Are your assets at risk from the 'mob-ocracy'?

Why bullion is your bulwark ►16th March 2008

"The middle class, to so many Germans the stable core of society, seemed to be disappearing before their very eyes". Weimar Germany, Promise & Tragedy - Eric D. Weitz [Princeton University Press]

Recently, a friend made a revolutionary statement! He declared that he no longer intends to save for his retirement. At NZ Gold the expression of such sentiments present us with a dilemma. Should we let our 'middle-class' sensitivities and beliefs come to the fore - and condemn such irresponsible thinking? Or should we stay true to the principles of this website and explore the possible case for such a contrarian view?

Whatever the rationale for our friend's argument we believe, at NZ Gold, that a most worthwhile function has been served - because someone is actually prepared to question the current obsession with 'saving for retirement'. As we consider this issue we suspect that the 'middle-class' are at a huge disadvantage - because they have not understood that the rules of the game have radically changed. Indeed, there is something quaintly antediluvian about the thinking of those of us who occupy that strata of society that finds itself increasingly compressed between the burgeoning 'underclass' and their alter ego along the same 'National Socialist' continuum - 'the corporate elite'.

Overwhelmingly, it seems to us at NZ Gold that the 'middle class' repose their hopes for the future primarily on the value (we prefer the term price) of their house. This - in our view, flawed strategy - is then augmented with various ancillary financial vehicles of which the most notable recent example is the government inspired Kiwi-Saver. This leads us to respectfully ask a question of our readers - do you trust politicians and the elites that command them? Perhaps you do! Perhaps you write letters to the paper praising Helen Clark or John Key. Or maybe you find commonality of purpose with the cheering crowds we have recently seen in the United States - as they 'canonize' their beloved candidates in the unfolding battle over who will be the next President. If such is your inclination then there is probably little that we can assist you with - other than urging you to be more discerning! Yet, if you are part of that emerging - and courageous body - that is prepared to think independently and to stand up against the ruling elite's determination to take us along Friedrich von Hayek's 'Road to Serfdom' there are things you can do to defend the interests of yourself, your family, and your friends.

Central to our thinking at NZ Gold is the fact that if 100% of your wealth is denominated in New Zealand Dollars, or other fiat currencies, then you are only wealthy for as long as politicians and their 'corporate masters' allow you to be. Remember, the ruling elite do not need to physically take your savings in order to destroy their value - they only have to inflate the currency in which they are domiciled to worthlessness. This is precisely what happened in Weimar Germany and, more latterly, Zimbabwe. At NZ Gold we suspect the example of Zimbabwe actual holds hugely important lessons - especially for New Zealand - because it touches upon the very hidden prejudices of the middle class that, paradoxically, make us so vulnerable to a huge financial shock. Indeed, at NZ Gold, we once described New Zealand during a visit to England as "an aspirant Zimbabwe of the South Pacific". We offered that choice of nomenclature not to be unnecessarily disparaging - but because we identified emerging parallels that the passage of time and unfolding events are bringing in to steadily sharper focus. Of course, many will ridicule our thoughts but we would urge readers to reflect that Zimbabwe (formerly Rhodesia) was once a relatively prosperous agricultural nation with a remarkably strong currency and 'Westminster style' of government. The problem is that a coalescence of the 'mob' and the 'ruling elite' have destroyed the nation in a conventional sense but created an environment of unimaginably rich-pickings for some. Within this we understand that the 'middle-class' - like their counterparts years before in Germany's Weimar Republic - have been financially annihilated. It can be no fun going to the supermarket to discover that a lifetime's savings, domiciled in the Zimbabwe Dollar, will not even buy you a handful of groceries!

At NZ Gold we like to challenge and dare we suggest that one of the reasons our minds might be closed to possible comparisons with Zimbabwe is because Robert Mugabe is a black man. Thus is it possible, that with the example of Weimar Germany now largely gone from living memory, that we simply cannot bring ourselves to draw any parallels with Zimbabwe because our politicians are generally drawn from the 'respectable' white middle classes? Could it be that contemporary political leaders in the West - whilst mouthing their usual catalogue of pieties - actually rely on such prejudices to disguise their own similar intent? Our impression of Mr Mugabe is not of some primitive ignoramus - but of a highly educated and articulate man with formidable powers as a populist orator. It is critically important to remember that the business of monetary debasement - and the concomitant destruction of the middle class on whose values functional democracy is reposed - is not an issue of race, colour, or creed. Rather it is an 'outcome of convenience' ultimately designed to advance a small cabal of vested interests at the top with unruly 'muscle' initially being deployed from the bottom - until the pretext for a more formal dictatorship is established and even welcomed by those crushed in the middle.

As we scan the horizon we are increasingly persuaded that so-called bastions of democracy, such as the United States and Britain, are on the slippery slope to the condition of 'mob-ocracy'. Nobel prize winning economist Friedrich von Hayek foresaw this when writing his seminal work 'The Road to Serfdom' at The London School of Economics in 1943. Remember, this was at the height of the second world war when the British nation was struggling to survive in what Winston Churchill described as "the supreme crisis of its life". How bizarre, how ridiculous it must have seemed that von Hayek chose to warn, that despite the raging conflict with Nazi Germany, Britain had already embarked upon the same ultimate path to fascist dictatorship. This was a theme re-visited by British based American financial commentator Robert Beckman in his 1988 publication "Into The Upwave" [Milestone Publications]. Beckman described a coming "Gulag Anglo-Pedigree" and, when examined retrospectively, the thrust if not the minutiae of his forebodings shows considerable prescience. At NZ Gold we offered our own thoughts in an update in the England Expects section entitled "Why Britain is the emerging European gulag" [Sunday January 28th 2007] noting ► "we suspect it may be difficult to immediately comprehend the evaporation of freedom that is occurring". We went on to reflect on what liberty actually means concluding: "true freedom is the ability to walk down a street without being watched, to say what you like without fear of arrest and 'show trial', to be free from carrying an identity card in the country of your birth, to know that your family's property - legitimately worked for - is yours and not the government's to confiscate at any time, to pursue your nation's historic religion without increasing state proscription, to know that a sovereign government and not a 'liberal elite/corporate cabal' makes the decisions affecting your life and to know that your savings will not be destroyed by the politicians most practiced con - monetary debasement".

So where does all of this leave our New Zealand and United Kingdom readers as they seek to protect their assets from the mob-ocracy? Put crudely we perceive a 'crushing pincer' comprising a 'bottom claw' of burgeoning social welfare and a more subtle - but ultimately much stronger - 'upper claw' of corporate welfare. Stuck somewhere between the two - and already under rapidly burgeoning pressure is the 'middle class'. The problem is that a 'triple-whammy' is developing comprising higher costs for day to day essentials such as food, an emerging evaporation of home 'equity' as house prices stagnate and fall and, of course, the relentless burden of tax, tax, and more tax. Unfortunately, all the evidence appears to support our hypothesis that the prosperity of recent times has, to a large extent, been a credit financed scam and not a 'new paradigm' of permanent prosperity. Indeed, it seems that lessons from the nineteen thirties are having to be re-learned. Middle class Kiwi and Pom beware! If the economy falters and unemployment rises sharply, or the government's much hallowed surplus disappears [not, of course, that there is a surplus in Britain!] it will be to you that the government comes for more plunder. Moreover, are you really confident that your investments are safe in New Zealand - or Britain. Suppose it suited a desperate government to play to the 'mob' with the nationalist card and to seize a business in which you had a worthwhile shareholding. Can politicians be relied upon to 'play by the rules of the game'? Probably yes - sort of - if things are going well. Yet what if they are going badly?

At NZ Gold the first thing we would suggest to our readers is that personal expenditure should be bought under strict control and credit cards used only in exceptional circumstances. Remember, it is not your patriotic duty to go out and spend - irrespective of whatever ridiculous hypotheses many be advanced about 'consumption' being the key to economic prosperity. If you must insist on spending make sure that it is on something with enduring potential - some fine art, a nice antique, or a good book. Do not waste your money on consumptive trivia. A greenhouse for the growing of vegetables would, in our view, be a much better 'investment' than a new television. Secondly, understand that your house is both an asset and a liability. Concentrate more of your psychology on the fact that it is your home and not something that will automatically make you wealthy. Indeed, a hyperinflationary 'blow-off' or a 'debt deflation' will play havoc with the doctrine of housing as a 'a store of value' and, in both circumstances, we fear some great financial unpleasantness could be in store via the rating system. Do not make the mistake of automatically assuming that a fall in house prices will provide the 'comforting crumbs' of lower rates. We suspect our U.K. readers will be more conversant with the use of rates as 'weapons of mass financial destruction' than their Kiwi counterparts but we would urge our New Zealand readers not to feel left out - your turn is coming!

One of the problems being faced by local authorities in Britain, besides dealing with the complexities of now very diverse urban centres, has been the recent overwhelming influx of people from the former Eastern block. The primary beneficiaries of this have been the European Union, who appear particularly determined to create a 'Europhile' hegemony - especially within England - and the corporate elite who have found themselves a ready supply of cheap skilled labour. The losers are Britain's increasingly 'immiserated' working class, who are being progressively displaced from the workforce, and homeowners who are being forced to meet the huge practical costs associated with such a massive new population influx. As an aside it is also important to note that young Kiwis look like being losers since the British government now appears to be desperately seeking ways to proscribe immigration from commonwealth countries in order to offset the unbelievable magnitude of what is happening. The winners, of course, are the corporate elite and the wealthy who are able to enjoy the skills of a 'replacement workforce' whilst many of the costs associated with its domicile are passed on to the population in general. Naturally, anyone who protests at having to contribute to this arrangement is branded a racist. At NZ Gold we suspect that a similar 'corporatise the costs, privatise the profits' scam is probable following the coming 'free trade' agreement with China. We will be addressing this issue in more detail in a subsequent update - but do not be surprised if you find yourselves being forced to pay via local authority rates for the 'replacement' of New Zealand's working class!

In essence, we see ordinary hard-working Kiwis being increasingly squeezed in order to pay for ever greater government liabilities and the demands of the corporate sector. Remember, much of the fall in unemployment has not come about because of 'genuine' jobs for which a true demonstrable demand exists. On the contrary, as in Britain, it is the government that has become the great recruiter for often hugely remunerated jobs that would simply not be available in a properly functioning market economy. Moreover, we are extremely suspicious about many aspects of the great global warming panic and we conclude that much of what is being said by our leaders simply does not stand intellectual scrutiny. We are fearful that the 'man made global warming' mantra could be used as an expedient to crush the living standards of the middle class both here and overseas. When the same people who have hitherto overseen - and enthusiastically endorsed - a grotesque orgy of personal consumption begin demanding the wearing of 'hair-shirts' and the practice of 'monastic abstinence' how can we take them seriously?

Through all this one monetary medium, one store of wealth, that has watched the follies of man for millennia, stands aloof from the detritus of the collapsing credit cycle and the tax and spend policies of governments. It is gold and, of course, its more restless 'bedfellow' silver. It is an extraordinary thing that the 'middle class', who seem to spend so much time worrying about financial security, and who perversely mortgage themselves to the eyeballs in the process, appear to have little time for the precious metals except as adornments. At NZ Gold we do not elevate gold and silver to positions of deification but we do recognise them as the money of last resort whose values cannot be destroyed by the sweep of a politician's or banker's pen. Indeed, they are the polar alternatives to the folly of our leaders and that is why in the midst of some of the greatest acts of financial recklessness in history gold stands at an all time high, with the market closing for the first time on Friday 14th March at over US$1,000 per ounce! Do we advocate selling your house and putting it all into gold and silver, especially at these prices? Of course not! Do we advocate abandoning all other monetary vehicles for the precious metals? Of course not! All we say is this: "Let your house be your home, let your bank deposits and shares be your investments, but let gold & silver bullion be your bulwark"! 

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