We live in a time of great illusion in terms of money, wealth, and justice. Investment banking and finance continue to attract the greatest minds. Fraud of the greatest degree goes practically unpunished.
On the surface, to pursue a path toward safety appears to be the ultimate sacrifice, both financially and socially.
The Great Financial Forest Fire
The housing market captured the developed world's imagination by the financialization movement long ago, leading to a giant industry subsidized by tax credits.
Fueled by the great credit boom (now unwinding), its exponential growth led to enormous growth in consumer spending via the HEALOC. This was achieved while spinning off an array of complex investment vehicles, including MBSs. It ultimately lead to crisis, but simultaneously reinforced the creation of more fuels for an inferno of derivative risk in a market with a nominal value approaching $1 quadrillion.
Along this path to ultimate fragility has been the scourge of fraud and abuse that, aside from a few smaller sacrificial scapegoats, has gone eerily unpunished in the years following the crisis.
Maintaining the Illusion
The main sentiment barometer remains equities, despite the fact that the mainstream investor is largely not participating. That could change as portfolio managers begin making the rounds using charts showing all time highs, and the rally that was missed by the baby boomer who vowed never to return after the dot-com bubble burst.
Of course, the greatest bubble of all, and the by far the largest market outside of OTC derivatives, is the U.S. bond market which is still viewed as the safe haven. This is despite the obvious fragility as demonstrated by the effect on yields in the face of what amounted to talk of tapering the FED's bond buying program; euphemistically referred to as quantitative easing, but is in reality (digital) money printing.
Across the political spectrum, debt and deficits seem not to matter, as the effects of the debt monetization have not yet made an impact among those able to observe or participate.
The Difference Between Price and Value
Just like food, water, shelter and time, real wealth is what you can see, feel, experience or share.
When it comes to the precious metals, obviously, one subsists from gold or silver — although technically they can be safely consumed in small quantities.
The point is, things could be converted if needed and yes, a host of items could be used for barter. But few possess the unique qualities of the monetary metals which are non-perishable, non consumable, exist in limited supply, easily divisible, durable, portable, and stable in value.
Representations or derivatives have always existed. Some have shown promise-like Bitcoin. Indeed, if Bitcoin was adopted widely and did depend on technology for its trade a valuation, it would be the most likely viable contender.
Alas, representations in electronic format, just like fiat currencies, are always abused and easily confiscated if and when they pose a threat to a government or competing currency.
Invariably, the last throes of every forced tender end with irrational aggression. The circumstance of Bernard von NotHaus is a case in point. He was clearly called out as an example for doing something perfectly legal — privately minting silver coins. Instead, he was accused of counterfeiting government-issued legal tender — which of course has not contained real silver for decades.
As they say, the truth shall set us free, and this applies to monetary as well. Unfortunately, given the extent of the current falsehood, that new freedom is at risk of igniting in a sudden and very flammable vacuum.
In the end, when each of these liabilities and promises come due all at once, the tide will go out one final time, laying bear the destructive heap of what is left of the once fragile, and now destroyed economy.