The current investment climate is more perilous than ever. The Federal Reserve's balance sheet continues to grow stuffed with the dubious paper purchased from the too-big-to-fail banks that are now wards of the state. The music stopped and there were no chairs, but the Fed and the Treasury snapped their fingers and trillions of dollars later the chairs appeared, the band played on and the banks live on. The taxpayers are now the not-so-proud owners of AIG, General Motors, Fannie and Freddie and dozens of banks. Where did the money come from? Out of thin air.
Every paper currency in history eventually reaches its intrinsic value — zero — and the Fed's Ben Bernanke is doing all he can to see that the dollar becomes worthless sooner rather than later. As Marc Faber told an investment conference crowd recently, Zimbabwe's serial inflator Robert Mugabe is Bernanke's mentor.
Investors live in the here and now. We can't pick what our investment climate will be. If only we could live our lives with the market deciding what money is and 100-percent reserve banks protected our money on deposit. No such luck. The financial waters are treacherous and we must navigate them.
Charles Goyette provides a roadmap for survival with his newly released book, The Dollar Meltdown: Surviving The Impending Currency Crisis With Gold, Oil, And Other Unconventional Investments. The former Phoenix radio talk-show host has learned from some of the brightest minds in economics and investing. It's the rare book that engagingly teaches sound economic theory, provides the history of how we got in this mess and then provides solid investment advice that considers the precarious times we live in. As ambitious as this sounds Goyette's fast-paced book gets it all done.
The author brings the reader up to speed writing about the bailouts and the nation's debt. After explaining why gold has been the market's choice for money for thousands of years, he writes about every saver and investor's nightmare — inflation — using the modern example of Mugabe's Zimbabwe, a once prosperous nation reduced to a Stone Age economy with the continuous printing of paper money. Everyone is a billionaire but nobody can buy anything.
Goyette looks to Murray Rothbard to explain the history of America's Federal Reserve and fractional reserve banking, and to Ludwig von Mises to see what the crack-up boom might look like. He makes the poignant point that hyper-inflation is not just something engendered in banana republics. Israel experienced triple-digit price inflation in the late 1970s and early 1980s.
Every once in a while dissatisfaction with the dollar makes the news, most recently with super model Gisele Bündchen demanding to be paid in euros rather than dollars. But the Brazilian bombshell was not the first. Goyette writes that Bette Midler demanded gold Krugerrands to perform overseas in the 1970's. No doubt the Devine Miss M was influenced by then manager and boyfriend Aaron Russo.
Ultimately inflation leads to a state-controlled economy and America is headed that way, evidenced by Washington picking which businesses survive and which are left to fail, not to mention how much executives — high level and low — can be paid. So what's a person to do? There is no academic hemming and hawing with Goyette and don't be looking for stock tips. The author suggests investing in real things and he especially likes the yellow metal. What's especially valuable is the primer he provides for buying physical gold — something that many people ask about.
All the other ways of investing in gold are addressed along with a separate discussion about silver. Goyette knows the whole energy independence chatter is nonsense and spends a chapter discussing what the world will not be living without in our lifetimes — oil.
Specifics are provided on how to invest in other commodities and what to invest in to take advantage of the coming bond market crash. Goyette's explanation of how volatility can eat up an investment in leveraged funds is especially helpful as well as his tip about TIPS.
For readers who want more information, the author's suggested readings at the end of the book will arm investors with ongoing market and economic knowledge.
At the book's end Goyette's sadness of America's loss of liberty is evident. He worries what will become of this country's prosperity and freedoms. But he doesn't waste time urging his readers to write their congressmen or elect the right people. It's too late for that. Protect your assets, get out of the dollar.
November 2, 2009
Doug French [send him mail] is president of the Ludwig von Mises Institute and associate editor for Liberty Watch Magazine. He is the author of Early Speculative Bubbles & Increases in the Money Supply. He received the Murray N. Rothbard Award from the Center for Libertarian Studies. See his tribute to Murray Rothbard.
Copyright © 2009 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.