Economic Collapse

“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.”
- Norm Franz (”Money and Wealth in the New Millennium”, 2001, Whitestonepress, page 154).

“History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.”
- President James Madison

“If the American people ever allow private banks to control the issuance of their currencies, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their prosperity until their children will wake up homeless on the continent their fathers conquered.”
- President Thomas Jefferson (letter to Treasury Secretary Albert Gallatin, 1802)

Topics: What is money? Why is gold a smart investment?

I often get asked by non-economist friends and acquittances to explain the current economic crisis. I love those conversations because it helps me to keep my language free from the economic lingo with the complex acronyms that really helps nobody to understand what is going on around us. So, I thought I’d write articles that tries to encapsulate typical conversations I often get into in social settings. Almost always the conversation begins around the topic of how to invest in a smart way when the economy is as turbulent as it is. Since I’m a guy of the Austrian School of Economics, I think gold should be in everyones portfolio and this is often what makes people interested in what I have to say since it is not that common yet for people to advocate physical gold in your own possession. That is likely to change soon though since more and more people are moving into gold. So imagine a conversation something like this:
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Nice and scary illustration from Good.is (click the image to zoom):

Now, as you know, the real debt of the US will be much higher than 20 trillion in 10 years, but the concept “trillion” is nicely explained here.

Also, look at this one: Click the image to zoom.

Here is a great interview with legendary Jim Sinclair of JSMineset.com on the inflation vs deflation debate:

• Download Mp3-file
• Listen in your browser.

From the kingworldnews.com website:

“Legendary Jim Sinclair known as Mr. Gold for his remarkably accurate timing regarding the gold bull market of the 70’s is the Founder of jsmineset.com and Chairman of Tanzanian Royalty Exploration. In this interview James discusses inflation, deflation, hyperinflation, the U.S. Dollar, gold, silver, social unrest, the Federal Reserve, commercial banks incorrectly positioned on the COT, fraudulent bank balance sheets, the equity market, future opportunity, gold and silver shares and much more. King World News thanks Jim for being so gracious with his time.”

Listen carefully to the last statement… Also consider the “depends on you perspective” statement. This is key: Jim Sinclair calls it MOPE: Management of Perspective Economics…

http://www.huffingtonpost.com/2009/09/25/neil-barofsky-tarp-inspec_…

G22, Special Drawing Rights, Future of the Dollar: Jim Rickards, director of market intelligence for scientific consulting firm Omnis, shares his outlook for the dollar.

Important quote:

“The problem is, when you own gold you’re fighting every central bank in the world. Central banks hate gold because it limits their ability to print money.”

Interesting take on the need for inflation for the US debt mountain and the risk for hyperinflation as well as the role of the IMF Special Drawing Rights discussed during the G22 meeting.