Economic Chatter

Dateline: 17 July 2014

I don’t think a day goes by that I’m not listening to one or more discussions about the past, present and future state of the national and international economy. 

I have no interest in listening to the myopic mainstream media economic discussion, and I’m surely not going to waste my time listening to any government representative. The mainstream media are agents of misinformation, and I figured out long ago that most politicians and bureaucrats really don’t know much about economics. So, instead, I listen to a bevy of independent-minded economists on the internet.

Greg Hunter at USA Watchdog and Elijah Johnson at Finance & Liberty present a steady stream of interviews with independent-minded economic people on their YouTube channels. I appreciate the perspectives and opinions presented by the likes of Paul Craig Roberts, John Williams, Chris Martenson, James Rickards, Jim Willie, G. Edward Griffin, Nomi Prins, Andy Hoffman, Mike Maloney, David Stockman, Alasdair Macleod, and others. I never miss the McAlvaney Weekly Commentarywhich, in my opinion,  presents the most thoughtful, intelligent,  measured perspective of all the alternative economists. 

I think I’m mentioned here in the past that my interest in economics began with my interest in history. This interest must be genetic, as my grandfather Kimball was an avid reader of history books. Though I never discussed history with my grandfather (he died when I was 7), he left an extensive personal library, which I perused at length during the summer vacations of my youth (I was a bookish youngster). My grandmother let me have any and all of his books that I wanted. 

I also had a 7th grade teacher who made American history interesting. The two-day field trip our 7th-grade class took to Sturbridge Village was somewhat life changing for me. One thing led to another and, on my own, pursuing my yen for historical understanding,  I soon came to the unavoidable truth about paper currency and central banks (check out my essay titled, Andrew Jackson Hated Paper Money)...

In short, every economy in the history of the world that has utilized a paper currency has eventually collapsed (check out This Excellent YouTube Movie for some history of paper money). Such collapses bring social upheaval, despair, ruin, poverty and death. Often an economic collapse (or even the possibility of an impending collapse) leads to war.

All of which is to say that America’s economic system is destined for collapse. Prior to the mini-collapse of 2008, when I wrote my essay titled, An Agrarian-Style Economic Self Defense Plan, most Americans were pretty much oblivious to America’s economic peril. A lot of investors lost a lot of money. But I think it was all chump change compared to the losses that are coming.

Our economy has limped along since 2008 and never fully recovered. A perfect anthropomorphic analogy for our present economy would be a terminally ill person getting blood transfusions to extend their life for a little while longer. The economic transfusions are mind-boggling amounts of American dollars being created and fed into the world economy. This “quantitative easing”  has not stimulated economic growth, and it never will. The creation of so much more American debt has only enriched international bankers at the expense of "main street" Americans. 

Unfortunately, I think most Americans are still oblivious to the seriousness of the economic metastasis that is taking place in the worldwide economy. They are thinking that the future will eventually be like the past. They are clinging to the old economic paradigm. They may be uneasy about the economy but they are hesitant to make any significant changes in their lifestyle and investing strategies to deal with emerging new realities. I suspect that they aren't all that interested in what history can teach us. Besides that, the stock market is soaring to amazing new highs. That's a good sign, right?

Well, if the stock market were soaring to new highs because of economic growth, that would truly be something to celebrate. But our economy is not growing. Recent stock market gains do not reflect economic reality. 

[Sidenote: David McAlvaney's Most Recent Program discusses the current stock market boom (bubble). The McAlvany investment strategy has been described as 1/3 stocks and bonds, 1/3 cash, and 1/3 precious metals, but David appears to be advising stock market investors to cash out now.]

Different economists have different opinions about the current state of our economy, but among the alternative media economists I’ve been listening to, the consensus is that the 1944 Bretton Woods Agreement (which established our current world economic system, with the American dollar as the world currency) is badly broken. The American economy was booming back in ’44, and our dollar was “good as gold.”  But that is now no longer the case. Not even close.

Thus it is that there will be a new world economic system. How soon, no one knows for sure but the groundwork is being laid out now. The rest of the world is growing wary of the dollar. Confidence is eroding. This situation is causing all sorts of serious underlying problems. 

When the American dollar is no longer the world reserve currency, America will face an economic crisis like it has never before experienced.

With all of that in mind, there seems to be a heightened “chatter” of concern lately among the alternative-media economic analysts. They are expecting something serious to go wrong with the economy relatively soon. 

They may be wrong. It wouldn't be the first time. Economists are often wrong in their predictions. But sometimes they are right. 

No economic crisis in history has come as a total surprise. There have always been those who saw, and understood, and prepared for what was coming. Such people were (and are), of course, maligned by those who don’t want to face reality, or who have a vested interest in the status quo. 

In the final analysis, I always return to the historical precedent

All paper money schemes in history have run their course, and eventually collapsed. The American dollar will be no exception, and it will be an epic collapse when it happens. I think this will happen sooner rather than later. Maybe it won’t be real soon, but I’d rather be prepared (as well as possible) for this eventuality years early instead of one day late.

If you have not already done so, I recommend that you read my Agrarian Style Economic Self-Defense Plan, and my six-part series, How To Get Through The Coming Hyperinflation

I wish you well.


Sunnybrook Farm said...

I think you are right and I might add that we are seeing the end game of the progressive movement that has been working towards this transformation for a little over100 years. They taste victory and are going to rush it as fast as possible but their religion won't work and it will take the dollar down with it. Progressives control both parties, churches, schools and the media so it isn't going to be pretty when people finally see what has happened.

shannon templeton said...

I could have written this article, and I have been known to spout these very things to anyone who will listen. We are on the same page about what has happened to our country and what is about to happen. May God bless and keep you and yours thru this coming storm.

Anonymous said...

Herrick, In my opinion, I think your article is right on, but it is read to lightly. I agree with everything you said, but what one event was it that catapulted us into the mess we are in, other than the passage of the 1913 federal reserve act. Hint, it happened in 2001. Anyone with a small lick of intelligence and a little research will undeniably find out, we were involved, or did it entirely. Once that is realized, because of truth, and real investigation, than one will realize, that most of all bad things that happen are usually planned and they happen for reasons. Please take care best you can, we live in very evil times.

Anonymous said...


I agree with the majority of your article. All monies come and go. In my opinion the problem isn't exactly the paper money,it is the backing (or lack therof) that money has.
Pre-60s we had great money, the silver certificates. Every slip of paper was 100% backed with silver. The problem we now have is money with no backing. We lost all sure backing with the federal reserve note, and by inflating we have made the dollar less and less valuable.
What destroys economies is inflation. For whatever reason, inflation starts, then it stops and we go to recession, and then we inflate to get out of it (the circle continues on...)
The only reliable money system is one where the currency, potatoes, paper slips, etc. has a solid backing in some commodity who's value people trust.
Good luck,

Alex said...

We have much the same problem with the Pound. It is an artifice held in place by an economy driven only by debt. Those who can get credit (AKA debt) can live reasonably well but those who cannot end up struggling to pay for the basics. In the UK rents are now far exceeding peoples monthly wages so lots of people have second jobs just to get by and newly built houses are promptly purchased by buy-to-let landlords who are understandably taking full advantage of the situation. The whole system is in dire need of a correction but they keep pumping in new money through quantitative easing.

Anonymous said...

While no one knows with precision what will happen in the future, you don't have to have a Ph.D. in economics to figure out that a system built on lies and dishonest weights and measures is bound for disaster. Which indicates that our problem is really moral in origin, not financial.

Put that way, even I can understand it!

David Smith