by Larry Edelson

Dear William Duffy,

I’d like to start this issue by quoting three great authors. Although they were from very different walks of life, they shared an understanding of exactly what the global economy is going through today, especially the events here in the U.S. …

“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.”
— Ernest Hemingway, September 1932

“Destroyers seize gold and leave to its owner a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it.”
— Ayn Rand, Atlas Shrugged

“By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.”
— John Maynard Keynes, 1920

In my view, it all started in 1933, when President Franklin Roosevelt devalued the U.S. dollar from $20 per ounce of gold to $35 per ounce. That’s a whopping decline of 75%!

That was at the height of the Great Depression, when scores of banks were going under, and I don’t blame Roosevelt. It was the only way out of the depression. Debase the paper dollar by raising the price of gold. Get out of deflation by sparking inflation. Erode debt burdens by devaluing the dollar. Get the economy going again, no matter what.

It Largely Worked, But It Forever
Changed the Face of Economics

Ever since the devaluation of the dollar in 1933 — and the simultaneous upward revaluation of gold — central bankers and politicians around the world have come to the same conclusion as those authors I just quoted. Here it is, in my own words …

In the absence of a gold standard, central bankers and politicians are free to confiscate your money through inflation, at will.

Mind you, they don’t have much choice … just like Nixon didn’t have much choice in 1971, when he completely abolished all remnants of the gold standard, severing the link between gold and the dollar for good.

The cold hard truth of the matter is that now, whenever the economy hits a pothole, central bankers will put their pedals to the metal, creating as much money and credit as possible, even at the risk of running hyperinflation.

As Keynes pointed out in that quote above, “The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.”

So here’s my question to you: Which one are you going to be …

One of the 999,999 people who do not understand what the government is doing to their money?

Or the one in a million who does, allowing you to protect your wealth, and even profit from the government’s actions?

Now’s the time to decide. Reason: The dollar has already been getting killed in international markets for more than three years now, but …

The Dollar’s Decline Is About
To Get a Heck of a Lot Worse

The supply of money is suddenly surging at an annualized growth rate of 36.4%. By some estimates, that’s the highest rate of growth in the money supply since 1973!

There is no way the U.S. dollar can hold its current value when the supply of money is being pumped out at a 34-year high.

There is no way the U.S. dollar can hold its current value when the Fed is likely to cut the Fed funds rate on September 18, and do whatever it takes to rescue the critically-ill real estate and mortgage markets.

There is no way that the U.S. dollar can hold its current value when foreign economies are outgrowing the U.S. economy by miles.

And there is no way that the U.S. dollar can hold its current value when so many overseas investors — who have lent us hundreds of billions of dollars to finance our economy — are now waking up to the fact that the U.S. economy is staring into a black hole.

One last thing: No matter how strong the rallies look in the stock market, with the exception of gold and natural resource-related stocks, stay away from the majority of equities. As I’ve noted before, the Dow is likely headed down to about the 11,000 level.

Also continue to steer clear of the bond markets. Keep your liquid money safe in short-term money market funds.

Best wishes,

Larry