I have been giving a great deal of thought this week to why people like Backwoods Jack, who is well read and very bright, refuse to acknowledge what to me is so clear – and easily documented. His latest comments to me, after I informed him that I will no longer discuss ANYTHING economic with him are:
Can we keep gold and silver on the playing field as I value your judgment on commodities. I will be buying more from you; It is just the “gloom and doom” I can live without. I hear enough about America drifting downward into 3rd world status.
Without going into detail, my answer was no! It is impossible to discuss gold and silver without discussing why one needs to own them. It’s like asking your doctor for a prescription without explaining what the symptoms are. I believe, like my good friend Terry says, Backwoods is suffering from a case of Normalcy Bias. It’s as widespread as the common cold.
For those of you who aren’t familiar with the phrase, here is the definition of normalcy bias:
The normalcy bias, or normality bias, refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of governments to include the populace in its disaster preparations. The assumption that is made in the case of the normalcy bias is that since a disaster never has occurred then it never will occur. It also results in the inability of people to cope with a disaster once it occurs. People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.
How clear it is – Backwoods says, “It is just the ‘gloom and doom’ I can live without.” It’s not that he can’t comprehend what I say; it’s that he doesn’t want to comprehend what I say. He automatically moves toward any source of information that paints a rosier picture.
He is, for lack of a better phrase, a “cockeyed-optimist.” God bless the optimist! But in this case, I think God will bless the open-eyed realist. Like so many, Backwoods would rather kill the messenger than face the truth. The sources he turns to for information are all mainstream bankers and brokers, all of whom benefit from a strong economy and pitch an upbeat story.
Wish it were so, but if you give any credibility to John Williams (Shadowstats) note that his latest release says:
- Although Recovery Never Took Place, Official Double-Dip Recession Likely Will Be Clocked from Second- or Third-Quarter 2012
- Reported Contraction in Real GDP Designed to Discourage Fiscal Reform?
- Fourth-Quarter Nominal GDP Growth Collapsed to 0.46% from 5.91%
- Real Durable Goods Orders Contracted Year-to-Year, Despite Temporary Orders Boost from Year-End Defense Spending
No. 498: Fourth-Quarter GDP, December Durable Goods, January 30, 2013
If you want to ignore what is occurring, and fall victim to the Normalcy Bias, there will be a severe price to pay. Backwoods, and all the rest of you like-minded optimists, it’s time to get real. Gold and silver are an insurance policy to protect you in the storm that is approaching. Close the shutters. Take care of business now, while you still can, don’t ignore the warning signs and don’t seek out advice from the very sources that have been wrong through every crisis and bubble. They didn’t warn you in advance before and they are pulling the wool over your eyes now too. That’s a fact Jack, Backwoods Jack!
The year-over-year change in real GDP was 1.5 percent. There has never been a time since measurement commenced in 1948 when the annual pace of real GDP has fallen that low without the economy ultimately slipping into recession. Sub-2.0 percent readings are historically the warning signal.
-Rich Yamarone at Bloomberg, quoted at BusinessInsider.com, January 31 2013
I think I’ll ad…
Today’s comments from Newsmax here – they seem to fit the theme of my rant:
We are in danger!
U.S. National Debt is nearly $17 Trillion – soon Twenty Trillion Dollars!
That puts you and your financial security in GREAT Danger.
This “Fiscal Cliff” and our national debt problem are truly dangerous to you and your way of life. Here it is in perspective:
First, let’s list the financial statistics of the U.S. Then we’ll convert the numbers to compare them to a family budget.
Prepare to be shocked.
Financial Statement of the United States of America:
* U.S. Tax revenue: $ 2,170,000,000,000 * Federal budget: $ 3,820,000,000,000 * New debt: $ 1,650,000,000,000 * National debt: $ 16,571,000,000,000 * Recent budget cuts: $ 38,500,000,000
Let’s now remove 8 zeros and pretend it’s a household budget:
* Annual family income: $ 21,700 * Money the family spent: $ 38,200 * New debt on the credit card: $ 16,500 * Outstanding balance on the credit card: $ 165,710 * Total budget cuts so far: $ 385
“Uh-oh. We’re in BIG trouble. $165 thousand dollars in credit card bills?!?” says any reasonable family.
“I’m thinking $385 should do it,” says OUR Washington family.
Total budget cuts so far: $385
$165,000 of debt and we’re only cutting $385.00?
AMAC thinks this is irresponsible and harmful to every American. Especially to those over the age of 50 relying on a fiscally sound America in order to be able pay their monthly bills – whether you rely on savings, investments or Social Security.
This gives you an idea of how bad the situation is. It will only get worse!
Ed Steer posted the chart below that shows how gold, bonds, stocks and the U.S. dollar index have fared since 1970. Interesting, huh? Show this to your friends who still own stocks and haven’t bought any gold.