Seduced by an idea

Something is up. Red flags popping up everywhere, if you know where to look.

More evidence I’m right appears by the day…

By “right” I mean the existing financial system careers headlong towards corruption and crisis by the day. You just have to keep your eyes open.

I’ve been exploring this idea all week. Yesterday I looked at what I called The most dangerous idea in history”: Modern Monetary Theory. Aka MMT. Aka the idea that the secret to prosperity is to create more money.

What could possibly go wrong?

Remember my theory. The monetary system has no physical constraints. It is open to corruption. The root of that corruption is a seductive idea. And MMT may well be the most seductive idea of all time.

After all, it gives the political class free rein to spend whatever they want, without the messy business of going into debt. To our friends in Westminster, that’s the equivalent of crack. Which as all Peep Show fans know is really moorish. A hard habit to kick.

But I’m not here to repeat myself. Read yesterday’s piece again if you like. Today I want to look at things from the opposite point of view. The exact, equal and opposite of MMT.

Here’s a theory. Ideas spread and seduce. They hit a tipping point. They cascade. Right now MMT is hitting that point amongst the political and economic elite.

But maybe all ideas have their inverse. Their opposite. Maybe those ideas “tip” simultaneously. Maybe they cascade at the same time. Every action has an equal and opposite reaction.

Why else would gold be soaring in so many currencies, all over the world, at precisely the same time?

Two ideas. Two opposites. Cascading and seducing in sync. As the politician wakes and thinks, “MMT is the answer to this country’s problems” the private investor wakes and thinks, “Gold is the answer to my problems.”

Maybe they don’t realise so explicitly. But they are connected. That is what’s going on right now. The elite are gearing up to create and spend an enormous amount of money out of thin air. And gold is soaring in response as regular people wake up to what’s happening.

Because gold is the equal and opposite of MMT. One is a theory of unlimited money supply, created on the whim of the political class. The other is finite. Constrained. It doesn’t care who is in power or what their “theory” may be. It doesn’t change and can’t be created on anyone’s whim.

That’s why it is soaring. And it is soaring.

For proof of that I’m going to share part of an email I got from someone who has spent a lot of time analysing gold this year. His name is Tom Dyson. He’s a part of the very loose global network of writers, thinkers and traders of which I’m one small part.

Tom is an interesting chap. He’s currently on the road in Asia with his family. As he travels, he documents what he’s up to… and what’s happening in the gold market.

I caught up with him a few months ago in London and lent him my copy of Neal Stephenson’s Cryptonomicon. If you’re interested, this is the one novel I ask all my new hires to read. It’s an outstanding book, laying the (fictional) groundwork for a digital hard money system backed by gold, long before bitcoin. (If that’s not your thing, it’s also a great story about the codebreakers in the Second World War.)

Tom’s postcard from the road yesterday noted that gold is now at or has recently made an all-time high in pounds and euros. And a hell of a lot of other currencies. Why? It’s a signal. People are waking up. The idea is cascading.

Over to Tom:

There are 56 countries left on the planet where the gold price is NOT yet at an all-time high. Many of them have pegged currencies to the dollar. Here’s a list of some of them (number in parentheses shows how high gold has to rise to hit an all-time high):

USA (23%)
Bangladesh (8%)
Switzerland (10%)
China (10%)
Guatemala (24%)
Israel (28%)
Iraq (19%)
Iceland (15%)
Cambodia (21%)
Laos (11%)
Vietnam (6%)
Thailand (19%)
Singapore (7%)

Why is the price of gold rising around the world?

Many countries are about to weaken their currencies. It starts with America. Look at Trump’s recent tweets. Or the U.S. government’s $21 trillion in debt (which is effectively a massive bet on the dollar losing value.) America needs a weaker dollar to win back industry from overseas and keep the credit flowing. Look at the Chinese, who want their products to seem cheap in the rest of the world. Or the Japanese and the Germans, who compete with the Chinese. Or the Brits, who are about to Eurexit…

We’re entering an era of “competitive devaluations” or “currency wars.” Gold will be the only practical way to preserve purchasing power. 

I slightly disagree with Tom there.

Competitive devaluations is one thing. It may be a side effect of what’s coming. I think what’s really going on is that people are realising the US is going to go down the MMT route. It’s going to fire up the printing presses. Perhaps after the next election.

That gives everyone else about 18 months to beat the US to it. Steal a march.

That’d have two major benefits.

First, the reasons Tom outlines. Devaluation of your currency. You get a bigger boost to your export economy if you can weaken your currency first, before the race to the bottom begins.

Secondly, MMT has an inbuilt first-mover advantage. It’d likely trigger something of a phony boom. Or even a real one. For a while. Before you get the comedown you get the high.

And the quicker you move the bigger the high. In fact, that’s how MMT will seduce and corrupt the world. It’ll look like it’s working! One country will try it. Then another. Soon everyone will be clamoring to try this new “modern” way of managing the money supply…

And then… well, you can guess what will happen. You cannot spend or print your way to prosperity. Not real prosperity.

That’s what gold is telling us. Something is up. Something big.

Which is why you need to get the very best gold investing intelligence you can, right now.

For more on that, follow this link while there’s still time.


Nick O’Connor
Publisher, Exponential Investor

Category: Cryptocurrency

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