On November 25, 2008 Bloomberg had an interesting article titled "Citigroup's $306 Billion Rescue Fueled by Pizza From Domino's".
It is comforting to know that the purchasing power of many Americans is being stolen from their 401Ks, pension plans and savings accounts to buy pizza to fuel those working on bailing out irresponsible thieves. Because of the nature of fractional reserve banking all bankers are liars and frauds therefore it is easy to make such sweeping generalizations.
One interesting quote in the article caught my attention: "They've got to stop this thing. It's just turned into a snowball,'' Brian Barish, who oversees about $6 billion as president of Cambiar Investors LLC in Denver.
I am not sure who Brian is intending with the pronoun 'they' or what this 'thing' is. If he is referring to central bank officials or government regulators then he has seriously diagnosed the situation. If he is referring to individuals in the market then he is asking them to make irrational decisions.
Either way he reveals his extreme ignorance when it comes to economic law. Worse he oversees the management of $6 billion. I am glad none of it is mine.
Obviously, Mr. Barish has not been schooled, although he is now, in the Austrian School of Economics. Like most people managing large amounts of money he has probably been schooled in the traditional schools of economics that infest most business schools throughout the country. The sad thing is that they teach principles that are fundamentally flawed.
What is happening in the financial markets is natural and predictable under the Austrian school of thought. This is a credit contraction that has followed a credit expansion. The snow of this Kondratieff Winter has been falling and there is only about 2-3" on the ground. Because of the nature and scope of the credit expansion this credit contraction will be very severe.
At the risk of sounding melodramatic this is the end of a 100 year-old worldwide fiat monetary system. Depending on how it plays out it may even be the end of a 600 year old monetary system. This is big. Really, really big.
Most ordinary people are completely clueless and oblivious as they wander around in their bathing suits as the snow is falling thinking that the sun will come out soon.
Worse yet are those who manage billions and billions of dollars and do not even have a clue what is going on. Then they yelp like a puppy that has been stepped on for some mythical 'they' (government regulators) to suspend the 'thing' (consequences of economic law).
According to the Associated Press on November 25, 2008 'A twin-engine plane crashed several miles from Nashville’s major airport, killing all three people aboard.'
Why is no one asking Congress to repeal the law of death and the law of gravity to bailout these causalities? Perhaps Mr. Barish should ask that 'they' stop the 'thing'; as if whoever 'they' are who can suspend the natural laws of death and gravity.
So likewise the natural laws of economics are being asserted. What is currently happening are consequences just like gravity. The more bailouts, governmental interference and yelps for regulation the longer, deeper and more painful the consequences will be because they are not wise actions to take as a result of the economics laws which are operating.
Individuals are acting in rational ways regarding their price, utility and value according to their preferences. As a result the safest and most liquid assets are being sought after.
Treasury Bills are considered by most trained in the fundamentally flawed business schools to be the safest and most liquid asset. But gold is the ultimate form of payment and is always accepted. Gold is the safest and most liquid asset.
When the investment community comes to that understanding, that the earth (US$) revolves around the sun (gold), which is contrary to what they were taught in school then 'things' will get extremely interesting for the 'theys'.
Until then most people like Mr. Barish, Ben Stein, Art Laffer, etc. will being living in their own illusionary world in self-satisfied self-deception thinking that the way they see things is the way things really are and whining about how the fundamental laws that operate should be suspended in order to prevent natural and predictable consequences.
On the other hand, other people like Peter Schiff who has been schooled in Austrian economics will understand the laws which are at work and modify their behavior, like using GoldMoney for ordinary business transactions instead of the current banking system, for more desirable consequences.