Titanic, Gold and the Monetary System
Written April 2012
I have not written for a while about the economy or Precious Metals, but I did not feel the need. However quite a few people have contacted me the last few days on my views of what is going on. So I guess it’s about time I wrote.
2 nights ago I was watching a documentary with my wife, all about the Titanic based off actual interviews with the survivors in the weeks following the actual sinking, on what exactly took place.
What struck me enormously was the arrogance of the people in the total invincibility of this ship not only by the ship builders but also the sailors and passengers themselves.
Did u know that after they struck the iceberg and the ship was brought to a dead stop, the Captain and his officers were so comfortable with the fact that the ship was unsinkable that they started the engines again. Moving the ship forward, which pushed sea water into the holes at an enormous rate, which caused/guaranteed the rapid sinking of the Titanic.
(the engineers in the boiler rooms who were attemtping to pump the water out of the forward compartments could not believe the decision, as the water surge inundated their attempts and guaranteed the rapid sinking of the ship)
This action was done even with the knowledge that several of the ship’s watertight compartments were already breached.
The Titanic had the ability to carry up to 64 wooden lifeboats which would have been enough for 4,000 people – considerably more than her actual capacity. However, the White Star Line decided that only 16 wooden lifeboats and four collapsible’s would be carried, which could accommodate 1,178 people, only one-third of Titanic’s total capacity.
Why ?? Again because of the sheer arrogance of the builders / designers and owners that nothing would ever go wrong !!
Once the passengers were ordered on deck, they ambled slowly upstairs again with the thought process this is pointless exercise as the ship is unsinkable. The first life boats were only 30 to 50% loaded in relation to actual full capacity allowance, with first class passengers, women and children.
Why ?? Again because of the arrogance. It was not until the ship actually showed evidence of sinking that panic ensued to get on a life boat.
This is exactly the analogy we can use for our present situation. The “Monetary Fractional Reserve FIAT Currency System” is the Titanic. The people are so blindly confident (even market professionals in the banks themselves) that this system will continue and the impossibility of it ever possibly ending that “life boats” (Gold, Silver, Commodities etc.) are absolutely pointless.
Why the ignorance ?
Simply because of the age of this present system is in it’s 41st Year Anniversary.
All working adults up to the age of retirement and the younger generations have only ever experienced this system and hence have no concept at all of anything else. However picking up a history book you can clearly see that scattered throughout 5,000 years of human civilisation FIAT Currency (pure paper money backed by nothing whatsoever) experiments which on average have had an average lifespan of 40 years all ended in total collapse.
In fact we have had 3 Monetary System’s within the last 100 years.
We actually had a chance (a very small one I admit) to help end this suicide trip to the bottom of the ocean floor (and wait happily on board until another ship came to help – instigate a structural resolution to the Worlds over-leverage and insolvency) by actually allowing the banks and financial sector to self destruct / break up on their own heavily leveraged merits and weeding out corrupt board members and managers of these institutions and charging them under the full weight of the law.
However our wise leaders took the other route and loaded up Public Sovereign Debt levels (taxpayers liabilities) instead and re-inflating the World with debt leverage, printing vast amounts of new FIAT money and giving free loans or gifts to the banks (re starting the engines to push seawater into the boat guaranteeing our inevitable end).
At the moment we are at the stage where the First class passengers have ambled up to deck and very slowly climbing into the life boats (buying Precious Metals & other hard asset classes). Once the masses comprehend the fact that the system is doomed and FIAT Currency / Bonds etc.. are being spectacularly devalued / destroyed the metals will no longer be available (life boats have left). The end is a forgone conclusion, it’s up to you if you want to be on the life boat or attempt to survive in the freezing waters !!
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
Ludwig von Mises
Recent economic events confirming the ship is sinking are the PMI (Manufacturing Survey) surveys across the world are again falling (China, UK, Europe), LTRO 1 Trillion Euro injection into the system is failing already with yields on Spanish / Italian / Irish / Portugal debt climbing (fastest drug high in history that one), Spanish economic fundamentals deteriorating rapidly. New Greek Debt after the 78.5% default has already collapsed 20 % in value in a few short days – another bailout will be imminent. UK fundamentals are a joke and confirming the country is a basket case. The lying USA Government released economic statistics that was supposedly indicating an economic recovery are already falling to pieces. I could go into the finer details but would take to long for this post, least to say even Goldman Sachs chief economic strategist is very negative -
& even JPM is now publicly negative on the USA economy.
I wish you luck
James Turk rubbishes Bernanke’s recent speech to the colleges.