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The past is not prologue. The
coming collapse will not be the same as the Great Depression. It will be
worse. Then, it will be better.
Free will, like the idea of free markets, has an
unmistakable appeal. Nonetheless, even its most committed advocates did not
choose or will their birth, their gender, their proclivities, their talents
or their foibles; and whether we wish to be here or not, all of us are now
gathered together on the very precipice of extreme change.
To most, the appearance and severity of the current
crisis is unexpected. To Professor David Hackett Fisher, author of The
Great Wave, Price Revolutions and the Rhythm of History (Oxford
University Press 1996) the crisis and its severity was both expected and
understood.
According to Professor Fisher, waves of rising
prices have interrupted long periods of stability throughout history. These
great waves are often accompanied by unexpected disasters, extreme social
upheaval and always end in economic collapse.
Such great waves last from 80 to 120 years and their
appearance spells the end of epochs and eras. Great waves marked the end of
the feudal era, as it did the end of the renaissance and the enlightenment;
and soon, the current great wave that began in 1896 will end the era of
“Victorian equilibrium”, an era that began with the reign of
England’s Queen Victoria.
This era, however, could be called “the era of
debt-based paper money and credit” for debt-based paper money and
credit was the foundation of Queen Victoria’s
British Empire,
an empire now in its final stages of dissolution and collapse.
The current great wave of rising prices began in
1896. Lasting from 80 to 120 years and always culminating in economic
collapse, this great wave will collapse between now and 2016. But, according
to Fisher, this great wave differs from preceding waves.
..the great inflation of the twentieth century differed from
every price-revolution that had preceded it. Its velocity, mass, and momentum
were greater than those that came before.
Just as the magnitude of this great wave is
unprecedented, so, too, will be the severity of its collapse; and, although
such changes happen with varying regularity, this time, we—all of us
now here—will witness and experience this event together.
Professor Fisher writes in the preface to his book:
…Every
period of the past has been a time of change. The world is always
changing—but not always in the same way. We shall find empirical
evidence of distinct “change-regimes” in the past that were often
highly dynamic, but stable in their dynamism. Sooner or later, even the
strongest of these change-regimes broke down in moments of what might be
called “deep change”. When it did so, one system of change
yielded to another. Deep change may be understood as a change in the
structure of change itself. In the language of mathematics, deep change is
the second derivative. It may be calculated as a rate of change in rates of
change.
We have
been living through a period of “deep change,” when one
“change regime” yields to another...In periods of deep change,
understanding lags behind the movement of events…In the United States
problems of economic understanding have been compounded by the effects of
economic prosperity…The Greeks called it hubris, and thought that it
always ended in the intervention of the goddess Nemesis. That lady makes her
appearance when wave-riders begin to believe that they are wave-makers, at
the moment when the great wave breaks and begins to gather its energy again.
Economic misunderstandings exacerbated by recent
economic prosperity have left those in the US, Asia and Europe particularly ill-equipped to deal
with what is now about to occur. Nonetheless, the past is proof that
misunderstandings are no defense against future
occurrence, no matter how many are ignorant of its coming
While the whiff of hubris is still evident in the
optimistic outlook of economic hucksters and those who job it is to keep us
ignorant and complacent, it is clear that the goddess Nemesis is now about to take center
stage. The great wave has broken.
THE
COLLAPSE OF PAPER MONEY
The great stock market bubble of the 1920s was caused by the sudden influx of leveraged credit
from the introduction of debt-based money by the Federal Reserve in 1913. Just
16 years after its introduction, the explosive growth of credit in the hands
of speculators led to the collapse of the US
stock market in 1929 and was to bring the world economy to a virtual
standstill by 1933.
We are about to see a variation of that disaster,
except this time it will be worse because
this time sovereign monetary defaults
will accompany the defaulting of
debt and the contracting of credit. This time money itself will be a victim.
Fiat paper money systems have always ended in failure. This time is no
exception.
Massive debt failures will happen and credit will
become increasingly scarce. Indeed, both are occurring already. But what will
happen this time that didn’t happen before is that this time the US
dollar will increasingly lose value as will all debt-based paper currencies
issued by central banks.
This time, the debt-based paper money of the Federal
Reserve will not only be responsible for a deflationary collapse as it was in
the 1930s, its continued excessive printing will be responsible for the
hyperinflation that will succeed the present inflation now in motion around
the world.
Currently, inflation in Turkey is 12.1 %, Vietnam is
28.3 % (Vietnam was the world’s largest importer of gold in January as
investors bought gold as a protection against inflation but since June 23rd,
Vietnam has prohibited the importation of gold.) South
Africa inflation is at 13 % and as per the calculations
of John Williams at ShadowStats.com, the rate of
inflation in the US
is 13.64 %.
Hyperinflation Ben, née Helicopter Ben, Bernanke will be the usher
than when the era of fiat money, the foundation of the era of Victorian
equilibrium, comes to an end sometime in the next eight years when Professor
Fisher’s Great Wave finishes
its work.
GOLD
When I presented my book How To Survive The Crisis And Prosper In The Process to Marshall
Thurber’s Positive Deviant Network, http://www.posdev.net, on March 1, 2007 the price of gold was $645 per ounce. In How To Survive The Crisis I wrote that
that gold was then in Stage II, a stage where the price of gold was rising,
even as central banks fought its advance.
Now, we are clearly in Stage III, a period of price
volatility evidenced by its ascent to its $1,033 March high and recent
correction to $830. This period of volatility will not change until Stage IV
begins
It should be understood that Stage III is the last
opportunity to invest in order to profit from the coming shift. Stage III is
the interim stage which is, as in the cowboy movie, The Last Train To Yuma,
the last remaining chance of investors to liquidate soon to be illiquid
positions and reinvest in gold and silver which will be among the few safe
havens in Stage IV.
In the final session of Gold Standard University
Live to be held in Canberra,
Australia
from November 11th – 14th, Professor Fekete and I will
discuss using the gold and silver basis to maximize precious metal
investments during this period, There are only a few seats left on The Last Train To Yuma, see feketeaustralia@yahoo.com.
It is not certain how long Stage III will last. It
is only certain that Stage III will be succeeded by Stage IV, a stage whose
end will coincide with the collapse of paper currencies, a collapse that will
also mark the end of the era of Victorian equilibrium.
The price of gold will be a marker of this event because gold—or rather the lack thereof—provided
the key to the bankers debt-based money that funded England’s 19th
century empire.
Now that England’s surrogate successor, the
US, has completely removed gold from the debt-based money first issued by the
Bank of England and now issued by all central banks, the current debt-based
global economy, a house of cards, a monetary abomination of historic
proportions out of which bankers have sucked all remaining productivity and
profit, will fall—a fall which will denote the end of England’s
surrogate dominance and the collapse of its banks.
The
bankers are bankrupt
Who
would have thought
What
once was so
Now is
not
The
guard is changing
The
kingdom’s exposed
Its
coffer’s empty
Its exit
closed
Time is
now moving
Towards
an end unknown
May the
Hand that guides us
Lead us
home
HUMPTY
DUMPTY & THE BRIDGE OVER SAN LUIS REY
Humpty
Dumpty sat on a wall
Humpty
Dumpty had a great fall
All the
king's horses and all the king's men
Couldn't
put Humpty together again
Such will be the end of fiat money. No system of
fiat money has every survived and now, for the first time in history, all
currencies of all countries are fiat. This is the economic equivalent of
everyone having AIDS. Its end will be catastrophic. The collapse of paper
money as store of value is as unimaginable as it is now virtually inevitable.
China, late
to the party, is not yet aware that the party is about to end. Nonetheless, China, better
off than before, is beginning to realize the precariousness of its present
well-being, a well-being predicated on the continuation of debt-base
economies operating on fiat currencies.
With
gold no longer a protective barrier between currencies and nations, the
transmission of monetary pathologies such as inflation is as inevitable as the
transmission of AIDS at an orgy with infected and unprotected participants.
Note: Since the issue of protection has been raised,
previous to our discussing matters of economic importance, Martha & I
primarily tended to the affairs of our condom company, Mr. Happy’s Hat Inc., see www.mrhappyshat.com.
To the unanchored mind, events appear disconnected
and without meaning. Chaos is the apparent backdrop to an incomprehensible
life which dictates dominance as the only path of survival and success. Fortunately,
it is not so.
The rhythms of history move through both our
individual and collective lives. If we cannot see any meaning, it does not
mean there is none. It
only means we are blind to what is.
The great wave that began in 1896 is about to bring
the era of Victorian equilibrium, sic
the era of debt-based paper money and credit to a close; and, as with all
endings it will be succeeded by yet another beginning.
It is our individual and collective fate to be here
at this momentous and very difficult time; and, if we had a choice in the
matter, it is obfuscated by our unawareness that it might be so. Nonetheless,
we are here now and must deal with what is about to be.
Thornton Wilder’s Pulitzer Prize winning novel
The Bridge Over San Luis Rey
(Penguin 1926) begins with three words, Perhaps
an Accident. The story is of five people who fall to their death when a
bridge gives way in Peru.
The question asked is why were these five individuals on
the bridge at the moment of its collapse—was it an accident or
was it fate?
When
someone asked Thornton
Wilder about his purpose in writing “The Bridge Over San Luis Rey”, he replied that he was
posing a question: "Is there a direction and meaning in lives beyond the
individual's own will?
This very question may well be asked of us who are
here at the end of a momentous great wave unprecedented in velocity, mass, and momentum, a great
wave that will bring to an end an extraordinary era, an era that until just
recently appeared to be a glimpse into an infinitely unfolding future.
Due to Professor Fisher’s scholarship, we now
know that this is not so. The era of Victorian equilibrium was going to end
as certainly as did the feudal era, the renaissance, and the enlightenment
which preceded it. Merely because
we are alive now does not imbue this particular time with an eternality
somehow missing in previous epochs.
Whether we believe our presence during this period
has meaning or not, nonetheless it would behoove us
to act as if it were so and to therefore bring our best to the table. What
lies in front of us individually and collectively will not be easy to
survive. Disasters such as the bubonic plague (the Black Death) and the 100
years war happened during previous great waves; and, now, the polar icecaps
are melting and there is a growing feeling that more problems are on the way.
While credit paved the way in the past, it will not
do so in the future. Character and courage, not credit and hubris, will be
the requisite currency demanded in the new era.
Darryl Robert Schoon
www.survivethecrisis.com
www.drschoon.com
Information contained
herein is obtained from sources believed to be reliable, but its accuracy
cannot be guaranteed. It is not intended to constitute individual investment
advice and is not designed to meet your personal financial situation. The
opinions expressed herein are those of the author
and are subject to change without notice. The information herein may become
outdated and there is no obligation to update any such information. The author, 24hGold, entities in which they have an
interest, family and associates may from time to time have positions in the
securities or commodities discussed. No part of this publication can be
reproduced without the written consent of the author.
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