Monday, September 21, 2009

The Afghan War - Another Symptom

of a declining nation. We don't know why we're there, we don't have a clear objective, and yet the only debate is on the number of troops there and the strategic points of the "battle."

Today's headlines talk of the need for more troops if Afghanistan. I am no military expert, I just know that war is a horrible use of economic resources. We are a broke country pretending to be otherwise and we are making things worse by starting wars with random small countries that are no threat to us. The War on Terror is not meant to be won, it is meant to feed the military-industrial complex and it wastes an awful lot of money to do it.

We can't afford it and this is just another straw set to break the camel's back at some point. The camel, by the way, is our currency. After another deflationary wave causes another short-squeeze/intermediate-term rally in the U.S. Dollar, the rubble of the economy and popped real estate bubble left behind will finally expose the naked emperor for all to see. The massive debt overhang with no way to reasonably service it will require our currency to be sacrificed. This may be intentional or due to abrupt capital flight, but it will happen.

Gold is the best protection against a government gone mad that insists on spending more money that it doesn't have at a time when we need to save and pay down debt. Though we cannot default on the Gold standard this time around, rest assured our currency will again be debased in some type of rapid event. And I am not talking about a 10% haircut. Holding Gold is your best protection against what is now inevitable. We can debate about the timing all day, but at the end of the day, this is an event you don't want to be a day late for. Get prepared if you haven't already.

In a country with almost no net savings that has a rapidly rising unemployment rate, taking on more debt to restore prosperity lost in the private sector not only can't work, but is now pushing us dangerously close to the edge. I don't know when the levee will break and we are certainly not the only country in trouble, but similar situations historically never end well.

Gold is in a bull market relative to all fiat currencies. As the country who owns the right to the printing press for the world's reserve currency, the United States stands to lose more than most. Military empires often end because they collapse under the financial strain maintaining such an empire presents. Our country is broke and overextended and looking to other more peaceful nations to borrow more money to keep the bloodshed going. So the global bully needs to borrow money to keep picking on people?

We need to stop our aggression. Whether you support our military policy or not is irrelevant: we can't afford it any more. And since our apparatchiks refuse to tackle the issue realistically, the inevitable will occur and our currency will pay the price. Keeping a portion of your long-term savings in physical Gold will help protect you from this outcome. It is not a question of if, it is a question of when. Just because I believe that the U.S. Dollar can rise for a period of time against other paper fiat currencies does not mean I perceive the U.S. Dollar as a store of value or anything more than a trade. All paper fiat currencies are sinking relative to Gold over the longer term and this will continue for the foreseeable future.

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