Is Economic Anarchy Coming?
By Greg Hunter’s USAWatchdog.com
The financial malaise the world finds itself in right now can be summed in just one sentence. There is way too much debt. It is such an enormous amount of debt that most people cannot grasp its size. It is a sum that is unparalleled in human history. There are only two ultimate conclusions to debt–it either gets repaid or it does not. If debt is repaid in printed money, then that is that same as a default. The world will either repay its gigantic debt or default with money created out of thin air. What is at stake here is the world monetary system and what will constitute money in the future.
Wonder why everyone is making such a fuss about the debt of a tiny country such as Greece? Greece is only about 3% of the European Union economy. So, why is the world so concerned? A default by Greece could set off an interconnected daisy chain of debt dominos that could throw the world into a depression. Then, why not just bail them out and be done with it? Here is what expert investor Jim Sinclair said recently on his JSMineset website: “If the Dark Side can break Greece, using Germany, propaganda and the rating agencies as the tools, it will be open season on six of the weakest countries debt next. More depends of the resolution of the Greek situation than Greece and the euro. . . . Then comes the dollar because of its outrageous (for a major currency) debt to GDP as a percentage position. Save Greece, and the West advances at warp speed towards a form of Western world Weimar. (hyperinflationary Germany of the early 1920’s) We are damned if we do, and immediately damned if we do not.” (Click here for the complete story)
Harvard history professor Niall Ferguson wrote an article last week called “A Greek Crisis Is Coming to America.” The crisis Ferguson sees is not imminent, but he seems to see one coming sooner than later. Ferguson says, “Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven.” US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941. . . . On reflection, it is appropriate that the fiscal crisis of the West has begun in Greece, the birthplace of Western civilization. Soon it will cross the channel to Britain. But the key question is when that crisis will reach the last bastion of Western power, on the other side of the Atlantic.” (Click here for the full article.)
You are probably thinking blah, blah, blah, what does this mean to me? Paul B. Farrell of Market Watch tries to answer that question for the common man. Before I share with you what he wrote last week, I want to let you know a few things about Farrell. He’s a former big time Wall Street guy with a PhD. He’s written 9 books, including a best seller, and more than 1,400 articles for Market Watch. He is not some nut hanging out in a cave hoarding shotgun shells and cans of pork and beans. Farrell is a real guy with real credentials! So, when he recently wrote an article titled “How to invest for a global-debt-bomb explosion”– I took notice. The article is much more about survival than investing, and it is written with the common man in mind. Farrell wrote, “The Big One is coming soon, bigger than the 2000 dot-com crash and the 2008 subprime credit meltdown combined. A huge market blowout. And as Bloomberg-BusinessWeek predicts: “The results won’t be pretty for investors or elected officials.” One of Farrell’s sources only gives the complete breakdown scenario a one in ten chance, but I get the feeling Farrell sees the chances of anarchy much higher. Farrell says, “This is no joke, folks. Are you prepared? Or preparing? Will your family survive in a post-apocalyptic world, when anarchy is rampant in America? Look at Washington, Wall Street and Corporate America today. You know it’s already begun. You are witnessing a fundamental breakdown of the American dream, a systemic breakdown of our democracy and our capitalism, a breakdown driven by the blind insatiable greed of Wall Street: Dysfunctional government, insane markets, economy on the brink. Multiply that many times over and see a world in total disarray. Ignore it now, tomorrow will be too late.”
If you read nothing else this week, please make time to read this article. It amazed and, quite frankly, shocked the hell out of me. If Farrell is only half right, then things will get much worse than they are right now. (Click here to read Farrell’s complete article)
America is not going to end. There will be a brighter tomorrow someday, but make no mistake– very tough times are coming. They will come sooner than most people think and be with us longer than anyone can imagine. I feel the better informed and prepared you are, the better off you and your family will be.
Damon Vickers (film clip in your post “Dollar Rally will not last”) did a Glen Beck show last week – his recommendation was the same as Mr. Farrell = buy a farm and be ready to self sustain and defend yourself. I came to the same conclusion in 2005.
Paul Volker did a CNN on Sunday; GPS (Global Public Square). It would seem he did so to counteract the Paulson/Greenspan malarky a week earlier on Meet the Press. I would guess Volker’s conscience is bothering him. Volker is also speaking out to tell Goldman Sachs their not going to be a bank anymore if they don’t give up the proprietary trading. Of course the famous “no comment” from Goldman Sachs, as usual. But at least someone is speaking to their contempt.
Volker bailed a lot of criticism on government dysfunction in general. Especially that after more than a year, they have failed to appoint an “under secretary of the treasury”. My bet is that Geithner just does not want anyone in the room or looking over his shoulder as a witness to the shenanigans he is engaged in. Does he really think that telling the press they can’t use the term “toxic assets” anymore is going to make them more saleable as “legacy assets”? A constant insult to intelligence comes out of the treasury.
Abraham Lincoln knew Paul Volker would be demonized. Honest Abe noted:
“The money powers prey upon the nation in times of peace, and conspire against it in times of adversity. The banking powers are more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies, all who question their methods or throw light upon their crimes.”
As to a state of anarchy, I’ve thought we achieved that years ago. This definition is not original and I forget who said it, but anarchy is the result of too many laws. Don’t believe me, try and collect a money judgment and see how far you get.
The state of anarchy referenced above is only possible if we cease funding the social safety net or should a Weimar condition exist that causes monthly Social Security and welfare payments and military pay to become worthless.
It will get worse before it gets worse. Worse than the Great Depression but not as bad as the five centuries we call the Dark Ages. Unless of course war among the major military powers breaks out.
Hi Greg –
The isolated farm scenario can backfire due to it’s isolation and lack of support in the event of attack by determined criminals. Think of the ship convoy system vs. independent sailings in WWII. I read a book about Argentina after the Dec 2001 economic collapse and the isolated farms were a good target for criminals to overwhelm the family, tortured until all the wealth was found and stolen, then the family would be killed. Cities were formed to provide strength in depth when attacked. Of course cities will have their own crime problems in the economic collapse. Think Al Capone, or the Crypts. The Agentina book talks about city no-go zones, kidnappings, and road blockades. Any way you look at it, not a pretty future ahead. Take care and keep up the good work.
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Good article and thanks for the hyperlinks. The linked articles were interesting. Some of the rhetoric in the articles was a little much; unfortunately, there is some truth to the rhetoric.
I liked this paragraph as I have recently started to think worst case scenarios: “His advice: Make tons of money. Buy an isolated farm in the mountains. Protect family against the barbarians: “Your safe haven must be self-sufficient and capable of growing some kind of food … It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc. Think Swiss Family Robinson.”
Softies won’t survive.