Share this
Del.icio.us
Digg
Facebook
Googlize this
kwoff
Linkedin
MySpace
Newsvine
Reddit
StumbleUpon
Twitter
Export PDF
Print
E-mailDavid Burton considers whether this could be the next Great Depression.
A major problem that I feel will cause the next Great Depression, a depression so bad that it may in fact be worse than all the previous depressions combined, has been looming for years. No government or set of men can prevent it. While companies are bailed out at the rate of one a week, politicians fail to run their governments successfully as a business. How are they going to run bankrupt companies? When governments are buying failed or failing companies with taxpayer’s money, we are heading towards a society that looks less and less like a democracy, but rather one where the government controls everything. No one will invest in a country if businesses aren’t left to fail. Companies must be left to fail and people must lose their jobs.
People who sold at the top of booms want to buy the same thing back from the same people at the bottom or lows (in other words, when they go broke). They have all failed to realise that the next phase of the cycle results in people not spending – and this will lead to the next Great Depression. It doesn’t matter how much money is thrown at the market, it will not work in the long term.
Instead, we must look at the cause of the current problem, which started when we moved away from the gold standard. Gann said, “The cause is known long before the effect takes place.” Governments are printing money just to delay the inevitable – a major collapse. Printing of money by all governments is currently creating low interest rates (more supply, and markets work on supply and demand), but will cause high interest rates in the end, with hyperinflation. Don’t get caught in the spending trap.
The gold standard
The gold standard was a commitment by participating countries to fix the price of their domestic currencies in terms of a specific amount of gold. National money and other forms of money (bank deposits and notes) were freely converted into gold at a fixed price. A country under the gold standard set a price for gold, say $100 per ounce, and bought and sold gold at that price, effectively setting a value for the currency.
As an example, $1 might be 1/10 of an ounce of gold. Other precious metals could also be used to set a monetary standard. Silver standards were common in the 1800s. The combination of gold and silver was known as bimetallism. The US Gold Standard Act was passed in 1900 and effectively came to an end in 1933.
The Bretton Woods system, established in 1945, created a system of fixed exchange rates that allowed governments to sell their gold to the US Treasury for $35 an ounce. The system collapsed in 1971 following the United States’ suspension of convertibility from dollars to gold. The effect has been long lasting.
It’s amazing that people expect the US Federal Reserve and the government to fix the financial mess they (and now we) are in, when they are the ones that created it. So far, financial casualties include Iceland, the United Kingdom, the United States and Pakistan. If the current Australian government keeps spending the former Liberal government’s savings, we will soon join them.
Gann used the Hebrew calendar, and said to watch for a change in trends around Jewish holy days. On the day in 1971 when the United States dropped the gold standard, Neptune was going into Sagittarius, which is ruled by Jupiter, which is inflationary. When Neptune went into Capricorn in 1984 it was deflationary and interest rates started to drop. See figure 1.
Figure 1: Gold standard natal chart
In 1995 Pluto went into Sagittarius, which meant debt was going to expand until Pluto went into Capricorn in 2008. Following this reasoning, people will remain concerned about paying off their debt until 2023 – the time the overall bear market will last. I guess people will know the true meaning of a long-term investment by then. If you think it can’t happen, remember that the Japanese stock market topped in 1989 at 39,000 and has fallen for nearly 20 years to 7000.
Gann had data going back hundreds of years. He studied all the panics and booms in history. Gann students who have completed my workshop aren’t in housing or the stock market at all, because their research has shown these are not wise investments.
The year 2008 was 288 years from the South Sea bubble, during which there was great interest in investing in the South Seas and in stocks generally. Famously, much money was invested (and subsequently lost) in a company that advertised itself as "a company for carrying out an undertaking of great advantage, but nobody to know what it is". As the price skyrocketed, people bought on credit (sounds like today, doesn’t it?). Once the selling began, bankruptcies ensued. 288 years is twice Gann’s square of 144, which reveals important time cycles as well as parts of cycles. The number 666 is based on the eclipse cycles, and in 2013 it will be 666 years from the black plague of 1347. By 2013 population numbers should start to fall. If population numbers fall, there won’t be the demand for stocks or real estate.
The Federal Reserve chart and Richard Nixon
Richard Nixon was President when the United States abandoned the gold standard. The Federal Reserve chart and Richard Nixon’s birth chart happen to be in the same year, 1913. Nixon’s natal Saturn made a nice trine to the Fed’s Jupiter, both in earth signs. See figure 2.
Figure 2: The Federal Reserve chart
The future
At present, the mathematics of money just can’t work, and a new system needs to be developed. In the medium term, we will most likely go to a one-world currency (the euro is a trial). There is discussion of the ‘Amero’ for Canada, the United States and Mexico.
As an example of how money works, if I have 10 balls and I lend you them, and you have to pay back 11 (one being interest) where does the extra one come from? It’s impossible to pay it back unless I produce another ball and put it in circulation. I have to keep doing this to delay the time when it will all fall over and collapse – like today. Producing the extra ball is the same as printing money. In Germany in 1923, printing money caused hyperinflation, which is where the United States is heading.
Consider – money is great for governments. They print a $100 note for six cents, and charge the banks interest on it, which in turn charge interest to the people with debt. They do not want you to pay off debt, because the government is making so much from it. Why would they want the masses to be debt free? It’s a great money-spinner and of course the government gets a lot of the money back in taxes as well, so they make a very big killing. Debt is the same as death; it will kill you in the end.
If everyone in the world, including governments, wanted to pay their debts off today, it simply could not be done, as there is more debt than there is paper money. Furthermore, when spending ceases, unemployment skyrockets and the economy collapses further. So get in early and pay off your debts. You may not have a job if people stop spending on credit.
David Burton has been studying and using financial astrology and the methods of WD Gann since 1980. Visit www.schoolofgann.com or email dkb@commhedge.com.au for more information.
AFSL No: 241371
Methods of WD Gann Workshop
This article was originally published as 'The End of Capitalism' in the Mar/Apr 09 issue of YourTradingEdge magazine. All rights reserved. © Copyright 2009, MarketSource International Pty Ltd.
