Gold, Money, Wealth

Bullion Vault
How a rising Gold Price actually signals deflation, not inflation, when it’s held as money…

“YOU MAY HAVE green shoots, or whatever you want to call them, and you may have temporary relief, but you are still in a world that’s breaking,” Black Swan author Nassim Taleb told CNBC’s Squawk Box, says Dan Denning in the Daily Reckoning Australia.

“Anything that’s fragile like the financial system will eventually crash,” he said. “We’re in the middle of a crash…So if I’m going to forecast something, it is that it’s going to get worse, not better.”

Taleb’s point is not a popular one. But it is a realistic one. The fiat money and leveraged finance that took Western investment global in the last twenty years provided an epic rise in asset prices (and the debt used to purchase them). There’s no doubt that real goods and services have traded hands with world growth. But now we wonder how much of that is sustainable when you take the credit away.

Did we use phoney money to build a world with completely unrealistic levels of growth? Were trillions of Dollars of capital allocated based on final demand that was artificially pumped up by credit, currency manipulation (low US interest rates and global Dollar pegging), and government stimulation?

Well, yes we did! Mind you, the crash of the financial system is not the end of the world. It is a massive calamity to be sure, wiping out the value of retirement assets many people were counting on to make it through their golden years. But as many readers have reminded us in the last few months, there is more to life than money.

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