Step back and behold the big picture: you are watching the death throes of the centralization epoch that began about 1650 with the rise of corporate states.
Corporate vs. personal
By Franklin Sanders
I say “corporate” because government was transformed from personal to corporate. Subjects of a monarchy pledge loyalty to a person, the king. Citizens of a state pledge loyalty to a corporation, the state. A man dies; a state never does, for a corporation has “no soul to damn and no body to kick.” Think of any Robin Hood movie you’ve ever seen, where in the end good King Richard returns and all bow and pledge their fealty to him. Then think of any officer of the United States government. He doesn’t give his word he will serve any person, not even the nation, but that he will “support and protect” the Constitution, an abstract that is the charter of a corporate state.
More starkly, think of the pledge of allegiance that millions of American school children are forced to repeat daily. They pledge to a flag, the abstract symbol of an abstract corporation, “the republic for which it stands.” One nation. Indivisible. Unitary. Supreme. Not personal.
Perhaps because they never die these abstractions, these legal fictions, these juridical entities, over the last 350 years have sucked into themselves all powers once distributed throughout society among any number of institutions — family, guild, municipality, nobility, church. At one time these mediating institutions counterbalanced the state’s powers and shielded individuals against tyranny. Alas, between the naked individual and the state now stands no protector. Against it, we are all legally disarmed and virtually powerless, for it has eaten all the old protectors. And of course, always remember that no corporation acts itself, but for the breathing humans who control it. A corporation is a front — for whomever can seize control of it.
Centralizing more quickly
The centralization accelerated with the French Revolution and its ideological promotion of a supreme unitary, homogenous state. Lincoln’s suppression of the Southern states’ independence boosted centralization another notch. In the 1850s and 1860s, Italy was united under the Sardinian King, Victor Emmanuel, by the leadership of the Revolutionary Carbonari Mazzini and Garibaldi. In 1870, the manifold German principalities were hammered into a unitary state under the Prussians. Everywhere power flowed toward the center.
In the 20th century the corporate state bore its bitter fruit, a century of wars bloody beyond anything humanity had ever imagined. World War I destroyed the last personal monarchies — Russia, Germany, Austria — while surviving monarchs became virtually indistinguishable from their states. World War II continued the work of centralization, and at war’s end only four empires stood: England, France, Russia and the United States. The first two were speedily dissolved by post-war de-colonialization, designed by the ex-colonialists only as a more efficient exploitation. The last two empires wrestled through the Cold War until communism finally dissolved (if it really did) in 1989. Voilà, the end of history! The whole world lay under the hegemony of one central empire, the United States.
And beneath the U.S. benevolent umbrella, machine guns, and missiles sprang up new centralizations, the European Union, globalization, and a co-ordinated international dictatorship through the United Nations. So strong are they now that the U.S. figurehead, err, president and his secretary of state are not ashamed to order heads of foreign nations to step down. If they refuse, the US and its surrogates invade them, waging war that peace may come.
Wait just a minute, Moneychanger. You began saying that we are witnessing the END of the centralization epoch. All you’ve done is demonstrate its perfection in total power. So where is the end?
The peak is the end
Watching markets, we learn that they rise in ascending waves. First wave might carry to 381, then back off for 25 years, ratchet to 1,000 in 10 years, back off 17 years, then over the next 18 years climb to 12,000. The naive might behold and believe that another, greater peak will surge to 36,000.
Yet every cycle belongs to a cycle of greater degree. I described, of course, the U.S. stock market from 1896 to 2000, but that period itself nests within a larger cycle that began in the early 1700s with the Louisiana Bubble in France and the South Sea Bubble in England. What we are witnessing now is not the building of strength for another advance, but rather the exhaustion of all that long period’s strength.
A peak, although it is the apotheosis of strength, is not a beginning but an end, the exhaustion of the trend. As for the ivy that covers and then pulls down the oak, success is death.
Over the past 150 years the U.S. and the West have built up an economic, financial, and monetary structure by which a government-central bank partnership control the economy to feed the parasites of finance, speculation, and trafficking on the whole commonwealth’s production. They camouflaged fascism and called it capitalism and freedom. This structure was not born of nature or economics, but of centralization and state control for someone’s benefit. You are now witnessing the death throes of that system. Its central bank quacks continue to apply the same medicine – print more money and talk more blarney – but the patient doesn’t respond. His fever grows. His illness becomes more desperate. The 150 year old patient is dying.
All power has owed to the center. Now it has only one way left to flow: Away from the center.
The decomposition of the fascist economic system proceeds apace. (“Fascist” means the partnership of big business with big government.) Markets are mirroring this. In the beginning there was a stock market crash, and Greenspan fired the liquidity cannon, and behold! A real estate bubble, and a bond bubble. Then the real estate bubble burst, and the sickness became much worse, and the federal reserve had to hand out $16 trillion to banks around the world to keep the patient alive.
But the pox merely broke out again in Europe, this time questioning the solvency and survivability of the state itself: Iceland, Ireland, Greece, Portugal, Spain, Italy, France and now Cyprus — banks and government together sliding into the pit’s mouth. And the solution offered for the sickness that centralization caused? Why, more centralization, of course.
Two interpretations are possible: Central bankers and governments are trapped by their own ideologies and the lack of imagination those ideologies have fixed on them, or (2) they are destroying the world economy on purpose. It’s always risky to place any answer before plain human stupidity. That usually nails it. STOP.
Markets are acquiring a new temper, and a new tempo. Their nature or quality is changing. The decomposition is speeding up, accompanied by more violence and volatility.
All of these are changes in quality, changes in temper, of the decomposition, things that have never happened before, and never with such speed. The economy and monetary system is flying apart beyond my expectations. Looks like things will get much worse before they get better, and all the official reactions so far still do not dare to propose any genuine solution
Since 2001 I have generally refused to give any U.S. dollar targets for this bull market in metals. Rather, I have given three signals:
1. A gold/silver ratio at 16:1
2. The Dow selling for one to two ounces of gold, and
3. The Dow selling for 32 ounces of silver or less.
I picked these signs because they historically the represent the internal extremes of these markets. Who can value silver and gold or even stocks against the declining dollar? If the central banks and governments are only modestly incompetent, maybe gold reaches only $3,000. If they meet their accustomed standard of incompetence, maybe $6,000. If they prove wholly incompetent on the scale of von Havenstein and the Weimar government, then pick any number out of the sky, $10,000 an ounce, $16,000 an ounce, a zillion dollars.
But in fact I have been holding back ANOTHER signal, and this signal might appear any time, and we can only judge at that moment. That signal is a period of turmoil followed by some monetary reform. I can’t imagine now what that initiative will be, and it may look sorry as a rented mule when presented, but we will have to answer one question: Will it work?
Phony reforms hide real problem
False solutions. Remember that inflations often have “reforms” that only give the hyperinationary episode a new lease on life, exchanging one doomed currency for another. For instance, in France the mandat succeeded the assignat, and calmed the public for a while, but was then itself quickly consumed. Only Napoleon and his firm promise to pay only in gold ended the hyperinflation.
To replace the hyperinflated Reichsmark in 1923 the bewildered German nation was presented with the Rentenmark, itself only another at currency. Yet it worked, because their exhaustion was so great. Any solution was preferable to more hyperinflation.
It may be that all this monetary & economic turmoil is merely another ploy by the insiders to harvest the rest of us. After 100 years of at money and inflation, they will reverse their field and pursue 100 years of hard money and deflation, once they have plenty of gold in their own pockets.
But I am too small to answer such great questions. I only know that when we see such a reform, we will have to judge it and guess whether it will succeed. If it succeeds, it will mark the peak in the silver & gold bull market, and that will be our time to sell. But that’s nowhere on the horizon yet.
From the August 2011 Moneychanger. Used by permission. [Some of the market material in this essay may be slightly out of date, but I left it. However, I did edit the text to bring in the Cyprus situation. DJT] Franklin Sanders is publisher of The Moneychanger, a privately circulated monthly newsletter that focuses on gold and silver and the application of Christianity to economics, culture and family life. We have subscribed to this newsletter for more than 20 years, and consider it a must read. F$99 a year. Franklin is an active trader in gold and silver (he’ll swap your green Federal Reserve rectangles and give you real money in return). He trades with savers and investors outside Tennessee. Subscribe to his daily price report and market commentary on the website. F. Sanders, The Moneychanger, P.O. Box 178, Westpoint, Tenn. 38486 Tel. 888-218-9226.