It doesn’t take a master’s degree in economics to recognize that the U.S. is in dire fiscal straits. While most see the possibility of a financial disaster in our future, though, experts are divided regarding when it may come and what we can do to avoid it.
The issue was a major focus of the recent Western Conservative Conference, during which several authorities on the subject offered their analysis. Though leaders throughout the past several generations have paved the way for economic destruction, these speakers agreed that the current administration is ushering in a threat of unparalleled proportions.
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Western Journalism President Floyd Brown excoriated the Federal Reserve’s artificial method of propping up the economy by recklessly printing money and engaging in the bond-buying scheme known as quantitative easing.
“Ben Bernanke got them hooked,” he said of the outgoing chairman. “Now Janet Yellen has got her hand on the syringe and they’re pumping money into our system like never before.”
Just before the financial crisis of 2008, he explained, the Federal Reserve “reported a monetary base of about 849 billion dollars.”
After “five years of the most incredibly easy money you can imagine,” he added, the current stockpile tops $3 trillion.
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While this manipulation leads to temporary market spikes, he noted that a collapse is lurking.
“We’re sitting on a time bomb,” he said, explaining the Fed’s actions have resulted in “the largest bubble in bond prices … in the history of the world.”
Additionally, chronically high unemployment is forcing aging Americans to retire early, meaning many will outlive their retirement savings.
“If you actually prepared for your retirement,” he cautioned, the government is “robbing from you every single day through inflation.”
Investments in bonds and other traditionally safe assets are increasingly unreliable, Brown noted, explaining that even certificates of deposit are no longer a safe place to park money.
“Yes, they’re protected by the government,” he said. “The government’s bankrupt.”
The only failsafe in today’s troubled market, he concluded, are precious metals.
“You should have a minimum 10 percent of your net worth … in precious metals,” Brown suggested, urging investors to “consider direct ownership” of gold and other hard assets.
“The only single investment you have that has absolutely zero counterparty risk is precious metals that you physically hold,” he said.
Jim Clark, CEO of Republic Monetary Exchange agreed, detailing the three likeliest outcomes of our current financial crisis.
A default, he said, would be the most disastrous eventuality; and, in such a case, “all you’re going to have is gold.”
Fortunately, he said that is probably the least likely scenario.
The potential also exists for inflation, Clark added, which could result in skyrocketing additions to our national debt.
“I do think that will be part of the scenario,” he said, “but the third one will be a term that is coming into our vocabularies: bail-in.”
This frightening possibility, he explained, is defined by a government looking “internally to citizens for assets” such as “private retirement accounts and bank accounts” in an effort to pay down debt.
Clark said leaders in various other nations have already resorted to this method of plunder, noting it is not unreasonable to believe the U.S. could follow suit. He mentioned the recent State of the Union address in which Obama “informs us he is going to, by executive order, … give us the MyRA,” a government-backed retirement account plan he subsequently imposed by decree.
Leading up to that announcement, Clark noted, China sold off a record amount of treasury debt and purchased a staggering stockpile of gold.
The nation is now the world’s largest holder of the precious metal, he said, explaining “they don’t export any gold whatsoever.”
He said nations holding debt are also purchasing precious metals, informing Americans that “when you’re holding paper, you’re holding some sort of debt.”
As a result, he concluded, the individual would be wise to similarly add gold to his or her portfolio instead of relying exclusively on fiat currency.
While he agreed precious metals are an important component to combatting a potential economic collapse, Tea Party leader and U.S. Senate candidate Joe Miller stressed the importance of stockpiling more immediate resources.
“Preparation is something my wife and I always thought was important,” he said. “If it does come and if this country does stop, you need more than just gold. You need what you need to survive.”
Trevor Loudon, an author and political activist from New Zealand, addressed the fiscal crisis from a national security viewpoint, contending our allies around the world are “willing to take your inflation … because they understand your military will protect them in Europe and Asia and all around the world.”
As our debt becomes more unmanageable and our military continues to shrink, however, he predicted that these countries will have no remaining incentive to consider our dollar the world’s reserve currency. Furthermore, nations like China and Russia would likely exploit our weakness with military action against us.
Only a strong conservative leader can rescue America at this point, he said.
“If you can keep your military strong and protect your allies,” he said, “they’re going to give you a lot of leeway.”
Drilling for oil domestically, he added, can also help strengthen our economy.
“Deregulate, get rid of the EPA, OSHA, the IRS, the Federal Reserve, and all of these things,” he concluded.
–B. Christopher Agee
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Photo Credit: Gage Skidmore