Protect Against The Currency System's Final Catastrophe

Feb. 10, 2012 3:28 PM ETDGL, GLD, IAU, PHYS, SGOL94 Comments
Dumb Wealth profile picture
Dumb Wealth

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of the voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved. -- Ludwig von Mises

Can we really print ourselves to prosperity? Is this time different? Have we really discovered the secret unlimited potion that makes economies grow? No, no and no.

Over the past 40 years, we have printed money and expanded the credit system to grow our economy. During this period, as we papered over cracks that appeared in the system, we continued to grow the economy in nominal terms. By not resolving underlying issues, economic cracks grew into gaping holes requiring increasing amounts of credit and monetary expansion to maintain a semblance of prosperity.

Crisis after crisis, opportunities to resolve massive imbalances were simply pushed into the future, allowing those imbalances to compound. While many view the 2008 crash as the apex of the credit and monetary cycle, I fear it is not.

Since 2008, economic policy based on credit and monetary expansion has not changed and continues to push an escalating crisis into the future.

Nobody knows when the final crisis will occur, but like so many times throughout human history we are marching down a narrow path to the final catastrophe of our fiat currency system.

Human behavior is too hardwired for us to change paths, regardless of how different we think we are. Even the smartest of men can become seduced by the near-term, quick solutions by which they are judged. Human nature is geared to solve immediate problems (e.g. how to escape the lion creeping through the village) at the expense of lasting solutions (e.g. divert resources and invest the time and

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Dumb Wealth profile picture
Website: I created DumbWealth as an anonymous open journal to help my children, family and friends build wealth and survive the working world. I am a 20 year investments industry veteran and I've witnessed a ton of BS. I want people to learn from all the mistakes I've seen, including my own.

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