Imprisoned by the ugly sisters - why we won't go to the ball

Sunday October 5th 2008

These days we have to be a little careful at NZ Gold. Why, because the author holds British citizenship and, in consequence, is a defacto subject of that new Shangri-La called the European Union. Within this it troubles us to use an analogy with the tale of Cinderella, for fear that we might fall foul of the The Bureau of the European Parliament, and its High-Level Group on Gender Equality and Diversity.

Of course, regular readers will understand our huge respect for the EU. A shinning light of democracy and hope for mankind - especially for those blessed to live under its domicile☻ (Frankly we can't imagine what those indigenous Europeans, adherents of Judeo Christian tradition, believers in sovereign nation, advocates for the fair and impartial rule of law, and believers in free markets and individual liberty are winging about. Surely the EU has created paradise - not!). Within this NZ Gold is most anxious not to offend - especially as the great Stalinist behemoth is now planning for 'trials in absentia' as part of the European Arrest Warrant system. It would appear that refinements to this controversial arrangement mean that a British citizen can be arrested within the U.K. and then dispatched to prison in some far-flung corner of the European Union's evil empire - even if they are completely unaware that charge and conviction has occurred in their absence. At NZ Gold we see this pending change as a dastardly new vehicle that will be used, in particular, to attack political dissent - especially over issues such as immigration and Islamification. Expect to see courageous Europeans-various locked up for esoteric crimes such as 'xenophobia' and 'Islamaphobia' within the anticipatable future.

In the context of this article we are more concerned that our prose - involving as it does ugly sisters - might fall foul of new "language specific guidelines for gender neutral language as outlined in the report by the High-Level Group on Gender Equality and Diversity" (May 2008). At this stage we assume that an EU citizen - failing to use gender neutral language - is not committing an offence in which a 'trial in absentia' might occur. However, we suspect it is only a matter of time and a website more willing to elevate the EU to the position it seeks - deification - might be inclined to refer to the ugly sisters as 'attractiveness challenged persons of non ebullient persona' in deference to that August body - The High-Level Group on Gender Equality and Diversity.

Well, at NZ Gold, we make no apology. We think the analogy of being trapped between two ugly sisters - whom we have named Inflatia and Deflatia - is very apt considering the financial circumstances now unfolding. Our interest is not in pandering to the elite that is destroying Europe, or their admirers in New Zealand, but to our readers - for whom we hope to offer some worthwhile ideas as the great credit orgy unwinds.

At NZ Gold we incline to the view - that what might be termed 'malignant inflation and deflation' - are not two distinct and diametrically opposed phenomena. On the contrary, we see them as symptoms of the same 'disease of money'. In recent decades, certainly since US President Richard Nixon ended America's quasi gold standard in 1971 - with all its profound implications for the wider global economy - there has been a public tendency to associate inflation with economic growth and deflation with economic contraction. Therefore, provided 'Joe Public' believed that general price inflation was relatively benign (excluding his house price of course, where he welcomed every bit of inflation he could get) an assumption existed that prosperity was continually expanding. So what has gone wrong - in the United States, Britain, Europe, New Zealand, and elsewhere?

Of course, there are numerous contemporary economic gurus, bloggers, and others who will offer a raft of explanations. Yet it is in the past that we find the most prescient observation. At NZ Gold we have quoted King Alfred the Great before. Yet we will quote him again - for his wisdom is undiminished by the passage of many centuries: "In the midst of prosperity the mind is elated, and in prosperity a man forgets himself; in hardship he is forced to reflect on himself, even though he be unwilling. In prosperity a man often destroys the good he has done; amidst difficulties he often repairs what he long since did in the way of wickedness".

Whilst we suspect that most politicians, and the elites that control them, would hold Alfred's Judeo-Christian values in utter contempt they have historically shown no such compunction in taking advantage of his observation: "in prosperity a man forgets himself". We are thus brought to a dichotomy. For we would argue, that over many decades, the values that lead to success - and thus to real prosperity - have been progressively abandoned by the Anglo Saxon economies. What has been substituted has, to a large extent, been an illusion of rising prosperity. This has been made possible because, like the spendthrift heir to a large fortune, we have progressively squandered our capital and then borrowed as though there will be no tomorrow to fund further national and personal indulgence. Yet never mind because, as Alfred noted, when you are prosperous "the mind is elated". Thus we play into the hands of our masters, who have known since the days of Rome's 'bread and circuses' how to fool Joe Public - make him feel as though he is getting ahead and let him believe he got something for nothing.

There is, of course, no better way to make an Anglo Saxon in particular feel prosperous than to oversee circumstances in which his house prices rises exponentially. So desirable is this phenomenon that it has now also spread to continental Europe and elsewhere. Put simply the contemporary measure of a person's wealth is determined by how much their house is 'worth' and this lesson has not been lost on the ruling elite in recent years. Indeed, we would suggest they have actively engineered the phenomenon. Well how do you make a static entity like a house appear as though it is some magical producer of riches - even earning more than its occupants who might be engaged in the most constructive of enterprises. Simple, you debase the value of the money against which the housing stock is measured thus creating an impression that real prices have risen. Joe Public is delighted because he perceives his net worth to have increased and he can even borrow against his now more 'valuable' house to purchase consumer goods and the like -  items paradoxically made less expensive by advancing technology and the emergence of China as manufacturer of last resort. Bingo! Shangri La has been reached and perpetually increasing prosperity will continue so long as the population is discerning enough to keep on accumulating debt. Of course the nation's young people - its hope for the future - are largely excluded by mere accident of birth because they were not born early enough to access the new money. Never mind though. The least we can do to compensate is to load them up with student debt and credit card bills.

As in so many things, where a historic perspective is useful, it is the experience of England that educates and informs. For as we have noted, it was Alfred who warned us how vulnerable a persons sanity is to prosperity. Ironically it  was Winston Churchill - who regarded Alfred as being without peer in England's history - who proved his hero correct in matters financial. As British Chancellor of the Exchequer it was Churchill who took Britain back onto the gold standard in 1925, after the nation had been forced off by the demands of the first world war. (As an aside this is a reminder that rigid adherence to 'sound money' would prevent most wars because politicians would soon run out of cash to pay for hostilities. Imagine if Uncle Sam had been forced to meet the costs of his incursion into Iraq with real money instead of his plague of I.O.U.s. In such circumstances his bankrupt nation would have been lucky to have deployed a company of medieval pike-men). Surely, the hopelessly romantic Churchill took Britain back onto the gold standard because he was a child of the Victorian age  - an era of  pomp, grandeur and stability during which time gold stood as an inviolate monetary sentinel. As he once noted: "this was the British Antonine Age. Those who were its children could not understand why it had not begun earlier or why it should ever stop".

Yet it was at this point that Churchill's romantic attachment to the past (that was to provide such powerful  and inspiring imagery a few years later) came up against the much diminished circumstances of post world war 1 Britain. Put simply the halcyon days were over and this unpleasant, but vigorously denied reality, was unfolding at the same time as growing popular demands for 'bread and circuses' in the form of an embryonic 'welfare state' were emerging. Socialism had begun to deliver its seductive, but ultimately destructive, blueprint for the future - which is now playing out in the worldwide financial crisis and ubiquitous destruction of personal liberties. Yet we urge our readers not to delude themselves! Though we may have advanced a great distance along Friedrich von Hayek's 'Road to Serfdom' we have not yet reached the terminal destination. We suspect that a much more extreme sequestration of personal wealth, property, and individual liberty inevitably lays ahead.

So how does this tie in with our idea of the ugly sisters Inflatia and Deflatia. Well, at NZ Gold, we would suggest that an underlying deflation, depression, deleverage (call it what you will) of success based values has now been unfolding for decades in countries like Britain, The United States, New Zealand, and elsewhere. Britain is a particularly interesting example because it could have effectively retired from world affairs after 1945 and been enjoying a modest, but socially cohesive, energy independent, and militarily unassailable retirement with a great 'quality of life' to boot. Left to our own devices we would suggest that most ordinary Poms would have chosen this path - but unfortunately the 'lumini' within the political establishment both at home and abroad had other ideas. Within this we think that Britain - and especially England - has been signaled out for particularly destructive treatment because it was a repository of ideas anethemous to those determined on an ultimate 'one world' national socialist order. If you think we are exaggerating we suggest you think again. When we hear a man like Gordon Brown calling for a 'one world financial order' alarm bells should not just be ringing in our ears - they should be screaming! For what it is worth our view, at NZ Gold, is that the ruling illuminati will ultimately seek a 'one world fascist government' in which expressions of national identity will be cynically retained for Joe Public's consumption in token events like the Olympics Games - the circuses of ancient Rome. In reality we suspect there will actually be two nations "between whom there is neither intercourse nor sympathy" (to borrow the word of Benjamin Disraeli) comprising a grotesquely indulged transnational ruling elite, with their favoured minions, and then a new global peasantry.

At NZ Gold we do not believe it would have been possible for dastardly interests to have taken us so far along 'The Road to Serfdom' without the employment of some formula to render Joe Public crapulent and undiscerning. Again cue King Alfred: "In the midst of prosperity the mind is elated, and in prosperity a man forgets himself". Take a look at Britain, particularly in the last ten years, and ask yourselves: - would the demographic transformation, the relentless assault on personal liberties, the involvement in wars in which the nation has no legitimate interest, the ruthless undermining of Judeo- Christian values and the virtual surrender of national sovereignty to an alien and unsympathetic governance from Brussels have been possible if Joe Public had not been 'out of his mind' on the euphoria begat of easy money. At NZ Gold we do not think so!

Yet, even the easiest of easy money has its limits. There must surely come a time when there is no one left to lend to - and when those to whom you have lent, lent, and lent again, simply cannot leverage any more. In the absence of setting up mortgages for the dead, the unborn, pets, pot plants and ghostly ghouls summoned by Madam Za Za how is the 'Ponzi scheme' going to keep on delivering all that 'pixie dust' wealth. The answer, of course, is that it can't and a point is inevitably reached when the whole rotten fraud falls over. It would appear we are nearing that day of reckoning which the Austrian economist Ludwig Von Mises (1881-1973) pointed always occurs after such folly: “True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression”.

Yes, we are inclined to the view that an essentially depressionary phenomenon is unfolding - but to allow such to run its natural course would pierce a rapier through the heart of Joe Public's perceptions - that wealth and asset inflation are entwined like 'star crossed lovers'. A massive deflation might even cause him to take heed of the words of Alfred the Great about what happens when people have to sober up after a period of excessive indulgence "in hardship he is forced to reflect on himself, even though he be unwilling. In prosperity a man often destroys the good he has done; amidst difficulties he often repairs what he long since did in the way of wickedness". Perish the thought - people might decide to start earnestly repairing "what they long since did in the way of wickedness" by demanding sound money, the restoration of personal liberties that our forebears battled for, the return of national sovereignty and an end to interference in the affairs of others, even to the view that a house is merely something you live in and not a vehicle for creating wealth out of thin air. On the other hand what does history tell us - about what people might demand if a hyperinflationary repudiation of debt occurs. Well a certain Adolf Hitler - beneficiary in chief of what happened as a result of the monetary madness in Weimar Germany - gave us a clue in Mein Kamph:

"The government calmly goes on printing scraps of paper because if it stopped that would be the end of the government. Because, once the printing presses stopped ... and that is a prerequisite for the stabilization of the mark ... the swindle would at once be brought to light. Believe me, our misery will increase. The scoundrel will get by. The reason: because the state itself has become the biggest swindler and crook. A robbers state! ... If the horrified people notice that they can starve on billions, they must arrive at this conclusion: we will no longer submit to a State which is built on the swindling idea of the majority":

           "We want a dictatorship"

In essence, we are trapped between inflation and deflation. Two ugly financial sisters who are determined we shall not go to the ball - that wonderful event our leaders promised we would get to if only we borrowed, borrowed, and borrowed again. At NZ Gold our view remains - that despite recent attempts to convince us that deflation is an imminent threat - and despite the fact that we believe the underlying financial pathology is deflationary - inflation (and quite possibly hyperinflation) is likely to emerge as the winner of this unfortunate contest - at least initially. Why, because governments have the printing press and they long ago abandoned any connectivity between their currencies and the discipline of a precious metal standard. Thus, if it takes freshly printed 'billions, trillions, or quadrillions' of dollars, pounds or whatever to reflate the nominal value of assets it can - in theory at least - be done. The consequence, of course, would be the utter destruction of existing monies purchasing power and penury for all except the ruling elite and those who have protected themselves with suitable alternative 'money' such as gold and silver. However, there could be no room for 'gold-bug' euphoria in such circumstances - even if the precious metals were to increase in price by Weimar proportions - since ubiquitous societal dislocation would inevitably follow. At what point we wonder would Joe Public offer the clarion call:

      "We want a dictatorship"

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