Black Swan Theory - Possible black swan event in near future

All swans are white, if there is a black swan; it means there is an irregularity. It is my conclusion after read Nassim Nicholas Taleb’s version of Black Swan Theory. Actually, his theory is not about swan at all. Now, let’s see the possible event of black swan.

It was in December 23rd, 1913, Congress of United States passed Federal Reserve Act. This act gives power to Federal Reserve to print gold backed money, something previously done by US Treasury. Even if this Federal Reserve is not federal and also does not have reserve – its name surely has been fooling American and the rest of the world.

For this work, Federal Reserve is paid by what so called seigniorage, a difference between nominal value and print cost. Ironically, Federal Reserve does not receive payment using money it printed – of course because paper money is worthless. Federal Reserve is paid using Gold Certificate, that only exchangeable to gold, real gold!

To avoid any disturbances, the payment is done by 1% of US gold reserve per year. Even if it is relatively small, US government is only able to pay in the period of 100 years. The end of 100 years period dated back from December 1913 is December 2012. So what will happen after that time? Who knows? But I am sure it will not be a pleasant thing. According to Mayan prophecy, 2012 is the end of life on earth. The real truth, we still know nothing.

Here is a quotation from Morgan Stanley in Financial Times:

“…given the size of the current and prospective economic and financial problems, and given the size of the monetary and fiscal stimulus that central banks and governments are throwing at these problems, investors would be well advised not to ignore this tail risk, especially as markets are priced for the opposite outcome of lasting deflation in the next several years. Put differently, we believe that buying some insurance against the black swan event of high inflation or even hyperinflation makes sense and is relatively cheap currently”

I am a lay people, but after witnessing governments over the world releasing what so called stimulus plan, I began to doubt that we will recover soon. It is very open that we will face black swan events in near future. How could they expect better thing by adding more money to market? We see, more money, less valuable it is.