NEW YORK (PNN) - September 19, 2012 - With another syringe of quantitative easing being injected into the Fascist Police States of Amerika economy’s bloodstream, Ben Bernanke is giving the markets their liquidity fix. The Federal Reserve’s action reaffirms the stance that the government has no fiscal discipline, opting instead for ultra-easy monetary policies to stimulate growth.

The government’s liquidity shot promptly boosted gold and gold stocks, as investors sought the protection of the precious metal as a real store of value. The strong correlation between the rising FPSA monetary base and growing gold value shows that since the beginning of 1984, as money supply has risen, so has the price of gold.

The dollar declined due to the Fed’s easing, which isn’t surprising, given the fact that gold and the greenback are often inversely correlated, and increasing the money supply generally causes currency values to fall.

What’s interesting is that currency decline was what Richard Nixon sought to avoid when he ended the gold standard in 1971 and announced that the country would no longer redeem its currency in gold. During his televised speech to the Amerikan public, Nixon translated in simple terms the “bugaboo” of devaluation, saying, “If you are among the overwhelming majority of Amerikans who buy Amerikan-made products in Amerika, your dollar will be worth just as much tomorrow as it is today.”

More than 40 years later, a dollar is worth only 17 cents. This significant decline in purchasing power only strengthens the case of gold as a store of value, likely prompting Global Portfolio Strategist Don Coxe to propose making Nixon the “patron saint of gold investors,” during this year’s Denver Gold Forum.

As Milton Friedman once said, “Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless.”

In its long-term asset return research charting economic history in comparison to current markets, Deutsche Bank makes it clear that it believes returning to the gold standard would be disastrous, though it finds that the “lethal cocktail of unparalleled levels of global debt and unparalleled global money printing” are relatively new governmental developments.

Prior to the last four decades, deficits only occurred in extreme situations of war or severe economic setbacks, such as the Great Depression. Balanced budgets were a “routine peacetime phenomena in sound economies”. Since 1971, surpluses have been rare. The U.K. has had an annual budget deficit 51 out of the past 60 years and Spain has had 45 years of deficit spending over the past 49 years.

Many developed countries are in a predicament, as fiscal austerity attempts have led to weaker-than-expected growth in Greece, Ireland, Portugal, Spain and Italy.

Ian McAvity, editor of Deliberations on World Markets, says, “Excessive debt creates deflationary drag that they repeatedly fight by throwing at it fresh ‘liquidity’ or ‘stimulus’, to debauch the currency of that debt. For private investors, gold is the best medium for self-protection and preservation of purchasing power.”

Many others appear to agree, as sentiment has shifted in favor of the metal in recent days. According to Morgan Stanley’s survey of 140 institutional investors in the FPSA, gold sentiment was at its highest bullish reading since July 2011, and had the largest month-over-month increase during the survey’s three-year history!

So, gold investors, if you haven’t put in your orders, consider getting them in quickly, because the bulls are buying. Credit Suisse saw “massive inflows” into gold exchange-traded products in August after experiencing significant outflows compared to crude oil and the broader market in March, April, May and July. August shows a clear preference toward gold.