It's Far Worse This Time 'Round, Mr. Browne
by
Jeff Berwick Previously by Jeff Berwick: USA Slipping and Sliding Towards Fascism
Government is good at one thing: It knows how to break your legs, hand you a crutch, and say, "See, if it weren't for the government, you wouldn't be able to walk." ~ Harry Browne Two months before I was born, on September 30, 1970, Harry Browne appeared on "Firing Line" with CIA operative, William F. Buckley Jr. For those unaware, Harry Browne was an American free-market libertarian writer and publisher of Harry Browne's Special Report, a financial newsletter he published from 1974-1997. In the debate between Browne and economist Eliot Janeway, Browne outlines the premise in his book, How You Can Profit From the Coming Devaluation, and states that:
"Looking at the world as it is, looking at the position the government has painted itself into. After 30 years of inflation, and I'm saying that as an act of economic desperation they will one day devalue the dollar and renege on the promise to foreign governments to pay 1 ounce of gold for every $35 turned in at the treasury." Despite the moanings from Eliot Janeway about Browne being an "alarmist", less than a year later Richard Nixon reneged on the promise to pay gold for dollars proving Browne right. Furthermore, those who followed Browne's advice to buy and hold gold and silver in his book would have had an incredible decade as gold rose from $35 per ounce to over $800 per ounce. Janeway also calls Browne a "pessimist" for his views... a refrain we often hear around these parts. Browne countered, "I don't consider myself a pessimist at all. I think I have my affairs in such order, as a result of doing the thing that is in this book, that I don't have to worry about things." IT'S FAR WORSE THIS TIME 'ROUND Perhaps what is most striking about this exchange over forty years ago is how little has changed. Harry Browne states that the big problems are government debt and high rates of inflation. Well, if he thought it was bad before, he wouldn't believe the state of affairs today. In fact, that's why the entire financial system didn't implode in 1980. It was on the verge but the US Government had one last option: to allow interest rates to rise to their true market level. They did, and interest rates hit over 18% at their peak. But, because US Government debt had only had a decade unrestrained by gold, it had only managed to build a total debt of $900 billion by 1980. At the time the US had a GDP of $2.7 trillion. So, debt to GDP was "only" 33%.
Today, the US GDP is approximately $15.4 trillion (2011). The admitted to federal government debt is also currently at $15.4 trillion, meaning a debt to GDP ratio of 100%. Forgetting for the moment the unfunded liabilities which have already been spent, which would leave the figure at closer to 500%, an interest rate of 18% on the current debt would require $2.7 trillion per year in payments. The total tax theft "revenue" of the US Government in 2011 was $2.3 trillion. In other words, the only way to end the current state of affairs in the US and "save" the dollar would be to allow interest rates to rise to market rates... and if they rose as high as they did in 1980, when things were much better in general, every penny of money stolen from US tax slaves would be used just to pay the interest on the debt. In other words, it's far worse this time 'round, Mr. Browne. THE END GAME In fact, there is no way out for this system now. Debt levels, and a government in the US who has stated that they will have $1 trillion+ deficits until the end of the decade, all but ensure a nuclear event. Either the dollar will enter hyperinflation and reach its intrinsic value, resulting in a collapse of the US Government. Or the US Government will have to collapse. Socialist Security will have to be officially reneged on, and most other government programs, including the US military industrial complex will have to be downsized by 80%. The second option, government collapse, is not an easy option for politicians who will be strung up in the streets by an entitlement dependent population... so, like almost every other time in history, the currency will be sacrificed.
As the dollar goes from being worth less to being worthless, the majority of US citizens will be eating catfood and riots and chaos will reign on the streets. The government will try to convince them that the rising cost of living is all caused by "corporate greed" or the Iranians... or the Chinese. What happens then is anyone's guess, but we don't intend to stick around to find out. Until then, we feel a bit like Mr. Browne. Many people claim we are being "alarmist"... many state that we are "pessimists". We're neither. Just like Mr. Browne, we're just trying to alert people to the situation and offer some advice on how best to survive and prosper the collapse of the US dollar and western monetary system. The remedy remains the same. Gold and silver. But the extent to which government debt has expanded also means that even more extreme measures are necessary. Mr. Browne never saw a fascist police state like the one that has been building in the US. He never saw cash sniffing dogs at US international airports, checking Americans on the way out. He never saw the US Government all but make it impossible for Americans to open international brokerage accounts and soon international bank accounts. Now, on top of precious metals, it is important to geopolitically internationalize your assets... to get a second passport to avoid confiscation... and to consider your own government as the biggest threat to your life, liberty and possessions. The US President who ran on the platform of closing Guantanamo Bay and who signed the National Defense Authorization Act (NDAA) enabling indefinite detention of US citizens has further shown the direction in which the US is headed. Things have changed since 1970 Mr. Browne. Now it's not just about salvation of your wealth but salvation of yourself. Reprinted with permission from The Dollar Vigilante. February 27, 2012 Jeff Berwick [send him mail] is an anarcho-capitalist freedom fighter and Chief Editor of the libertarian, Austrian economics grounded newsletter, The Dollar Vigilante. The Dollar Vigilante focuses on strategies, investments and expatriation opportunities to survive & prosper during and after the US dollar collapse. Copyright © 2012 The Dollar Vigilante
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