Unfortunately, Government not only lets private organizations defraud stakeholders, it helps itself to earned wealth through fraudulent money and equally fraudulent capital gains taxes. All it takes is a single corrupt individual to destroy a lifetime’s savings. And America seems to have more crooked powerful people than honest ones. And it puts no value on keeping its word, at least its own people.

Stocks can be a malinvestment if purchased as a hedge against inflation, the reasoning being that even if a fiat currency were to become worthless, then at least the physical assets of a corporation would retain some of their value. This is true, stocks do perform better than fiat currency under inflationary conditions. For example, during the hyperinflationary period of the 1920′s, the German stock market only lost 80% of its value relative to gold.

So, if you’re going to make a malinvestment while waiting for the government to stop monkeying around with the economy, then it’s worth noting that some types of malinvestment are less bad than others.

When the Federal Reserve lowers interest rates below the natural rate of interest, then that puts in motion a broad distortion in the allocation of capital. Under such inflationary conditions it becomes prudent to make malinvestments, not as a way of profiting, but simply as a way of losing less relative to other options available.

Another example of malinvestment is the diversion of investment money into the building up of excess inventories as a hedge against rising prices. Or buying houses for resale during a credit expansion boom.

The long term solution to the whole problem of malinvestment is the remonetization of gold.

Gold, then, is a profoundly optimistic and inspiring investment.

Many countries are actually borrowing money (or printing it) just to subsidize commodity prices for their hungry masses. Money supply, asset prices and debt have skyrocketed worldwide since 1971, when the world abandoned the gold standard.

Gold is etched in the human psyche by ages of evolution. It doesn’t spoil or even corrode. It’s fungible and easy to store. It is as precious and beautiful as fine art, but indestructible.

In the meantime I see no comments on James’ observation regarding purchasing stocks. Bravo for that one Mr. Saft.

Does anyone ever consider what happens when our Federal Reserve is forced to abandon it’s ZIRP (zero interest rate policy)? How do we measure and service our debt when rates rise as they must?

When QE ends, THEN Ralphooo, then we might see some people ascend that clock tower. Thanks for mentioning that. You reminded me of a classic obscure song written by the late Harry Chapin.

MIA

Probably they will decide to melt and coin it into 666,666 eagle-stamped American Krugerrands (seriously, do the math). John Ashcroft, in celebration, will then lend his best avian screech to a final chorus of “Let the Eagle Soar, Like It’s Never Soared Before.”

In this fever dream, Texas keeps on paying football players and department heads, passing out swarms of buttery gold coins to grateful loyalists, just as if the Great Crash of 2012 had never taken place. The drama unfolds on an Alamo-themed dystopian future campus, defended by a nest of patriotic snipers perched atop UT’s famously lethal clock tower.

Without question, one of the stupidest ideas I have ever heard.