
Why the global financial system is about to collapse (2006) - jasonisalive
http://www.safehaven.com/article/5205/why-the-global-financial-system-is-about-to-collapse
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aristidb
So I first thought this article might predict reasons for the "Great
Recession" that would come a year or two later, but nope.

"Spontaneous remonetization of Gold" combined with an erosion of the dollar...
While the gold price is somewhat higher than in 2006, the dollar has hardly
been eroded with inflation, quite the opposite: recent years are marked by
below-average inflation around the world. Long-term interest rates are at
record lows, nominal and real.

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notahacker
Yes. It would be difficult to have anticipated impending financial crisis more
incorrectly than this article.

The US economy collapsed due to systemic instability in the financial system
rather than the US dollar[1], with the flight to gold lagging rather than
leading the economic problems. Policymakers neither become more sympathetic
towards the idea of returning a gold standard, nor found it necessary to act
to dissuade people from buying gold. Instead they took the complete opposite
route: large-scale fiat monetary expansion without the dollar suffering. Ben
Bernanke - far less sympathetic towards a gold standard than Greenspan - kept
his job. N. Gold prices started to drop again naturally as the US economy
started to recover.

[1]if anything, it could be argued to be exacerbated by a collapse in the
prices of assets - housing - widely supposed to represent a solid store of
value against the dollar due to their relatively stable supply

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jasonisalive
1) If you read it properly it's not actually a prediction of imminent
collapse, it's a suggestion that buying gold is an optimal strategy and if the
world realised this and acted perfectly rationally everyone would buy as much
gold as possible, demonetising all fiat currencies and creating an ensuing
financial collapse. He's very clear that he doesn't expect this to necessarily
happen because people are not 100% rational. He also does have a sense of
humour (I know, outrageous right?) which you have to take into account.

2) If you read his writings further you'll see that he considers a distinction
between the financial system and the US dollar arbitrary, because the USG
insures all banks he considers the banking/financial system part of the
government. The fact that the banks were bailed out by debasing the US dollar
is one of the political realities which he would argue makes it more logical
to save in gold as opposed to dollars.

3) The housing bubble only happened because banks could take on poor loans
knowing that the USG would bail them out.

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al2o3cr
Goldbugs have successfully predicted 10 out the last zero hyperinflation
events. Surely they can't be wrong! ;)

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pron
To those who might think this article contains some novel analysis of the
financial system: it doesn't. This is your run-of-the-mill libertarian
politics, but at least the writer is completely upfront about it (inflation is
taxation meant to serve the goals of the government -> I think the government
is too big -> we should take away this form of taxation by switching to gold).

~~~
davidgerard
This is Mencius Moldbug just before he created neoreaction.

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jasonisalive
Part 2 of the article: [http://www.safehaven.com/article/5206/why-the-global-
financi...](http://www.safehaven.com/article/5206/why-the-global-financial-
system-is-about-to-collapse-part-2)

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jokoon
off-topic: isn't there already some "serious fiction" about government being
controlled by corporations ?

Sometimes I wonder, I want to ask a real politician, in an age of technology,
what would happen if corporations were able to control government or to
replace its role ? What would go well, what would fail ?

~~~
pron
You don't need to ask politicians -- just ask historians. The most recent
example is the US prior to Teddy Roosevelt. That age -- the Gilded Age -- was
a time of great economic growth combined with a great deal of suffering for
the population. The people cried for help, and the government rescued them
from the robber barons. That's how regulation came to be in the US -- as a
reaction to corporations running the country.

If you want to look further back, it's very easy to see the effect of weak
central governments because powerful governments are rather new. The way
pretty much all societies all over the world worked before centralized
government was called feudalism, and that is -- one assumes -- precisely the
form society would take again if corporations were allowed to roam free. The
way I see it, you have two options: a strong government or feudalism. Pick
whichever one you dislike less.

