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Saturday, January 16, 2010

The men who knew

I saw this video a long time ago. But it's worth seeing again, and again. It's quite an amazing video, demonstrating how the true believers in freedom and liberty saw all these economic problems coming many years ago, while conservatives laughed at and marginalized them.

Yet, even after the likes of Ron Paul and Peter Schiff have been proven right, they're still being marginalized. Their future predictions are still dismissed, and the widespread belief that government can fix all our problems persists.

Posted by Mike Brock on January 16, 2010 | Permalink


OMG! We have seen the enemy; and he is us. No matter who wins elections in America, scariness prevails.

Recently, the media reported that American citizens are saving more. Those savers must be frightened.

These Ron Paul warnings were in 2002. Now, in the year 2010, is America better off or worse off?

Why do I feel faint?

Posted by: Agha Ali Arkhan | 2010-01-16 12:35:57 PM


Indeed, with interest rates near zero, the incentive to save is removed -- due to the fact that it's easier to improve your material standard of living through borrowing than saving. This is fundamental to how a market, and how the pricing system works.

There's really only four options before us:

1. Borrow money to increase your material living standard.
2. Save your money, and have your material living standard decrease over time due to the effects of price inflation caused by monetary inflation.
3. Invest your money, in an attempt to protect yourself from inflationary effects, by putting your money at risk.
4. Move your money out of paper currency and into commodities like gold and silver.

If you're concerned about protecting your standard of living long-term, option 4 is the only reasonable position at this point. If you're concerned about your standard of living today than option 1 is the only reasonable position one can take. Options 2 and 3 are actively discouraged by the current monetary policies.

You just get screwed over with option 2, because saving your money simply means you lose purchasing power over time, and your material living standard is reduced. Keynes probably summarized the attitude against option 2 best when he said: "in the end, we're all dead."

Option 3 is discouraged because of the increasingly unstable and uncertain markets caused by the monetary policies.

Posted by: Mike Brock | 2010-01-16 1:00:57 PM

Thanks for the information and advice. Currently we are reasonably well-off with inflation-protected income, with an enviable cash reserve, with sufficient cash, stocks, and mutual funds in registered accounts, and filled-up Tax Free Savings accounts (including my spouse's.) Although we lost some thousands of dollars in the past couple of years, it hardly hurts. We also gave some thousands away. We are prone to actively use your #3 rather than #s 1,2 and 4.

Anyway, I always feel faint when I commit to one investment or another.

Posted by: Agha Ali Arkhan | 2010-01-16 2:03:35 PM

Government can't fix shit. Just sayin

Posted by: B | 2010-01-16 2:11:19 PM


You're wrong if you think you're completely "inflation protected" since all of your savings are in dollar-denominated assets.

Posted by: Mike Brock | 2010-01-16 2:19:26 PM

Good video, there are a couple of guys to quote. I wish we had a "Ron Paul" in Canada. Maybe someday, the Libertarian Party here can gain some traction and become a viable alternative to the established, hard to tell the difference, parties here. If we are to live in a monetary society, I would much rather have a man like that in charge.

Posted by: Steve Bottrell | 2010-01-16 2:44:15 PM

The only options are 3 and 4. 3 is tough, but can be quite lucrative if you get out and put everything in 4 before interest rests get too high.

Posted by: Charles | 2010-01-18 6:28:38 AM

I listened to an interview with Schiff, on the Roy Green show, yesterday. They had some amusing clips of people ridiculing his predictions, from a couple of years ago.

I wasn't totally surprised by Schiff's insight. Even fake clairvoyants get it right, occasionally. What hit me, like a ton of bricks, is how wrong the majority of experts called it. In hindsight, a lot of real economists seem to have wasted a lot of money on their education.

Posted by: dp | 2010-01-18 8:27:20 AM

"The soft-minded man always fears change. He feels security in the status quo, and he has an almost morbid fear of the new. For him, the greatest pain is the pain of a new idea."

"The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy."

"We must learn to live together as brothers or perish together as fools"

"Nothing in the world is more dangerous than sincere ignorance and consciencious stupidity."

Martin Luther King jr.

Posted by: Vegan Philosopher | 2010-01-18 11:52:49 AM

Wrong group, ooops

Posted by: Vegan Philosopher | 2010-01-18 11:53:57 AM

If (4) is considered 'not a risk' like (3), then a rational person would also take advantage of current rates and borrow (1) to buy gold and silver (4).

Bubble anyone?

Posted by: K Stricker | 2010-01-18 4:15:09 PM

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