(January 7, 1998)
Men love in haste but they detest at leisure. Lord Byron
The 1929-like crash in Asia is causing misery on a biblical scale, threatening the solvency of banks, stockbrokers, margin calls undermining investors, while the crackpots running the central banks raise taxes and interest rates, wreaking havoc on the middle class and poor. They know not what they do. However at least our leaders are taking the subject of currencies seriously, for the first time, although they still do not grasp that this is yet another "Vesuvian tremor" of the gold crisis that we have long foreseen and predicted. They simply do not connect Mexico's currency crash in 1994 with what is going on today, or that it is the very absence of a link to the reality of gold that makes currencies inherently unstable. If all nations printed paper money at different rates, how could there possibly be stability? Why not double the amount of printed paper money, give it to the poor, and solve everybody's problems by making everyone rich? They simply do not grasp the nature of the relationship of paper money as a store of value that we outlined in withering detail in The Invisible Crash. We nonetheless intend to keep telling it as it is until somebody hears us and, later, when they say "Why didn't you tell us?" at least we can say "We did." So spread the word, anybody within eyeshot of TDL with access to the press or media. Or friends. There must be a limitation on the amount of paper money printed other than a bunch of old men sitting around a room deciding that they should print 10% more this year, or some other number that they concoct. We have been looking for intermittent currency crises, each one worse than the previous, until the whole paper house of cards comes tumbling down in a financial calamity that will reverberate for centuries to come. It is doubtful that they will heed the Hard Money Movement and link currencies to gold, but at least we can go on record so that amidst the ruins a new currency system could be built on rock that would remain for future generations. This would be a great service to humanity, well worth a lifetime of devotion and struggle.
What next? Our guess is that this phase of the currency crisis is ending, that this ramshackle "system" of paper currencies has weathered yet another storm, but at a huge cost both in money and psychological trauma. Hopefully, Asian politicians will not blame this on capitalism and revert to socialism back out of the fire into the frying pan. Especially since we are looking for a major political upheaval in the world anyhow, as outlined in the Futurology chapter of the Mass Psychology book (page 138) where there simply will not be enough work for everybody and a new political system will be required neither capitalism nor communism, but something without a name yet. Much will depend on how "The Coming Religious War" plays itself out.
Getting back to the near-term picture, the fact that the "international community" is making a huge loan to Korea shows that Clinton understands that if Korea goes down so will Japan, and we cannot imagine the second-largest economy in the world caving in without triggering an international financial calamity. The innocent American public does not realize that most of those so-called "international guarantees" by various institutions are US taxpayer money; the US is the largest contributor to the IMF. It's not only that such money could be better spent at home by cutting taxes drastically enough to get the homeless off the streets, but that bailing out foreign currencies is a waste of time because their absence of a link to gold means that "The Coming Currency Crisis" will return even greater next time.
Indeed, with our prediction of "The Coming Competing Currency Devaluations" coming true before your very eyes, making lethal competitors of foreign exporters, there can be little doubt that the United States will soon run monstrously large trade deficits that will shake the dollar to its roots, especially when the US Congress rebels at bailing out the whole world. Sadly, it is when the US dollar finally goes down that will end the world as we know it. At that time the strongest of all instincts survival will send those with capital into a panicky flight to safety on a scale never seen before.
Those with a "core position" in the precious metals should survive it, which is our "insurance" hedge. You don't cancel your fire insurance because you haven't had a fire, so golds should be held regardless of price action, as a hedge against monetary upheavals. Nobody knows when trouble will start, but we do believe that it will be rapid because that is the way Mass Fear works, and only those who have built their ark in advance will weather the storm. Nearly all of you own The Invisible Crash and Mass Psychology, so this might not be a bad time to re-read them and know them like a book.