and internally it is dependent upon the speed at which red ink is added to the government's bottom line. The catalyst however will be a rogue event that is either unexpected, or contrived by the government. But let us turn to history for a second.

Mt Vesuvius brought an end to the city of Pompeii when it erupted in AD 79 and the Titanic sunk when it hit an iceberg in 1912. Although these events are centuries apart they are both connected by at least two common features: complacency and miscalculation. These traits are evident to one degree or another in most human beings as they traverse life. As a result their deviation from the norm is commonplace when it comes to issues of how much to drink, eat, speed, spend or borrow. The results therefore are as evident today in personal and public finances as they were when people perished in Pompeii and on the Titanic. No doubt the complacency and the miscalculation are driven by hope in the initial stages and by greed in the latter part of the unfolding tragedy.

Complacency and miscalculation are also evident in all governments world-wide and especially in the USA. Over-spending, unprofitable wars, expenditure that creates dependants rather than tax-paying citizens, corporate welfare at the expense of the public purse and above all dishonesty and a lack of transparency. Politicians gamble the nation's future on behalf of some agenda that serves select interests.

We know that life is inherently risky, but how often do we ratchet up the risk so that it takes on the guise of gambling? Those that lived in Pompeii and those who built the Titanic did not seriously factor in the risk of disaster. The smart resident of Pompeii would have made sure he lived along the waterfront and owned a good ship and crew. The builder of the Titanic would have at least ensured an adequate number of lifeboats.

In this age, excessive gearing has been the pivotal mechanism upon which excesses were founded and upon which finances have foundered. The easy money (lax lending standards) and cheap money did not have the capacity to cause the extent of the damage with which we are confronted today if it were not for the fact that so much risk was taken on with so little equity and such flimsy cash flow. The banker then complicated the equation geometrically and geographically through the mechanism of credit creation and various financial "products" that were sold far and wide.

When you have little or nothing to lose, the risk reward ratio becomes too enticing and if you are a banker or CEO who is rewarded on results, the pressure and temptation become even greater. When the capital of both the lender AND the borrower is destroyed the system follows suit. In fact if it wasn't for the FDIC papering over the reality and governments providing guarantees, then depositors would also be losers. In short, the system has been truly gutted.

The above is only by way of introduction, because I merely want to highlight the repetitive and inescapable nature of the economic and financial system within which we exist and operate. In other words, nothing will change as man is destined to repeat his genetic proclivities.

Once we have recognised the deficiencies in both ourselves and the system, the only question that remains is whether we accept the shortcomings as part of our individual and collective fate or whether we build into our lives a form of insurance to limit the damage.

At the present time the major Central Bankers and their coterie of well fed and badly educated economists are of the view that we have not only avoided a systemic collapse but that we are also headed for better days. The excesses have brought us to the edge of the cliff, so what should we do? Do we accept the pronouncements of those that brought us to the edge and simply enjoy the view, or should we look down and ask ourselves whether we should buy a "parachute?"

Dear readers, it is time to sell you an insurance policy. You pay the premium only once, the policy cannot be cancelled, it continues to increase in value over time, the policy may be sold to another person and even if no disaster takes place in your lifetime the policy can be bequeathed to your children who can continue to hold it or sell it.

Yes, dear readers, you have guessed correctly. The policy is made of gold, silver or both. Can you tell me which other insurance policy possesses the above qualities whilst still retaining international marketability and acceptability? The answer is "no other policy". Anyone who tells you otherwise is a liar or works for the Fed.

Gold and silver are hindsight and foresight rolled into one. They don't rely on honest government, honest bankers or peace to retain value. They revel under all circumstances and even when they are attacked through manipulation, they bide their time because history is on their side.

If you are sane and solvent then buy some precious metals as only gold and silver will provide a modicum of financial security in the event of extreme developments. (Just find a safe institution to place them with). Failure to do so condemns you to join the long line of anonymous and well known victims that continue to occupy the economic graveyards of history. Needless to say, beyond the material it will be the element of resourcefulness and the strength of familial and community bonds that will carry the day.

If you still feel complacent that's fine. Just remember.....that's how the people of Pompeii and the people on the Titanic felt until it was too late.