by Kirk Elliott, Ph.D.
A secret cannot be kept forever. The enormous growth of the global economy during the 1980s, 1990s, and into the 2000s was growth manufactured by the central banks of the world. This apparent growth is very misleading.
The world’s engine of economic growth has been fueled by cheap credit and mountains of cash created by government fiat. When borrowing becomes the norm to maintain an elevated lifestyle, to accelerate the normal evolutionary growth of the borrower, the competitive position of the borrower experiences a relative decline. This relative decline is the result of cheap credit and mountains of cash being infused into the economic structure and can also be called inflation. As inflation persists and becomes excessive, the economy will eventually stagnate.
The stagnating economy produces increased unemployment, shortages in all types of products (essential and nonessential), a collapsing standard of living, increasing bankruptcies, and increasing interest rates. Increasing interest rates put downward pressure on many assets including real estate, stocks, and bonds, and investors will eventually begin to pull the plug on their currency holdings in exchange for anything more tangible and liquid. Once the inflation rate begins its rapid ascent into a hyperinflationary state, savings accounts are eliminated, and anyone living on a fixed income, such as Social Security, could be impoverished almost overnight. This scenario is currently occurring in the United States—but in such slow motion that the populace is unaware of the erosion of their purchasing power. In the United States, the dollar lost 98% of its purchasing power via inflation from 1940 to 2008. In 1940 dollars, $1 is now worth a paltry 2 cents. However, since this deterioration has taken 68 years, the American populace is unaware of the effects of a devalued currency.
Imagine what it would be like to realize a decline of 98% of retirement assets or life savings in a month, week, or even day. The scenario has been played out to that tune many times, from the Weimer republic Germany in the 1920s to Yugoslavia in the 1990s. Social chaos and economic upheaval always show up at the party to dance with hyperinflation, and this is a party to which nobody wants to be invited. How does the party end? As in the case of Germany, there is gravitas towards anyone who offers a reasonable solution to fix the problem, and there tends to be gravitas towards a regime change, that is, from a democracy to an authoritarian regime, or vise-versa. World history has many examples of regime changes birthed by economic shocks. In the case of Germany in the 1920s, Hitler arrived at the party and absolutely took over the dance floor. During the French Revolution, it was Napoleon who crashed the party. Throughout history, when a country experiences hyperinflation, it changes its government and loses its freedom.
Every hyperinflationary period throughout history has occurred after 1914. It is no surprise that all hyperinflations, with the exception of France after the French revolution in 1789-1796, occurred under discretionary monetary standards. Prior to 1914, most economic systems were based on a metallic money standard that was linked directly to a supply of gold or silver. Under a monetary standard such as this, the tendency for inflation to occur is minimal as the physical supply of the monetary metal needs to increase in order for inflation to occur. Inflation is a direct threat to wealth and thus a threat to democracy that is so cherished in America.
America is at the crossroads. Is our beloved democracy at risk? Using history as the judge, the answer yes. The Federal Reserve is printing trillions of dollars to keep the economy afloat, and it is not working! Add higher taxes, higher unemployment, and eventually higher interest rates to the mix, and America is ripe for revolution. This is much bigger than you or I, and there is nothing you can do about it. Financial disasters lead to economic disasters. Economic disasters lead to geo-political disasters. The first was realized with the failure of the U.S. financial system in 2008. The second is working itself out now. These cycles will complete themselves, so do what you can do now to save your retirement assets before it is too late.
Re-allocate out of stocks, bonds, and real-estate and acquire as much gold and silver as you can before they are no longer available. There is still time, but you must take action soon before it is too late because there is massive amounts of flight capital leaving global equity markets as stock markets around the globe are losing money fast. So fast that it makes the U.S stock market look good! This flight capital is searching for safety—which can be found in tangible assets such as gold and silver. This is causing HUGE demand and ultra-low supply. Fundamentally, this supply and demand disequilibrium is causing and will continue to cause the price of the metals to rise potentially to levels we haven’t even dreamed of.
So, in conclusion, I urge you to take action now. Take action to save yourself and potentially future generations from the ravages of inflation and the collapsing monetary system.
