- By Bill Bonner
The Dow is back under 18,000 after yesterday's 178-point drop. Gold wanders around, apparently lost.
Our short term technical indicator is flashing a warning. It predicts a MINUS 4.5% return in US stocks over the next three months. Our long term model tells us to expect a 9.6% loss every year for the next 10 years.
Will these models be proven correct? We will wait to find out.
Yesterday, came a report that Polish Prime Minister Ewa Kopacz has urged Poles traveling to Greece to take "a larger amount of cash" with them.
Why? Because the situation could be "very dynamic," she says.
"Please do not count only on your ATM cards and on ATM machines, but take a larger amount of cash with you."
It's not the dynamic situation that would worry us. It's the dynamite that lies beneath the whole world's money system. It is a system that is fundamentally flawed. That is, it depends on the intelligence and integrity of its custodians. Not that we think Madame Yellen is dumb. Nor do we doubt her honesty. But she is, after all, only human. And centrally planning an $18 trillion economy...by manipulating paper money, asset prices and interest rates... is a super-human undertaking. The odds that something will go wrong: 100%.
A reader asks a good question:
If countries are putting controls on real cash and banking in what form should a person hold cash? US Dollars or some other currency. If we truly go to a "cashless society" what good would having a hoard of cash do?
Money is always a convention. It is an understanding -- almost never written down - whereby people recognize a form of 'money' as a stand-in for wealth. Since the beginning of civilization, people have experimented with different kinds of money. They ended up - almost always and almost everywhere - with gold and silver. Why? Because they were handy. And because they were hard to produce. They were 'cash' that governments could not control. No super-humans were needed to manage them.
Of course, governments - the people who are able to boss other people around - always want to control money. They put their faces on it. They mint it. They shave the coins. And they print pieces of paper and call it money. But they could never actually and completely control 'cash.' People hoarded gold. They hid it. They ran away with it. They used it to make trades between themselves - regardless of what the feds said.
And when the feds' money went kaput - which it always did - they turned to back to gold because they knew they could trust it.
And now, the feds may be making a new attempt to bring money totally under their control. Economists pretend it is a matter of convenience to the consumer (no more waiting for the clerk to make change for the fellow in front of you). Or they try to sell it as a useful macro tool for central planners (they will be able to stimulate demand by imposing negative interest rate...that is, a tax on your bank account). Or, they say a cashless world will be safer -- you won't be held up at gunpoint and terrorists will find it harder to get financing.
But the real reason is this: control. If they can eliminate cash they can easily track, tax, and confiscate your money. And if they can control your money, they will be able to control you too. Do you voice an opinion they don't want to hear? Do you belong to a group they want to get rid of? Do you want to know what happened to your tax money?
Watch out, with a keystroke, you could be 'disappeared.'
"Sometimes, when the government tells you to do something, it's best to do the opposite" says a French neighbor.
In 1944, he father was the adjutant mayor of a small town in Southwest France. The Allies had landed in Normandy and the German army was pulling its forces back to the Rhine.
Our friend tells the story:
"Someone had blown up a German truck as it went through town. . . People were doing that. Taking pot shots at the Germans. And the SS didn't like it. They would gather up the mayor and a few other people. If they didn't turn over the guilty person they would kill the mayor. Or, sometimes the whole town.
"My father got a message that told him he was supposed to go to the town square. Instead, he went into the woods... It's a good thing he did. Otherwise, I wouldn't be here."
When do you need a stash of cash? When the feds try to outlaw it.
Hold some dollars. And some gold.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.