Fiat Angst--Rejecting the System (FARTS)

Is this a happy Tuesday? Well… probably not, so let’s talk about other stuff.

Early in 2012, with gold soaring, and a key restriction lifted off my retirement account as I switched jobs, and with a severe case of fiat angst, we decided to reject the system and convert our fiat into precious metals (FARTS) (I love acronyms). So we withdrew it, paid fiat tax, paid a fiat penalty (about 20% total) and took the remaining fiat to the LCS. I had figured gold was headed higher shortly and would creep even higher in the days beyond. Wait, that shows my ignorance; gold doesn’t creep anywhere, it is fiat that changes in value. Well, you know what happened in April as gold approached 1700. A month later, I was 47% poorer, if I count wealth in fiat.

I was not happy, yet I did not despair, but I was feeling something. And “poorer?” Really? Was I poorer? No, I was more stable than ever and the angst was gone. Hmmm…

Today I see lots of negative emotion out there in the blogosphere from people who did as I did. They are frustrated at their loss, angry at those who said the system was collapsing imminently. Are they looking for someone to blame, even vindictively? But today, with some retrospective vision, and some soul-searching, I say they have the wrong perspective, that their negative feelings are founded upon a lie that “the system is fine,” that gold creeps and changes in value.

We are in the eye of the storm with the other wall approaching.

Perhaps my personal journey has been typical. My IRA lost 60% in 2008. I got conservative and moved it into a mortgage security fund AFTER the crisis where it earned a steady 6% per year and slowly, with steady contributions and meager interest, recovered most of my loss in 6 years. I started studying what went wrong and stumbled onto metals investing and found websites, this one included, that explained what was happening and pointed to a bleak future for the world economy.

In retrospect (and my retrospective vision is perfect, I might add), in retrospect, I should have doubled down with equities in 2008 like my retirement adviser suggested. I also should have bought those Citibank calls when the stock was priced at a dollar, my finger quivering over the mouse button, but I feared the small loss. None of us realized that QE and its wealth effect was on the way, that the Bernank would re-inflate those Fidelity equity funds beyond this financially ignorant slug’s wildest dreams. My boss, even financially sluggier than I, didn’t even pay attention to the crash. He stayed in his equity fund all the way through and is ready to retire now. “Highest praise to the Bernank!” he seemed to chant as he traipsed through the university halls. Meanwhile, I grumbled while slouching at my desk, staring at charts all day, reading financial blogs on the lookout for black swans. And I have seen lots of them: Silver default, Gold skyrocketing, Greece default, MFGlobal bankruptcy, Cyprus Bail-in, & and more recently, US Treasury dumping. But each has been shot down by Bernank & co. with metal control, multiple Greek bail-outs, a big cover-up, account theft, and the Belgian mystery buyer. And as can be clearly seen and proven by this image, there were more black swans I never knew about.

So how does that make me feel? How do I feel that my ovis aries friends have prospered since 2008 while I educated myself financially, then took aggressive action and have seen my wealth fall by about 50%. Well, I feel fine! Sure, I’d rather be right and rich today, profiting from an AG move of $35 to $600. But I feel fine because somewhere in all of the financial action I realized what Bernank & co understood all along, that 2008 was no game, it was not a simple crisis to be quickly solved and overcome. It was the game changer that teeter-tottered the future value of paper wealth to zero while the future value of commodities went the opposite direction. TARP, QE, LTRO, ZIRP, NIRP, bail-ins, have only served to keep the pre-2008 system appearing to be solvent, buying time for those who understand to unwind their leverage and transfer that risk to the financially ignorant.

So I see two distinct perspectives* out there:

1) that the central bankers have stabilized the financial system and found a way to continue the Keynesian government-economics for the foreseeable future. All is well, your funds are safe at Fidelity, the markets are driven by fundamentals (admittedly with some temporary headwinds and a few rogue traders), and these markets can be predictably traded with technical analysis.

2) that central bankers irreparably damaged their system in 2008 and currently have it on QE/ZIRP  life-support that is losing its effectiveness. They know it full well and are negotiating behind the scenes to set up a new system (SDRs?) that will replace it when they pull the plug. All is not well, some weekend in the future bail-ins are a real possibility, and those who trade the market compete with algo-pirhanas.

Perhaps a third perspective is that the system is really collapsing or shifting, but until it does, metals and equities are tradable (for a disciplined trader).

Probably most of us reading economic topics from the perspective here would hold to perspective 2 (or 3). And keeping that perspective is the key to managing the negative emotion, otherwise, we will become weary and be suckered back into a normalcy bias with anger for our perceived loss. We must set out a disciplined plan for the future and stick to it, not being moved by taunts that we are part of a sad cult. Yet, in our disciplined plans, we need built in flexibility, a recognition that the ground may shift beneath our feet, that this shifting ground may remain somewhat stable for a very long time, and avoid over-committing before it is time.

While the idea of flexibility should be clear, the idea of over-committing may not be. By this I mean that we are not over-committed as a “prepper” to the point that we lose our ability to earn a living or estrange our immediate family. Likewise, an attitude that says  “I’ll get ready when the collapse gets here,” that attitude will not suffice either. As I have written elsewhere, I hold that the collapse will happen incrementally, but fairly fast. We are not likely to see a sudden collapse (though possible) with the sharpshooting skill the Bernank & Co have shown in in shooting down black swans.

I know people who may be overcommitted as a “prepper” to the point where it affects their current life. One person sticks with a job she dislikes. Why? Probably because … “What’s the point in changing jobs if things may collapse tomorrow?” Well, the point is that you need to maintain good health. This person has suffered through a plethora of uncomfortable health issues—all stress related. She has done far more to prep than I have and has been on the leading edge of that movement since it started. But her life has been tough as a result and she does not seem to be happy.

I changed jobs two years ago to alleviate stress due to psychopathic bosses.  The stress of work was causing serious health problems. So I found less stressful, easier work, leaving the professorate at a large Mid-western university and taking a lower level teaching position out west where I literally only work half the hours I used to. I gave up 30% of my pay… but so far, it has been worth it.

Stacking is expensive (more so back in 2011), but preparing your life for the new economy doesn’t cost that much in terms of fiat. It may require a more stable job, changing where you live, adding on storage space to your current home, having a plan of self-defense, etc. But all these things cost far less than purchasing 20 ounces of Au or 2000 or AG. And while every ounce of AU & AG will be a blessing later, it may not be saleable for a while. But food and supplies? That’s a different matter altogether. Already, my food prepping is paying for itself. We are consuming our stored foods and restocking, eliminating things that just did not store so well or simply taste bad. The replacements cost more, but much of what we eat today was bought at 2011 prices. Inflation is real, now, and is part of that slow slide into the new economy.

In the meantime, we do our best to enjoy life. We take trips out of town, see relatives, vacation, and frugally have fun now. But we also try to increase our income (wife taking a new job) and create a life that works now. We will make the transition to the new economy as we need it to. As long as the fiat I earn will buy the goods I want, I will keep working, living, and trying to spend it wisely.

My forward looking retrospective vision says that if we bail out of the ship too early, we will have lost an opportunity to be even better able to manage in the new economy. It is certainly listing, but still stable. Keeping one foot in this economy, though it is sinking, and one foot in our “lifeboat” will be the best course of action. So get your lifeboat ready, stock it well, but keep it tied to the big ship (with a simple easy-to-untie knot). Let this economy continue to provide a good living as long as it can, illusory though it may be. Have fun with your family. But learn to garden. Go on vacations.  But take vacations in places where you may wish to live. Why not purchase a second home, or even a lot to park a travel trailer? Why not build a security fence around your home in the city, or replace your hollow core front door with one made of solid oak? Live a life of moderation, enjoyment, and careful observation. What great foresight that will be if we have a collapse. What great foresight if we do not.

A life of moderation, insuring yourself for the future, and enjoying what you can now, will mitigate that negative emotion. Recognizing that metals are real money, that they are undervalued in fiat today, will disempower the lie that “fiat is money and metals are losing.” Yes, I have learned to wait for dips to purchase and wish I would have done that earlier. But each time we see a another “isolated, roguish, Barclay’s moment,” another Obama executive-order, another war, we can take comfort knowing we are correct in our views, that the new economy is approaching, that continuing to advance our career—or switch to a new one is wise, that anything we do to make the transition will be gratefully appreciated, and that one might even do some trading, if you are skilled and disciplined. As for me and my house, we’ll leave the trading to others and invest in the new future with metals, land, and the tools we may need to survive then. That is what will moderate my emotions and keep me holding to the plan.

171 Comments

cliff 567's picture

Am I first?

Yes Bro./IBEW

That was me you wrote about there Dr. J.

I'm all in and under water and still swears that I did the correct move.

Just now I need a roof on my SHTF shelter, I need to sell shiny for 2/3s of my buy cost 3 years ago to buy asphalt shingles at the same price that they cost in 2011.

Life sucks and then you die.

I NEED a roof now, It ain't gonna come close to closing out my store of shiny, or diminish my resolve.

That struck me personally Bro Jerome, Thank you Bro

cliff

AlienEyes's picture

DUCE !

Hell yeah. smiley

Green Lantern's picture

Third

And first time since the beginning of TFmetals that I ever wrote 1st, 2nd, 3rd, even if I was early

metalsbyamile's picture

Cartel has a saying

"You can fool some of the people all of the time, and those are the ones you want to concentrate on." … GW Bush, joking at a Gridiron Club dinner, Washington, DC March 31, 2001

metalsbyamile's picture

Tuesday. Let's sing the same old song

Great vid!

Spartacus Rex's picture

@ Dr. Jerome...

Your naive paying of "Fiat Tax/ Penalty" simply demonstrates: "Ignorance of the Law" which is "No Excuse/ Excuses No One"

The "Powers That Be" deliberately buried the Truth and Exit from the Matrix within the Statutes (U.S. Code) realizing full well that the 99% would not perform their own Due Diligence to discover the Truth of the Matter.

Question:

So how has that been working out for everybody so far?

Grasp the Maxim: "Ignorance of the Law is No Excuse/ Excuses No One"

Knowledge will forever govern ignorance; and a people who mean to be their own governors must arm themselves with the power which knowledge gives. James Madison

Proverbs 4:7

Cheers & Semper Fi, S. Rex

mack's picture

all hail the doctor

well put doc.  I also have traveled the same road with the same losses and angst that followed.  Only thing to do is "keep the faith" and ride it out.

metalsbyamile's picture

Honest

Great expose of your life, the trials, tribulations, and certainly the emotional roller-coaster ride you have endured.One of the most honest and introspective pieces to come along in some time.

Dr. J., kudos, we have all been there at one time or another.There is something about having an ounce of gold or silver in ones hand.It brings a sense of calm.

atarangi's picture

Eggs al la Spartacus

Spartacus Rex was making a breakfast of fried eggs for his wife. Suddenly, his wife burst into the kitchen.

"Careful," she said, "CAREFUL! Put in some more butter! Oh my GOD! You're cooking too many at once. TOO MANY! Turn them! TURN THEM NOW! We need more butter. Oh my GOD! WHERE are we going to get MORE BUTTER? They're going to STICK! Careful. CAREFUL! I said be CAREFUL! You NEVER listen to me when you're cooking! Never! Turn them! Hurry up! Are you CRAZY? Have you LOST your mind? Don't forget to salt them. You know you always forget to salt them. Use the salt. USE THE SALT! THE SALT!"                   

Spartacus stared at her. "What in the world is up with you? You think I don't know how to fry a couple of eggs?"

His wife calmly replied, "I just wanted to show you what it feels like when I'm driving."

Spartacus Rex's picture

@ atarangi LOL

My Better Half, to this day, still insists that I cannot help but "burn water" on the Stove.

Cheers & Semper Fi

cliff 567's picture

I wont hat tip something so frivilous and off topic...

However, I had to giggle..

SS121's picture

Dr. J, my hat's tipped, AND off to ya

Through your comments, articles and even podcasts, you've chronicled your mental journey out of the system from deep within the world of academia, which imo is a monumental feat.   -AND-  All while continuing to remain employed within that world and "let this economy continue to provide a good living as long as it can" for you.

You are in a unique position for sure.  Maybe to be the voice of reason to a lot of people who might soon be taking that same journey in a matter of days, instead of years?

Thanks for another great post, and for all the above.

transplanted baby's picture

almost had #10

oh well, thanks Dr. J for putting into words some thoughts that had crept into my mind as well. Those, "what if...we are wrong" thoughts. But then I keep telling myself to remember all these other things, and these other things, if history is any guide, point to us not being wrong but being right. Although I am not sure how this is all going to play out. Anyway, back to the article. Thanks for the thoughts.

Green Lantern's picture

I'm sure this means nothing

I'm sure this means nothing and I wouldn't take any actions based on this information.  BUT I've been taking some readings on my new geopolitical psychokinetic energy meter.

let's say a Twinkie represents the  normal amount of global geopolitical psychokinetic energy

According to this morning's  PKE sample, the current level in the world would be a Twinkie 35 feet long weighing  approximately six hundred pounds.

Yeah, that's a big twinkie

                We could be on the verge of a fourfold
                crossover ... or worse.  If what we're
                seeing indicates a massive PKE surge, we
                could experience an actual rip.

Don't believe me.  Ask Spengler

Dr Jerome's picture

Metal roof?

Cliff567,

How about a metal roof that lasts 100 years and you might be able to install yourself?

But the way... an old IBEW joke for you

Q: How many fleas (FLEs)* does it take to change a light bulb?

A: About ten or so ... What? ... You got a problem with that, buddy?

* For those who desire to know more about the fleas... The Federation of Linemen Electricians, FLEs (another acronym), is a organization within the IBEW (electricians union) that has a reputation of taking over labor on big  job sites, slowing things down, and pushing jobs into overtime pay as they fall behind schedule...  They are not all bad, but they do have that reputation.

Sparticus,

I probably am ignorant... I had an old friend that taught me much about the tax laws, but he threw in the towel after 15 years when his wife said she was tired of fighting with the taxman. He settled and went back to a normal life. I have not explored that tax world much since then. I hire an account each year to keep them off my back.

atarangi's picture

That Twinkie looks big enough to share

tumblr_mdnczaB8Rx1qhkt2xo1_400.gif

atarangi's picture

WHOOPS! - TWO TWINKIES

tumblr_mdnczaB8Rx1qhkt2xo1_400.gif

Spartacus Rex's picture

@ Dr. J(i)rome...

I worked summers as a Longshoreman on the Left Coast w/ Local 9 back in the early 70's, due to being a former U.S. Marine, and personally knowing Johnny Weismuller Jr, who got me work therein, and the joke was: 

'How many Longshoremen does it take to change a light bulb? Eight! Got a problem with that?"

"Accountants" are part of the "system", ( ergo the FRAUD) and their very livelihoods depend on same!

The simple Facts & Truth of the Matter, is anyone presently earning under 400K in fiat F*Ns, does NOT owe a single penny in federal "Income Taxes" if they simply Follow the Law. Period!

"Ignorance of the Law, is not an Excuse/ Excuses No One"

Been There, Won That! Cheers & Semper Fi, S. Rex

Katie Rose's picture

Dr Jerome,

I always love reading your posts!

I, too, bought silver when it was at its peak. Am I sorry? Not one bit. I really have come to the realization that there are hundreds of moments throughout the day when I can choose joy or angst. It is my choice. I choose joy!

And so my focus right now is greenhouses. I want more greenhouses. They make growing veggies a delight. They are fun. They make me smile. Gold and silver do not bring the same joy that a greenhouse bursting with flowers and veggies brings.

I used to think I knew what the future held. So far I have struck out. Nothing is unfolding as I thought it would unfold. Nothing. Whoever would have thought silver would be so cheap right now? Not me!

Do I care?

No.

This birthing season was so heart wrenching I can barely speak about it. Six dead baby goats, three emergency trips to the vet, all at night, all during the weekend, all doubly costly due to the timing.

And so I come back to greenhouses. They are an explosion of life. They fill my soul and repair the damage to my heart from hearing my three favorite goats bellowing in pain as they just can’t birth the dead baby blocking the living ones from coming out.

I thought life on the farm would be easy. It isn’t. But it has taught me this:

There is always something to be grateful for, always a way to pass along kindness, always someone or something I can extend love to. There is beauty all around me if I will just pause and look, really look.

Wednesday I take delivery of two baby lambs. The breed (American Barbados Hair Sheep) is quite wild and I wonder if I have lost my marbles. It really doesn’t matter. My sister wants them, I get them. She is happy. I get back to building another greenhouse....

Spartacus Rex's picture

@ Katie Rose...

Holy Scripture provides the truth whereby simply because One recognizes and accepts the Truth, they will not otherwise have to pay a price! "Silver is tested in Fire, Gold in the Furnace."

Cheers, S. Rex

atarangi's picture

@ Katie

Good to see that you have things in the right perspective.   The joy of life is the important thing for sure.   Just wondering if the vet has given you a diagnosis on the stillbirths?   So many things can make farming a real challenge.                                                                                                                          I gave up on livestock and just stick with fruit and vegetables, way less heartache and stress.

El Gordo's picture

So I'm underwater...

...sowhat.  I continue to profess that this was "mad money" to begin with which I will hopefully personally never need.  After that, my heirs can complain all they want to about how much better off they would have been if their benefactor hadn't been such a fool, etc.  Meanwhile, my plan is to keep adding a little more along as I'm able which does 2 things - it lowers my average cost and it pisses off my heirs even more.  How much better can it get?  Should I outlast our present economic system, the demise of which I believe has accelerated during the past decade or so, then I may need some of the stack after all.  I never thought I'd live long enough to see our country in its current state of decline, but I did, so who knows all the variables.  As Gus told Woodrow (Lonesome Dove) something to the effect "it's not about dying, it's about living" so I on with it. 

Occasnltrvlr's picture

Hmmm...

Hammer's picture

looooooooool

looooooooool

atarangi's picture

Hammered

Are you still up Hammer. Probably been drinking that Japanese jungle juice. I tried that once and ended up hunting whales in the southern ocean. Only managed to catch one but it should keep me in meat until 2019. Quite nice though but not as good as Bluff Oysters or Crayfish.

atarangi's picture

Why is Hammer and most other boys (and men) happy

What do you expect from such simple creatures? Your last name stays put. The garage is all yours. Wedding plans take care of themselves. Chocolate is just another snack.  You can be President. You can never be pregnant. You can wear a white T-shirt to a water park. You can wear NO shirt to a water park. Car mechanics tell you the truth.

The world is your urinal. You never have to drive to another gas station restroom because this one is just too icky. You don't have to stop and think of which way to turn a nut on a bolt. Same work, more pay. Wrinkles add character. Wedding dress~$5000. Tux rental~$100. People never stare at your chest when you're talking to them. The occasional well-rendered belch is practically expected. New shoes don't cut, blister, or mangle your feet. One mood all the time. Phone conversations are over in 30 seconds flat. You know stuff about tanks.

A five-day vacation requires only one suitcase. You can open all your own jars. You get extra credit for the slightest act of thoughtfulness. If someone forgets to invite you, he or she can still be your friend. Your underwear is $8.95 for a three-pack. Three pairs of shoes are more than enough. You almost never have strap problems in public. You are unable to see wrinkles in your clothes.

Everything on your face stays its original color. The same hairstyle lasts for years, maybe decades. You only have to shave your face and neck.  You can play with toys all your life. Your belly usually hides your big hips. One wallet and one pair of shoes one color for all seasons. You can wear shorts no matter how your legs look. You can "do" your nails with a pocket knife. You have freedom of choice concerning growing a mustache. You can do Christmas shopping for 25 relatives on December 24 in 25 minutes

Hammer's picture

But but babies are scared of

But but babies are scared of FARTS...........

atarangi's picture

White Christians are scared of Muslims

The Score at half time     Muslims  -   9472 White Christians                                                                         White Christians  - 27 million Muslims 

Spartacus Rex's picture

@ Hammer... -"looooooooool"

Still leaves the "debauching of the currency/ inflation" Tax! When do you think the People will wake up and catch on?

Hammer's picture

When the voting middle class

When the voting middle class - working or retired -  (not the poor as the poor are always poor) also can't pay back their loans and resort to repairing things that break rather than buying a replacement. Can't afford the past (deflationary) and can't afford the future (inflationary) - mix and match as appropriate.

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