We’re at 22% unemployment based on raw government statistics. This number includes discouraged workers who can’t find a job. The government’s widely reported unemployment 8.1% rate excludes many discouraged workers who have yet to find a job.
The Consumer Price Index (CPI) is also misleading. The CPI impacts cost of living adjustments for Social Security recipients thus if it is underreported, the government saves money and the recipients is robbed of needed increases to make ends meet. Disposable income is not growing and the debt crisis continues to plague the housing market. Hyperinflation may come to a reality in 2014.
Evidence is accumulating that the current economic thinking is flawed. The Federal Reserve manages by looking through the rearview mirror. They create inflation (money supply growth) and it takes time to evolve into price inflation of goods and services we purchase. Directed attempts to bypass the natural cycles of expansion and compression have failed. Misunderstanding the most fundamental aspects of life are now creating an expected, deepening recession.
More countries are moving towards “bartering” directly with other countries. This direction will ultimately move towards a gold standard. Investment firms currently ignore unexpected risks aka swan events. Ignoring these risks allow these firms to greater leverage their assets at the same time create a greater risk of collapse. Failure to allocate risks of swan events will ultimately expose the investment firm to be a part of systemic collapse similar to the 2008 meltdown. The gold standard would curtail such risky positions.
This move to bartering will ultimately move the globe back to the gold standard. The day of the U.S. Dollar being the preferred global currency is fading away at a rapid rate. James Rickard in his book “Currency Wars” poses the scenario that other economic powers will use a gold standard against the U.S. in economic terms. Economic warfare by Russia, China, and/or India may promote such a path. Investors will then be put in a position of deciding between un-backed U.S. Government Securities and gold-backed instruments. At a minimum investors will diversify and increase the demand for gold. The writing is appearing on the wall.