It's Far Worse This Time 'Round, Mr. Browne

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Previously
by Jeff Berwick: USA
Slipping and Sliding TowardsFascism

Government
is good at one thing: It knows how to break your legs, hand you
a crutch, and say, “See, if it weren’t for the government, you wouldn’t
be able to walk.” ~ Harry Browne

Two months
before I was born, on September 30, 1970, Harry
Browne appeared on “Firing Line”
with CIA
operative, William F. Buckley Jr.
For those unaware, Harry Browne
was an American free-market libertarian writer and publisher of
Harry Browne’s Special Report, a financial newsletter he
published from 1974-1997.

In the debate
between Browne and economist Eliot
Janeway
, Browne outlines the premise in his book, How
You Can Profit From the Coming Devaluation
, and states that:

"Looking
at the world as it is, looking at the position the government has
painted itself into. After 30 years of inflation, and I’m saying
that as an act of economic desperation they will one day devalue
the dollar and renege on the promise to foreign governments to pay
1 ounce of gold for every $35 turned in at the treasury."

Despite the
moanings from Eliot Janeway about Browne being an “alarmist”, less
than a year later Richard Nixon reneged on the promise to pay gold
for dollars proving Browne right. Furthermore, those who followed
Browne’s advice to buy and hold gold and silver in his book would
have had an incredible decade as gold rose from $35 per ounce to
over $800 per ounce.

Janeway also
calls Browne a “pessimist” for his views… a refrain we often hear
around these parts. Browne countered, "I don’t consider myself
a pessimist at all. I think I have my affairs in such order, as
a result of doing the thing that is in this book, that I don’t have
to worry about things."

IT’S
FAR WORSE THIS TIME ‘ROUND

Perhaps what
is most striking about this exchange over forty years ago is how
little has changed. Harry Browne states that the big problems are
government debt and high rates of inflation. Well, if he thought
it was bad before, he wouldn’t believe the state of affairs today.

In fact, that’s
why the entire financial system didn’t implode in 1980. It was on
the verge but the US Government had one last option: to allow interest
rates to rise to their true market level. They did, and interest
rates hit over 18% at their peak. But, because US Government debt
had only had a decade unrestrained by gold, it had only managed
to build a total debt of $900 billion by 1980. At the time the US
had a GDP of $2.7 trillion. So, debt to GDP was “only” 33%.

Today, the
US GDP is approximately $15.4 trillion (2011). The admitted to federal
government debt is also currently at $15.4 trillion
, meaning
a debt to GDP ratio of 100%. Forgetting for the moment the unfunded
liabilities which have already been spent, which would leave the
figure at closer to 500%, an interest rate of 18% on the current
debt would require $2.7 trillion per year in payments.

The total tax
theft “revenue” of the US Government in 2011 was $2.3 trillion.
In other words, the only way to end the current state of affairs
in the US and “save” the dollar would be to allow interest rates
to rise to market rates… and if they rose as high as they did
in 1980, when things were much better in general, every penny of
money stolen from US tax slaves would be used just to pay the interest
on the debt.

In other words,
it’s far worse this time ’round, Mr. Browne.

THE
END GAME

In fact, there
is no way out for this system now. Debt levels, and a government
in the US who has stated that they will have $1 trillion+ deficits
until the end of the decade, all but ensure a nuclear event.

Either the
dollar will enter hyperinflation and reach its intrinsic value,
resulting in a collapse of the US Government. Or the US Government
will have to collapse. Socialist Security will have to be officially
reneged on, and most other government programs, including the US
military industrial complex will have to be downsized by 80%. The
second option, government collapse, is not an easy option for politicians
who will be strung up in the streets by an entitlement dependent
population… so, like almost every other time in history, the currency
will be sacrificed.

As the dollar
goes from being worth less to being worthless, the majority of US
citizens will be eating catfood and riots and chaos will reign on
the streets. The government will try to convince them that the rising
cost of living is all caused by “corporate greed” or the Iranians…
or the Chinese. What happens then is anyone’s guess, but we don’t
intend to stick around to find out.

Until then,
we feel a bit like Mr. Browne. Many people claim we are being “alarmist”…
many state that we are “pessimists”. We’re neither. Just like Mr.
Browne, we’re just trying to alert people to the situation and offer
some advice on how best to survive and prosper the collapse of the
US dollar and western monetary system.

The remedy
remains the same. Gold and
silver
. But the extent to which government debt has expanded
also means that even more extreme measures are necessary. Mr. Browne
never saw a fascist police state like the one that has been building
in the US. He never saw cash sniffing dogs at US international airports,
checking Americans on the way out. He never saw the US Government
all but make it impossible for Americans to open international brokerage
accounts and soon international bank accounts.

Now, on top
of precious metals, it is important to geopolitically internationalize
your assets… to get a second passport to avoid confiscation…
and to consider your own government as the biggest threat to your
life, liberty and possessions. The US President who ran on the platform
of closing Guantanamo Bay and who signed the National Defense Authorization
Act (NDAA) enabling indefinite detention of US citizens has further
shown the direction in which the US is headed.

Things have
changed since 1970 Mr. Browne. Now it’s not just about salvation
of your wealth but salvation of yourself.

Reprinted
with permission from The
Dollar Vigilante
.

February
27, 2012

Jeff
Berwick [send him mail]
is an anarcho-capitalist freedom fighter and Chief Editor of the
libertarian, Austrian economics grounded newsletter, The
Dollar Vigilante
. The Dollar Vigilante focuses on strategies,
investments and expatriation opportunities to survive & prosper
during and after the US dollar collapse.

The
Best of Jeff Berwick

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