Can You Afford Not to Own Gold?
Well ... can you?
Higher stakes and elusive returns
If there is one point of clarity amid this macroeconomic landscape, it is that reactive fiscal and monetary intervention has been (and will continue to be) used by sovereign states and their central banks to combat this global crisis. A political imperative exists, compelling them to action. Because it is hard to imagine that austerity measures can stem the tide of the broader debt crisis -- particularly given the results of previous interventions -- the opposite approach is selected by default. Some version of a printing press will remain the sole weapon within their arsenals. European leaders may be resistant to the proposed scale and structure of its bailout fund -- but just you watch, the untold billions will flow toward the continent's most toxic assets just as they have in the United States.
And so, for those who place their faith in the masterminds of aggressive intervention like Ben Bernanke, Tim Geithner, and their counterparts overseas, I have a few questions.
While you can effectively argue that years of reactive intervention have prolonged the status quo and forestalled a calamitous crash, can any well-informed and reasonable individual say with confidence that another stage of the global financial crisis -- one that could make Lehman Brothers look like a walk in the park -- is not still a viable threat?
Given that aggressive intervention in U.S. has failed to result in the economic recovery so repeatedly promised, why should investors believe that further intervention will yield a different result?
And finally, here is the $100 trillion question: What if the entire economic paradigm behind the questionable strategy of addressing a debt crisis with ever-increasing debt was a misguided approach from the start? What if the deleveraging mountain of toxic derivatives was always too giant a beast to slay and that increasing sovereign debt simply raises the stakes in a futile game?
If I have bummed you out, I'm sorry. But I believe folks have been spoon-fed sugar-coated visions of our financial condition for far too long and that a touch of harsh realism may be what's needed to encourage investors to take action to protect their hard-earned capital.