So you think fundamentals no longer apply?

Your view of the ongoing collapse of the Global Debt Ponzi is obviously going to be aided, colored or obscured by your understanding of how money really works, what money really is, how freedom and honest money are inextricably intertwined and of course, all the historical precedent on this matter.  For some people, we just have a rough spot in the economic road.  "These things happen", they think.  "It's a normal part of life, things will get better, they always do".  For other people, including me, a Debt Ponzi scheme is a scam even if it is run by governments and no scam ever ran forever.  They always collapse at some point.

We are living in an historic time economically.  The world has racked up monster amounts of debt that can never be repaid.  The entire global money supply is based on debt.  It is an incredible time; beyond the belief or understanding of most people.  Why?  Because it is beyond their experience.  Most people mainly learn from their successes and failures; they cannot just be told.  In order to learn from your experience you have to have done something already.  The world has never found itself in even remotely the economic state that it exists today.  The world has been turned on its head by a fraudulent money global supply which consists of fiat currency and fractional reserve banking:

• Bankers used to be stodgy clerks and penny pinchers.  Now they live like rock stars and are regarded as the elite among our society.  They bought this position using money they did not earn.  They simply conjured it up from thin air and then loaned it out for interest.  It's the digital age spin on the original something for nothing scam called alchemy.
• Gold is not thought of as money by most people but rather as "an investment", and in the minds of many people, a right risky one at that.  People's entire fortunes and retirement funds live in paper "assets" that didn't even exist 100 years ago, yet people feel assured that their stored labor is safe.
• Honest men with 30 years of consistent behavior and messaging like Ron Paul are "kooks" while bold faced liars like Clinton, Bush, Obama, Romney and others are given respect and trust which is far beyond anything they have ever earned.  They all say what they think people want to hear.  They all have racked up or are promising to rack up debt like the world has never known. 
• They all want endless war because they think it is good for the economy and because nobody puts them in jail for receiving bribes from "defense" contractors. 
• They all want people to have less freedom and privacy.  They think TSA grope-downs are normal right along with heavy taxation and heavy handed law enforcement.  All of them except Ron Paul, and he's the "kook".  As I said, the world has been turned on its head.  Good is bad.  Honesty is a lie.  Fraud is truth.  At least for now folks.  At least it seems like that for now.

It's like the fundamentals that have governed human society no longer apply.  It's a brave new world.  Everything that used to be true in the past is wiped away and there are a whole new set of rules now.  Or so you might believe.  Me, I am far from convinced.  I think the Debt Ponzi has peaked and that we are on a big downhill slide.  I think a lot of smug bastards that think they have the world all figured out are going to find themselves out on the street wishing like Hell that they had any real skills or redeeming human qualities.  These are not things you just pick up in an instant.  If you have not been working on them for years then you lose them.  Bankers and moneymen at all levels have fallen into this trap. They will eventually be among the biggest victims of their own game. 

Sprott and Baker provide more concrete detail on the subject of fundamentals.  I agree with the title of their article: When Fundamentals No Longer Apply, Review the Fundamentals.  The article is well worth your time as it is a quick read.  Bottom line is that fundamentals always did apply but they were masked out, bought off if you will, by the societal and economic plague which is a corrupt money supply. 

Think jobless rates are going down??  Think again!  The con men are simply gaming the numbers through

the use of a new category which is "people who have given up on looking for work".  This is an absolute joke of a statistic to just write off large numbers of people like that as if they no longer matter to how society operates.  At some point in time, if you don't work, you don't eat.  For now, many of these people are joining the ranks of those living off food stamps but this entitlement will only last as long as the US can borrow money at nearly zero interest rates.   

If (when) the perception becomes that US debt (in fact, ALL government debt) is risky then interest rates will rise rapidly and rolling over the existing debt into higher interest bonds will make it obvious that the US is just as bankrupt as Greece is. 

What do people really think is going to happen when the government starts raising taxes in order to service the debt (not pay it down folks, simply to avoid defaulting on it) and to continue feeding millions of people who are learning to be dependents of government welfare?  Well, first off, the government will try to crack down on tax collection.  But the miniscule rise in income that it receives will be offset by the cost of collections.  Not only that, but the heavy handedness of the efforts will result in capital flight.  In other words, people with something to lose will take what they have out of the reach of government thieves. 

It's already happening big time in Greece and Spain.  In Greece, government is seizing people's bank accounts and accusing them of tax evasion, promising trials in the future.  What a joke.  The Greek government will collapse and any funds they have seized will be lost.  Or, Greece will return to the Drachma and any funds taken by government will be claimed as a casualty of the conversion process.  Either that or the money will be tied up in the legal system long enough for the Greek con men to have inflated away all the value.  One way or another, possession will again become 9/10ths of the law.  If you leave your money where government can steal it, that's your fault for being an idiot.  In both Greece and Spain, people are quite aware of this and are pulling their money out of the banking system at an alarming rate.  A collapse will soon occur. 

A collapse by Greece is bad enough but a collapse by Spain will quickly be felt across Europe and the across the world.  At some point the panic will set in broadly.  Markets will crash.  Asset prices will collapse.  Cash will be king and gold metal will be the king of cash.  Silver metal will be the prince of cash.  

Keep in mind that spot gold is not real gold.  It is a market price that is greatly influenced by the trading of leveraged paper positions of gold.  The coin price is the real price of gold.  You do not pay the coin price and then receive paper promises; you receive real, tangible metal.  Thinking people will see the increasing delta between physical coins and the "spot" price as a flight to gold by the smart money.  This is capital flight out of corrupt fiat currency and into the only true form of money that ever existed on this planet.  It is happening slowly at first but expect it to increase in speed as the collapse plays out.  J.P. Morgan's words will echo around the world once more: gold is money and everything else is credit.

Why must this be?  Simply because anyone with a brain in Greece or Spain has already pulled their money from any paper asset where the governments could swoop in and take it with the stroke of a pen and the click of a mouse.  Paper assets are soooooo vulnerable to government theft it isn't even funny.  Anyone in Spain or Greece that has a dime left in any bank right now is a blithering idiot.  Yet many people simply don't know what to do with their cash because they have been fooled into thinking that gold and silver are expensive now.  They can't put it into real estate because it is still plummeting.  So they sit there and take an economic baseball bat to the face because of their ignorance. 

The really smart people took their money out of the corrupt system long ago.  Again, it's called capital flight. They did it when gold was $800, $900, $1000 per troy oz.   They got out while the getting was easy.  Today, the getting is simply "just good", no longer "easy".  But hundreds of millions of people still don't get it.  By the time they do catch on it will be too late.  They will get stuck holding a paper bag full of worthless paper money.  It will only convert into a small fraction of the gold that they could receive today.  The increasing delta in price between coins and spot tells me that fundamentals do still matter.  I predicted this was going to happen several years ago and now the numbers are obvious.  As the something-for-nothing con of fraudulent money collapses of its own corrupt weight, the world will be turned back on its feet.  It will likely not be pretty but it is a healing nonetheless.  No addict ever kicked the habit painlessly and it's not going to be different this time for the credit-addicted world.