Making the Case....Continued part 4
Reference Point
The reason we have covered Gold in detail, is because Gold is the reference point where you can begin to locate yourself in the economic cycle. Gold is to the economist what the North Star is to a sailor. If you are navigating, you need to know your coordinates in reference to an specific point so you may know how to plot your course.
Profit, Capitalism and Rule of Law
I will touch on some very basic and fundamental principles that to many of you are obvious, yet I come across many that claim to know the basic fundamentals and still fail to understand how they apply to business and economics.
The fundamental principle of Capitalism is to make a profit. If you fail to make a profit within the allotted time to cover your costs, you will not grow. If you have a deficit, you are bankrupt. This principle originates and comes from the very simple observation of Life, if a cell does not receive the necessary nourishment required for its survival on time, it will starve to death. Any additional nourishment from the cell’s present needs are stored and later used in case of a deficit (that is why we get fat). The more efficient you are at making a profit, the faster you will grow. Now, this presents a problem in reference to Gold, because Gold does not reproduce itself. The only way to increase the amount of Gold is to mine it from the Earth, which is a very tedious and expensive process. This fact, however, has not stopped many people from charging interest rates higher than the extraction rate from the Earth, making repayment of the Gold loan impossible. Let me give you an example, let us say there are only 10 ounces of Gold extracted and in control of an Individual, that individual may find some other individual willing to borrow the 10 ounces of Gold at 10% per annum; yet the extraction rate of new Gold is only 2% per annum, this means that repayment of the loan is impossible because at the time the loan is due, the borrower will be short 80% of the interest. That is to say, 10 ounces, 2% extraction rate equals .2 of an ounce for a total of 10.2 ounces of Gold, while the due amount is 11 ounces of Gold! Keep this in mind, because another tenet of Capitalism is the protection of property rights and adherence to the Rule of Law. If you had made this bargain as the borrower, the lender is in every right to recover from you any collateral from your breach and failure to honor your contract. So it is very important for you to be informed and understand what you are doing before you sign any contract.
The reason we have covered Gold in detail, is because Gold is the reference point where you can begin to locate yourself in the economic cycle. Gold is to the economist what the North Star is to a sailor. If you are navigating, you need to know your coordinates in reference to an specific point so you may know how to plot your course.
Profit, Capitalism and Rule of Law
I will touch on some very basic and fundamental principles that to many of you are obvious, yet I come across many that claim to know the basic fundamentals and still fail to understand how they apply to business and economics.
The fundamental principle of Capitalism is to make a profit. If you fail to make a profit within the allotted time to cover your costs, you will not grow. If you have a deficit, you are bankrupt. This principle originates and comes from the very simple observation of Life, if a cell does not receive the necessary nourishment required for its survival on time, it will starve to death. Any additional nourishment from the cell’s present needs are stored and later used in case of a deficit (that is why we get fat). The more efficient you are at making a profit, the faster you will grow. Now, this presents a problem in reference to Gold, because Gold does not reproduce itself. The only way to increase the amount of Gold is to mine it from the Earth, which is a very tedious and expensive process. This fact, however, has not stopped many people from charging interest rates higher than the extraction rate from the Earth, making repayment of the Gold loan impossible. Let me give you an example, let us say there are only 10 ounces of Gold extracted and in control of an Individual, that individual may find some other individual willing to borrow the 10 ounces of Gold at 10% per annum; yet the extraction rate of new Gold is only 2% per annum, this means that repayment of the loan is impossible because at the time the loan is due, the borrower will be short 80% of the interest. That is to say, 10 ounces, 2% extraction rate equals .2 of an ounce for a total of 10.2 ounces of Gold, while the due amount is 11 ounces of Gold! Keep this in mind, because another tenet of Capitalism is the protection of property rights and adherence to the Rule of Law. If you had made this bargain as the borrower, the lender is in every right to recover from you any collateral from your breach and failure to honor your contract. So it is very important for you to be informed and understand what you are doing before you sign any contract.
posted by TheMerchant at 9:11 PM
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