The industrial production is continual decreasing, lately with a slightly lower slope, and the same is happening distinctly with the world trade in 2008, 2009 and 2010. Protectionism is very tempting to reach for, and the omnipresent cult of environment and climate freeze more than it loosen for the new perspectives including the reorganization to the international competition in the Western hemisphere.
In addition all these initiatives started to end up in the financial crisis, subprime loans and more debt, grants, easy money and easy credits, negative interests continues unaffected. Debt and insecured liabilities and continuous official expectations about higher taxes underline what certainly does not have to be done. The last-mentioned is in force in USA, Europa and Japan, Japan with 20 years recession and old- perhaps neo-keynesian errors of judgements has ended in deflation. It is not much better in Europe. No, nothing point to the right direction as matters look like right now in the beginning of 2010, regardless the share prices shortly showed small local increases over time in the beginning of 2010.
40-50 years of excesses and more than 10 years of loose monetary policy with consumption-economics and hot air bubbles first in market of shares then in market of properties are not nullified in a couple of years. The Keynesian or if you wish the Neo-keynesian treatment is still in front at the mainland of Europe:’The more the households consume the poorer they become, the more the states consume the richer we all become’. With a South- and Eastern Europe put away to Jericho under the regime of Euro, the defending rises of interest from EU, trade obstacles and other kinds of protectionism (the capital flow east- and westwards, and the inflation threatens Germany and France), starts a downward spiral leading to a collapse combined already with deflation in the one half of Europa and an dawning inflation in the other (including France and Germany).The alternative is even more issued means of money, bigger consumption, higher taxes, zero interest and more debt upon the mountain of debt, and this make everything even worse: ‘The patient should not have more of the drug that already made him ill’.The last relates naturally to the fact that some of laws of economics are almost natural laws.The ruling and media have completely missed this, because they believed on and in this world and in unresponsible of the agenda.
The gold price approaches $1200 per oz. from a price of $250 in 2005. And the gold market is not like any other bubbling market as those of shares and property, as we had to hear from the media, and not even just the breeding ground of the speculators. If this price rise of gold continues stronger inflation must follow, and the collapse we have seen until now is then just the summit. The problem is that insecurity at both the market of real production and at the market of currencies almost forces the investors to go for gold, provided the means must be easily and quickly to realized.
Remember, when the retarded dolls in the media report their advises of investment, always to do precisely the opposite. Everything has an end, and the latecomers are the majority, they are the ones to pay for the game always. Do you remember the bubble of share market created by sailable paper and of course false or no real expectations, almost in the style of Bernie Madoff. Once in August 2001 you could read in the papers: ‘Let the children, indeed’. They were invited to invest the savings in the share market. ‘Everything went so well, and we became and shall become very rich’. And it was a lie. ‘More speculation, please’ was the title of an article in Berlingske Tidende. Apart from the title the article contained just empty nonsense, it was without any useful information.
I suppose a majority at the summit expect the problems with a new and for a long time needed international monetary system solved by imposing some kind gold standard. But this has never been the solution to the selfmade problems, and a continuous rising gold price will show, where we really stand when it comes to inflation, unemployment and state debt, but the gold standard is just meaningful in an extremely expanding world economy, as under the birth of Industrialism, and it will make everything worse today, when it is artificial draged out of its historical context, because lots of people cannot look at two phenomenons occuring at the same without to imagine a connection of reason between the two.
A real globalization of all markets naturally demands a new globalized international monetary system. The leaders of the world have to agree upon not ever in the future to be able to choose the easy way out, and at the same time impose a substantial limit the possibilities of speculation that truthfully are pure by-products of those professional-politicians-choises of the easy-money-way out.
14 January, M. Sc. (Economics) J. E. Vig