Knowing Your History is More Important to Preserving and Creating Wealth Than Fundamental Analysis

August 14, 2006 –

TJ.gif“The central bank is an institution of the most deadly hostility existing against the principles and form of our constitution. I am an enemy to all banks discounting bills or notes for anything but coin. If American people ever allow private banks to control the issuance of their currency first by inflation and then by deflation, the banks that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent that their fathers conquered.” — U.S. President Thomas Jefferson.

dwight.gif“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.” — U.S. President Dwight D. Eisenhower

Two former American Presidents, Thomas Jefferson and Dwight D. Eisenhower, predicted with amazing prescience the development of two situations that they stated would threaten the very liberties and economic well-being of the world. Thomas Jefferson made his statement over two centuries ago, and Dwight D. Eisenhower made his comment almost half a century ago.

One must wonder why these two presidents were so worried about these possible developments that one was compelled to state it would cause a nation’s children to become “homeless” and another was compelled to state it would become a direct threat to “liberties and democratic processes”. Furthermore, when one realizes that the central bank Thomas Jefferson most feared has since become a reality (the U.S. Federal Reserve) and that the all-powerful U.S. military-industrial complex that Dwight D. Eisenhower most feared has multiplied exponentially in strength since his declaration, then one must also wonder about the consequences of such developments. Undoubtedly, a private central bank (the U.S. Federal Reserve) that has created over $8 trillion of debt for a nation is necessarily going to affect global economies and stock markets (this is the “official” government statistic, though the true statistic is many multiples of this figure. In any event, $8 trillion is enough debt to stretch U.S $1 bills side by side from the earth to the moon and back more than five times).

Undoubtedly, a military-industrial complex that spends more on defense than the combined defense budgets of 18 NATO countries, Russia and China (that is an absolutely mind-boggling statistic if you take a moment to digest it) is going to drive foreign policy decisions that will have a profound affect on the world’s economies and stock markets (NATO stands for the North Atlantic Treaty Organization, a military alliance of democratic North American and European countries). One must must must understand the consequences of these developments to understand how global stock markets in the next five years will react. I cannot emphasize this point enough.

The Trillion Dollar Question

The trillion dollar question, now that the very developments most feared by two extremely intelligent people and former leaders of the United States have occurred, is

“What are the consequences?”

Interestingly enough, you will discover a deafening silence regarding both of the above issues in the mainstream media, whether Reuters, the BBC, the New York Times, the London Times, the Wall Street Journal, CNBC, Bloomberg and so forth. Could two extremely intelligent people have been so incredibly wrong in their warnings to the world? The problem is not that their concerns were overblown, but that their grave concerns were incredibly right.

So right, in fact, that those who understand their concerns fight the hardest to keep the potential consequences of such developments hidden from the rest of the world. Only those with the deepest, most intimate knowledge of how these two institutions function will profit in the future from the decisions of these two institutions (the U.S. Federal Reserve and the military-industrial complex) while millions in the thundering sheep herd will experience a great destruction of wealth. The crises that Presidents Thomas Jefferson and Dwight D. Eisenhower predicted are unfolding before our very eyes today in 2006 and will continue to unfold into the next decade, when many investors’ wealth will come under serious risk.

Understanding the MoneyMitesâ„¢ is the Key to Building and Keeping Wealth

The major point to take away from this article is that, as an intelligent investor, you must dig well below the surface of major media very deep down into the rabbit hole to discover how money truly flows. This is what we pride ourselves in doing at maalamalama. Understand the money trails of the most powerful institutions in the world and it is quite simple to predict economic crises and to understand not only how to preserve your wealth, but also how to create wealth from these crises as they unfold. Although powerful institutions such as the U.S. Federal Reserve and the world’s central banks and the U.S. military-industrial complex would like to obscure these money trails, the flattening of the world has ensured that the average citizen has access to enough information to understand where to invest money, in what asset classes, and at what times.

I’ll give you an example. I believe gold is a great asset to own as you all know by now. In an ezine I distributed in June, 2006, I mentioned that it was a great time to consider buying gold. However, at that time, I established only a partial but not full position. Why? Because many central banks around the world still had not established the very substantial positions of gold (meaning billions of dollars) they desired to hold in their reserves. I’ll discuss just one finding I uncovered recently that confirmed my belief that despite a likely run-up in gold from $570 (and it ran up to over $660 in just a matter of weeks from the date in June).

The Governor of the UAE Central Bank, Sultan bin Nasser Al Suwaidi stated to the media that his bank was preparing to convert 10% of their foreign currency reserves to gold in July, 2006. This statement followed numerous other similar statements of central banks around the world.

‘I don’t think it is appropriate to buy gold now – it is too expensive,” bin Nasser Al Suwaidi said. “The appropriate time might come very soon. We could go up to 10 per cent (10% equates to USD $2.3 billion).”

The above statement indicates to me that the price of gold will retract steeply one last time before running even higher.

Central banks collude all the time to set interest rates and to try to manipulate the prices of commodities. I know that people will blow this statement off as conspiracy talk but they haven’t spent the hundreds of hours scouring central banks’ official statements and balance sheets that we have. It’s not a conspiracy – just good business on the parts of central banks to do so.

The price of gold in a billion dollar purchase of gold to central banks is much more important than the price of gold to an individual investor that may purchase USD $100,000 or even a million dollars worth of gold. As well, there is historical precedent for central banks manipulating the price of gold in the past. When former U.S. Federal Reserve Chairman Alan Greenspan desired the U.S. dollar to act like it was backed by a gold standard even though it was not in order to re-affirm the dollar’s supremacy as the “world’s currency”, he enacted economic policies that drove the price of gold down in an attempt to re-establish the world’s faith in the strength of the U.S. dollar.

Therefore, if central banks desire to purchase gold at a lower price, and believe that gold at $620 is much too expensive to purchase, yet they desperately wish to purchase more gold, you can bet that they will find a way to depress the price of gold to more “reasonable” prices. I’m not particularly concerned with the fine policy details of how they will do it either. All we need to know is that they will find a way.

As a parallel to gold, for those wondering when the right time to purchase Euros are, to pinpoint this time is similarly easy. Just follow the money trail deep down the rabbit hole and you will discover similar machinations currently ongoing with the worlds’ central banks regarding currency valuations. However, if you continue to read nothing but mainstream news, you will remain ignorant of facts similar to the ones I discussed regarding the United Arab Emirates, and you will continue to be blindsided by shocking economic events that will catch the vast thundering sheep herd unprepared to handle.

Always follow the MoneyMitesâ„¢ to make more money, because even in bad economic situations, it’s possible to build tremendous wealth.


Hmmm. History. Don’t have much to say here but that yes, people must learn for history. So today I’ll keep it short and sweet and leave you with a teaching about history.

“Truly, one may gain by losing; And one may lose by gaining.

What another has taught, let me repeat:

A man of violence will come to a violent end.

Whoever said this can be my teacher and my father.”

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