When psychologists evaluate human behavior, one of the most prevalent observations regarding any activity is the all too often flawed basis of perceived versus realistic outcomes that dictates our every action. As imperfect creatures, we tend to construct theories that conform with our worldview, which are subsequently reinforced by our confidence (or lack thereof) in the future. This is true in any discipline: finance, politics, gambling, mating, etc.
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There is hardly a better example of this than the very basis of modern economic theory where assumptions about the validity of fiat currencies determine the actions of central banks, which in turn spill over into every aspect of modern society. Yet what if the very basis of core assumptions is wrong? What if every activity exhibited by humans in the post gold-standard world has a flawed assumption at its core?

Dear Comrades In Golden Arms,
I sent an email to you awhile ago saying "This Is It," when it wasn't apparent.
Now, I am sorry to say, THIS IS THE END because it is becoming apparent.
Everything stands on the foundation of CONFIDENCE which is cracking rapidly.
Respectfully,
Jim

by Bam_Man
on Thu, 02/11/2010 - 13:51
#227120
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I am buying zero coupon Treasuries hand-over-fist right now. YTM right now on the 8/15/2029's is almost 4.90%. Buying at a 62% discount means that once deflation finally kicks in, the capital gains will be enormous.