Paperbugs

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  • Tylerdurden
    Banned
    • Jul 2006
    • 19903

    Paperbugs

    It is now time for the tables to turn once again. It is now time for the paperbugs to take their medicine. It is now time for the "Don't Worry, Be Happy and Invest in Stocks Forever" crowd to come to realize they were not only wrong, but arrogant in the face of overwhelming evidence to the contrary.
    The paperbugs, as I am now going to start calling them, place all their belief in a paper system destined for failure. Paper fiat money has never worked throughout history and central banks have never benefited society over the long term. Kenneth Gerbino exposes the ridiculousness of paper money in one brilliant quote:
    "If you don't trust [G]old, do you trust the logic of taking a beautiful pine tree, worth about $4,000 - $5,000, cutting it up, turning it into pulp and then paper, putting some ink on it and then calling it one billion dollars?"
    Yet, such is the logic of the paperbugs. They believe confidence in men is eternal and more reliable than nature. Hasn't history exposed the folly of such beliefs over and over? Gold is money not because any one individual calls it that but because people and societies over the past few thousand years have figured out that it functions well in this role for multiple reasons. The main reason is basic: people in power are not to be trusted! Why is the collective wisdom of millions of people and hundreds of societies less valuable than the decree of a few scheming bankstaz and their paid-for bureaucratic bozos?
    I am not saying that we will return to a Gold standard monetary system any time soon. I am saying that this crisis exposes the folly of the paperbug. Believing in paper money when it can be created out of thin air with no work required is childish. If it is not childish, then it can only be nefarious (i.e. if one is an insider, paper money makes perfect sense). The ability to print money out of thin air is intoxicating and highly addictive. Our government and its drug dealer, the federal reserve, have taken the road more frequently traveled and are now in the terminal stages of addict and enabler, respectively.
    The paperbugs believe in fairy tales like the fact that the non-federal, for-profit federal reserve corporation is smart and knows what it is doing. The paperbugs believe government apparatchiks know how to "stimulate" an economy. I guess this is because governments have always been the driver behind economic prosperity, growth and innovation in "free" markets, right? This is why communism, fascism and socialism have always produced the strongest and most innovative economies throughout history!
    It is time for paperbugs to admit that their beliefs are bizarre and not worthy of serious economic discussion. Monopoly money cannot be the basis for a sound society. Look at what has happened to the United States since we severed the final tenuous link to Gold in our monetary system in 1971! We have lost our advantage over the world. We have lost our prosperity (no, it's not coming back soon for the "average" American), lost our manufacturing base, been through a horrible inflation (the 1970s) that required usurious interest rates to tame, and have been through serial unprecedented bubbles in stocks and then real estate that are now going to continue exploding for a decade or two.
    I am not saying Gold would have prevented all of these things, but Gold brings stability. It is boring. Paperbugs know that paper money is never boring. It is a manic-depressive master over society. Loose money fuels a boom and tight money results when the speculation has exhausted itself. The swings are getting wilder precisely because our money is not real. Our monetary system is a fantasy better told as a bedtime story to gullible children than as a basis for a "modern" society.
    Paperbugs believe CNBC and Larry Kudlow are telling the truth. Paperbugs believe the U.S. Dollar will maintain its grip over the world and is a viable global reserve currency. Paperbugs believe government "stimulation" is anything besides a complete oxymoron that drains the lifeblood of an economy. Paperbugs believe Gold is worthless and the paper promises of corporations are priceless. Paperbugs believe "stocks for the long haul" is something besides a marketing campaign designed to "rip your face off" over the long haul. Paperbugs believe Ben Stein knows something about economics and the stock market. Paperbugs are permabulls on financial markets.
    What paperbugs don't understand is that promises have to be kept consistently by the entity making them to maintain their value. The U.S. government, in aggregate, has past the point of no return. They cannot live up to their promises. They have promised too much and cannot deliver. That means every promise inherent in the currency units of the United States has much less value to the rest of the world. Paperbugs fail to understand that paper is about confidence. Confidence in the United States and its financial system is declining rapidly, which means our paper games are being exposed for the fraud that they are. We can recover, yes, but it will take a decade or two and we will likely be a much weaker nation on the other side.
    As the pendulum of time and greed swings in different directions, the Dow to Gold ratio will continue its inexorable decline towards one. Paperbugs will cry and scream and continue to call Gold worthless or a bubble until it is in its final blow-off stage. Then CNBC will tell the paperbugs to buy Gold and Gold stocks right near the top so that their corporate masters can sell to the frenzied paperbugs - sort of like what's happening right now in the general stock market.
    The trick for Gold bulls will be to recognize when the final peak in the relative value of Gold is near, then to trade that Gold for stocks, real estate, or some other undervalued asset class of interest. We are a LONG way from that point.
    Sorry - the page you tried to reach is no longer here.
  • huisjen
    innocent widdle bunny
    • Jun 2001
    • 8689

    #2
    Re: Paperbugs

    Thanks Norm. I looked here for your response, which I figured had a good chance of being interesting.

    Mark will, of course, think I read his jibberish and pretend, but I'm really starting to get used to the smooth flow of things when his and Jack's posts are blocked.

    Dan
    Master of The Ensign's Gig: a 7 1/2 foot flat bottom plywood skiff,
    and Prudence: Lightning #7896.

    Think Good Thoughts.
    Thoughts become words.
    Words become actions.
    Actions become habits.
    Habits become character.
    Character becomes destiny.

    Comment

    • Mrleft8
      Banned
      • Feb 2000
      • 31864

      #3
      Re: Paperbugs

      Silverfish!!!!!! I HATE those things!!!!

      Comment

      • Tylerdurden
        Banned
        • Jul 2006
        • 19903

        #4
        Re: Paperbugs

        Here's another perspective. In the day a roman soldier could by a fine suit of armor for a one ounce gold coin. Today that same gold coin will by a fine suit. Gold doesn't change in value except in relation to fiat economy's.

        If one was paid in gold in 1982 dollars today they would have triple the purchasing power if redeemed today. If paid in US dollars in 1982 they would have lost near 40% of value if redeemed today.

        If you want we can do comparisons back to 1913 when the federal reserve was established. Doing the same if paid in dollars back then you would get 4 cents today.

        Comment

        • Tylerdurden
          Banned
          • Jul 2006
          • 19903

          #5
          Re: Paperbugs

          Originally posted by Dave Wright
          So you own gold? If so, I'm curious as to what form it might be in? No I'm not just being a nosey bastard, I'm curious. I think actual ownership gives you a different view, just like owning a boat gives you a different perspective.

          Ye, no , maybe. I think you need to worry about what you hold.

          Comment

          • Tylerdurden
            Banned
            • Jul 2006
            • 19903

            #6
            Re: Paperbugs

            Originally posted by Norman Bernstein
            If someone paid in US dollars in 1982 stuffed those dollars into a mattress until today.... they'd not only have lost 40% of their value... they would have been blithering idiots!

            If, on the other hand, that person invested in the Dow, they'd be up 1000% in dollars..... the same thing, invested in gold: 282%.

            (To be completely fair, the time period includes a long period where gold outperformed the Dow, as well as a long period where the Dow outperformed gold).

            Nice to skip over the 2000 year value though Norm?
            I can show where cow patties have out performed the Yen too.
            Figures lie and liars figure.

            Comment

            • Keith Wilson
              Trying to be reasonable
              • Oct 1999
              • 64114

              #7
              Re: Paperbugs

              But not all figures are lies, and most of those who figure are not liars.
              The trick is to tell the difference.
              "For a successful technology, reality must take precedence over public relations,
              for nature cannot be fooled."

              Richard Feynman

              Comment

              • Tylerdurden
                Banned
                • Jul 2006
                • 19903

                #8
                Re: Paperbugs

                Originally posted by Dave Wright
                I bought Austrian Coronas in 1975 and 1976. I still have them. It's been a sterile investment. If I'd bought in 1980 it would have been worse. Their ownership is OK for me, but I wouldn't generally recommend it.

                I worked with guys who bought bags of junk silver coins in late 1979. They have an interesting view of buying and holding metals. That's why I asked you if you owned gold.
                I would say that holding precious metals silver is more practical in trade and if what is speculated comes to pass silver will more than likely out perform gold. I consider silver to be the poor man's gold.

                Comment

                • JBreeze
                  Senior Member
                  • Apr 2007
                  • 1874

                  #9
                  Re: Paperbugs

                  Another perspective is to view gold as a currency, somewhat inversely related to the US dollar......strong dollar, weak gold and vice versa. Don't worry about the "world" - just look at your own market and decide for yourself.

                  If everything collapses, I doubt I would be able to access or defend any physical gold holdings.....but I've done very well buying jr. gold miners over the past couple years....since 2008, WGW --> acquired by NGD went from .59 to $4.00+ and EGO went from $5.00 to $12.00+.

                  The point of this message is there are times to hold some assets related to gold or actual gold, and other times to get rid of it.....to make blanket statements or quote some specific period isn't instructive....gold has done wonderfully 1999-present, while the Dow is flat. Some miners have done much better than the physical gold.

                  Don't make investments to hold "forever" because you won't be around forever

                  Comment

                  • Tom Montgomery
                    Lurking since 1997
                    • Sep 1999
                    • 35611

                    #10
                    Re: Paperbugs

                    Diversify. A percentage of one's investments should include gold coins.
                    "They have a lot of stupid people that vote in their primaries. They really do. I'm not really supposed to say that but it's an obvious fact. But when stupid people vote, you know who they nominate? Other stupid people." -- James Carville on the plethora of low-quality GQP candidates in the mid-term election.

                    Comment

                    • Keith Wilson
                      Trying to be reasonable
                      • Oct 1999
                      • 64114

                      #11
                      Re: Paperbugs

                      silver is more practical in trade and if what is speculated comes to pass silver will more than likely out perform gold. I consider silver to be the poor man's gold.
                      Ah, NOW I understand. It has nothing at all to do with the performance of precious metals as an investment relative to other investments. If, as Mark has so often predicted, the US government and financial system collapses completely and dollar bills become not-very-good toilet paper, then he thinks it might be good to have bags of silver coins buried in the backyard.

                      OK, that clears things up; carry on.
                      Last edited by Keith Wilson; 10-22-2009, 03:43 PM.
                      "For a successful technology, reality must take precedence over public relations,
                      for nature cannot be fooled."

                      Richard Feynman

                      Comment

                      • Tom Montgomery
                        Lurking since 1997
                        • Sep 1999
                        • 35611

                        #12
                        Re: Paperbugs

                        Originally posted by Keith Wilson
                        Ah, NOW I understand. It has nothing at all to do with the performance of precious metals as an investment relative to other investments. If, as Mark has so often predicted, the US government and financial system collapses completely and dollar bills become not-very-good toilet paper, then it might be good to have bags of silver coins buried in the backyard.

                        OK, that clears things up; carry on.
                        Gold coins are simply insurance in the event of catastrophe. Perhaps I should have said "a small percentage of one's investments should include gold coins."
                        Last edited by Tom Montgomery; 10-22-2009, 03:54 PM.
                        "They have a lot of stupid people that vote in their primaries. They really do. I'm not really supposed to say that but it's an obvious fact. But when stupid people vote, you know who they nominate? Other stupid people." -- James Carville on the plethora of low-quality GQP candidates in the mid-term election.

                        Comment

                        • Joe (SoCal)
                          Banned
                          • Feb 2002
                          • 46431

                          #13
                          Re: Paperbugs

                          Originally posted by Norman Bernstein
                          You can't eat a chunk of metal. You can't burn it for fuel, you can't wear it, and you can't treat an infection with it. In a true economic collapse, all of those things will be far more important.
                          Right on Norman. The whole thing reminds me of an old Twilight Zone Episode
                          The Rip Van Winkle Caper




                          Synopsis
                          To escape the law after stealing $1 million worth of gold bricks, a band of four gold thieves, led by foreign-accented scientist-mastermind Farwell (Oscar Beregi, Jr.), hide in a secret cave in the desert. Farwell has designed suspended animation chambers and set them for 100 years, figuring that by 2061, nobody will remember the robbery and the gang will be in the clear.
                          When they wake up, everything starts to go awry. Mister Erbie is already dead, a mere skeleton, because a rock had fallen and shattered his glass chamber. Greed soon begins consuming the others. Brooks demands that DeCruz drive the getaway car. DeCruz kills Brooks by running him over with the getaway truck, but then finds that the brakes do not work and barely escapes before the vehicle crashes into a ravine. Consequently Farwell and DeCruz must walk through the desert in summertime, carrying as much gold as they can.
                          Later, Farwell, who is older and somewhat obese, loses his canteen, and DeCruz forces him to ante up one gold bar for each sip of water. When the "fee" goes up to two bars, Farwell strikes DeCruz with the gold bricks, killing him. Farwell then continues to a highway, lugging the gold he refuses to abandon. Finally, weak and dehydrated, he collapses. A futuristic car drives up and Farwell offers his gold to the couple inside in exchange for water and a ride to the nearest town, but expires a few moments later.
                          As the man gets back into his car to report Farwell's death to the police, he quizzically remarks to his wife, "Can you imagine that? He offered this to me as if it was really worth something." The wife vaguely recalls that it had, indeed been valuable sometime in the distant past. The husband replies, "Sure, about a.... hundred years or so ago, before they found a way of manufacturing it," and tosses the gold bar away.
                          Closing narration

                          The last of four Rip Van Winkles who all died precisely the way they lived, chasing an idol across the sand to wind up bleached dry in the hot sun as so much desert flotsam, worthless as the gold bullion they built a shrine to. Tonight's lesson...in the Twilight Zone.

                          Comment

                          • JBreeze
                            Senior Member
                            • Apr 2007
                            • 1874

                            #14
                            Re: Paperbugs

                            Originally posted by Norman Bernstein
                            You could have done just as well by investing in hundreds of stocks that have risen by similar percentages since 2008, though.... gold's price appreciation wasn't unique.



                            Only presuming that you knew, aforehand, just what those times were!

                            Like I said, look at gold as a currency, and use the same tools to evaluate this investment as any other investment

                            And gold sucked wind from around 1980 to around 1999. Once again, it's no different than making any other liquid investment.
                            So what is your point? You can't suddenly switch from comparing broad market averages to specific individual companies. People make an investment, evaluate their investments over time and make decisions to buy, sell or hold during each review.

                            " If you're jumping on the gold bandwagon, be mindful of the possibility that gold could turn negative once (if?) the world economy has rebounded strongly and central banks are ready to tighten monetary policy."

                            My point is that one should watch the $US currency vs. Gold as a currency, and take a position. Holding physical gold can be difficult because of transaction costs and security costs. However, one can "indirectly" buy, hold and sell gold through miners, ETFs, stock and options. As I stated, I've done very well by buying some miners, and have reduced my positions by 50%, based on MY analysis of the risks of those two "currencies".

                            Norman, you are always bashing gold whenever anyone discusses the topic. I specifically remember your smarmy remark to Ish a while ago...."what are you going to do - eat it?" in the context of a world-wide calamity. So you don't like gold. What is your recommended alternative investment?

                            Comment

                            • Captain Blight
                              Banned
                              • May 2008
                              • 7648

                              #15
                              Re: Paperbugs

                              The thing about a fiat currency, mark, is that it depends on everyone agreeing to ignore that it isn't backed with metals. In the case of the dollar, it is backed by "the full faith and credit of the United States." Okay, what does that mean? Different things to different people. For you, maybe, not so much. For the businessman in Zimbabwe, it might mean something completely different.

                              Gold does indeed hold its value over time, paper does not. In that regard we may well be better off going back to a commodity-backed currency. Silver, maybe?

                              Comment

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