Thursday, June 30, 2011

Hyperinflation, Economic Nonsense, and the Perspective of History

What does Lindsay Lohan have in common with economic historian Adam Fergusson?  The answer is that they both understand the cause of hyperinflation.  Yesterday Lindsay Lohan tweeted, "Have you guys seen food and gas prices lately?  U.S. $ will soon be worthless if the Fed keeps printing money!"  

One could hope that the perspective of history, specifically as demonstrated by Adam Fergusson's classic When Money Dies, would grant a measure of common sense to later generations concerning something so insidious as hyperinflation.  Yet Daniel Indiviglio of The Atlantic is brazen enough to act the part of Walther Rathenau, who oversaw the beginning of the Weimar hyperinflation.  Indiviglio writes, “The Fed's intervention is not driving food and energy prices. Moreover, the current levels of inflation are not nearly approaching levels where U.S. dollars will soon be worthless. To be sure, prices had been rising, but Americans aren't going to be pushing around wheelbarrows of dollars anytime soon to purchase a quart of milk.

Now, compare that to what Fergusson writes of Rathenau, that he, "expressly and publicly denied that the printing press had any role to play in that permanently spiraling sequence of events, and by ascribing the country’s ills primarily to the unfavourable trade balance caused by reparation payments he totally failed to understand the reality that the country was living far beyond its means, printing money to pay for excesses which included over-employment, the inordinate subsidy of industry, the import and manufacture of luxuries for domestic consumption, and a grossly inefficient tax-collection system.”

I know I frequently sound like I have nothing new to say regarding inflation, and our current state of economic affairs.  Yet I cannot remain silent on this.  Indiviglio is enabling the inflationary policies by parroting the Fed’s lies.  Inflation is never understood when it is happening—it happens slowly at first, that hardly anyone notices, and then it accelerates so suddenly that everyone is so consumed with spending their money to survive, that they have no time to reflect upon what got them into the situation they’re in.  This is one of the lesson’s Fergusson gives in his book.  Not only is he enabling the inflators, but he is actively denying their involvement and redirecting those harboring suspicion of the Fed to bogus claims of increased demand.

There are essentially two options in how to understand economics.  You can either listen to the King’s wise men, sorcerers, and magicians, like Indiviglio, or you can listen to those outside the establishment, with nothing to gain by the inflationary policies of our Gangster Government.  But remember, it is the court magicians and their wannabes, that never know what is happening until it is past, and then never recognize that things are as bad as they are, and then when it is too late, you’ve lost everything.

The reality of the situation, just like Weimar Germany, is that the Central Bank is creating money at a pace unparalleled in American history.  This is causing inflation, if not hyperinflation.  If you want to protect your wealth through the destruction of the dollar, you must put your money in things of real value, assets that will see you through the inflationary crisis we’re experiencing.  Get some gold and/or silver.  Do it now.  Ignore the fallacious economics of men like Indiviglio, and do what you know you must.

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Monday, June 20, 2011

Modern Conservatism's Achilles Heel

I encountered this blog post from nearly four years ago, that is precisely what is wrong with modern conservatism.  Porter Stansberry, an investment adviser, was invited to dinner with Ann Coulter and Doug Casey.  He writes of the encounter:

It gives me no pleasure to tell you about my dinner with Ann Coulter…
I was thrilled when a mutual friend invited me to join him, Doug Casey, and Ann for dinner in New Orleans. I thought, regardless of her rabid political views, surely Ann Coulter is an intelligent, curious, well-read person who has insight into the world…
Wrong. Dead wrong.
Ann Coulter is stunningly ignorant of the issues outside of constitutional law (she is a lawyer) and politics. Thus, in her view, politics is both the cause of all of our problems and the only possible solution.
Over dinner she reiterated her obnoxious opinion that the “experiment” with woman’s suffrage is the root cause of big government. Like a child playing with an Etch-a-Sketch, she points to a straight line, leading back through history. There, she says… big government started right there, in 1920. That’s when the 19th amendment was ratified, ergo that’s the cause of the whole problem. After that, according to Ann, it was all downhill.
Doug and I looked at each other curiously… But Ann, that same line, if you move it just a bit further, actually seems to start in 1913, when the Federal Reserve was created, the prohibition of income taxes was repealed and the Republic was put to rest through the direct election of senators. Don’t you think these changes to the Constitution and the policies they enabled – like FDR’s gold seizure and our resulting experiment with paper money – were far more significant than woman’s suffrage?
Ann Coulter had never heard of the gold standard. She didn’t believe us when we told her that in 1933 FDR seized all of the privately held bullion in the country, then devalued the dollar – probably the greatest financial crime in history. She didn’t even know it was illegal for citizens to own bullion up until 1974. Bretton Woods? Coulter thought we were talking about tennis rackets. She told me flatly “I don’t know anything about finance or economics.” Not even the basics, like how inflation affects prices or the key role paper money and progressive income taxes have played in building the welfare state. We might as well have been talking to a horse. Ann just looked at us, her long face turned sideways with incredulity.
Lacking anything intelligent to say, she decided to simply insult us. “I was a libertarian as a teenager, but I emerged from adolescence…”
Good one, Ann. What a zinger.

Coulter, like most outspoken conservatives, is simply ignorant of economics.  They have no real understanding of America's economic history, the role the gold standard played, the way the progressive era undermined the liberties Americans once possessed, and simply give lip service to "free market" economics.  Conservatives have bought whole-hog into the progressive policies of the early twentieth-century and adapted to the way things are, rather than insisting on Constitutional government.  And perhaps the worst thing about it all, is that they are self-righteously simple-minded.  There is no true intellectual foundation to the modern conservative movement.  This anecdote about Coulter is a distillation of an entire movement.

Buy and store gold abroad at BullionVault.
Get free shipping on your gold and silver purchase at Lear Capital.
Buy and Store Gold at Goldmoney.