Rome was an empire. Rome at it’s peak had conquered all its neighbors. Empires could demand and get tribute from those it had vanquished in the form of gold, grain, slaves, spices, silk, olive oil, wine, wild animals for the coliseum blood sports etc. The United States of America has been the main empire in the world for the past 100 plus years. We have 725 military bases around the world. So, don’t tell me otherwise.
What, how and why did the get our tribute we were due? Tribute is a Roman word for pay as an acknowledgment of subjugation, for protection from invasion, etc. We ruled the seas, the air, the markets. We were strong. We were and still are the policeman of the world. That was a big part of the reason Rome fell, by the way. They spent all their money trying to police their empire. We are rich. Wall Street ruled the world markets for years. Business across the land flourished. We had natural resources (gold, iron, coal) and fertile farm land. We deserved it and I say we got tribute. In spades!
How? We lived the high life all these 100 years and exported our inflation to other nations. Yes, the rest of the world had to take our rotten fiat paper money that was consistently losing value. The U.S. dollar of 1913 is now worth only 4 cents thanks to inflation caused by the combination of the Federal Reserve watering down the money and excess government spending. The politicians wanted inflation so they could spend more and pay back later in dollars worth less. What a musical chairs- casino-Ponzi scheme! We made out like bandits. Other countries had to take our stinking paper money that was losing 5% per year in value some years. They had to choke on it. While we lived high on the hog. We exported our inflation to other countries. We ripped off the whole world with our made-up monopoly money. No wonder other countries hate us.
95% of all U.S. paper money ever printed is in other nations. There is a huge market hedging interest rate risk on our dollars in Europe. It’s a debt instrument on the commodity exchange called Euro dollars – not the Euro currency. Total open interest 8/6/2010 was a whopping – $7,830,000,000,000.
Our empire is ending. The GREATER DEPRESSION started in year 2000 with the dot com stock market peak and may not bottom until 2016 -2018. China will be the next empire. You can plan on big time 90% drops in prices of real estate, stocks, corporate and municipal bonds, commodities (yes, gold and especially silver, palladium and platinum since the are all industrial metals may lose half) and antiques/art/collectable items in the deflation economy.. This will be a nightmare. I expect “Antiques Roadshow” to go off the air. You can’t eat that stuff. I was watching it the other night and someone on the program said prices were down by 33% in some areas of collecting and the value ranges they give are getting wider.
We are firm believers in Robert Prechter’s Elliott Wave Principle and analysis. How markets and indeed all nature appears to work. Socionomics is his new joining of sociology and economics in relation to mans mood swings from positive to negative and someday back to positive. For now, Prechter sees societal mood waning (getting more pessimistic) until 2016 – 2018. He says the effect on investment markets will be disastrous due to the fact that man is a herd animal and always buys more at the top – right when he should be selling. Just think real estate in 2006.
Prechter has found it is better to be a contrarian investor. When the direction of the long wave cycle changes to a deflation economy, the GREATER DEPRESSION is not far behind. Robert Prechter says most assets could drop by 90 percent and unemployment may eclipse 30% in 2016 – 2018. Get cash and T Bills. Cash will be KING! The Anglo financial power elite have most of their money in U.S. assets. They don’t want the dollar to lose any more value. The money they lent out would be worthless. The dollar will be strong. It’s the reserve currency of the world for god sake. Inflation is dead for the time being.
The same thing happened in the 1930′s. Inflation in the Roaring 20′s led to banker’s fear of lending. This caused a severe recession. Then misguided and crippling government intervention and regulation by the President Franklin Roosevelt administration caused a long depression.
The question now is will the U.S. dollar continue to lose value due to inflation or will the deflation put a stop to the free ride. I say the next 5 to 10 years we will have the Greater Deflation. It will be three times larger and longer than the 1930′s depression. Unless we get a private run gold money system all bets are off after that. Only gold backed private money can keep governments honest. Gold is not someone else’s debt! How great would that be. No gold – no spending. Otherwise we get inflation and maybe even hyperinflation as governments worldwide go on another spending orgy to mistakenly try Keynesian government spending programs again.
Speaking of orgy. Why did Rome fall? Here is why. They were debasing (inflating) their money. Caesar would have the coins shaved down in size and keep the profit. Now days, customarily, coins are made with little ribs on the outer edge to prevent the practice. There is no precious metal in them anymore, however.
Back then people would also keep the larger coins and spend the smaller ones. One of the first instances of Gresham’s Law in economics. Specifically, bad money drives good money out of circulation. Most U.S. silver coins before 1965 were 90% silver and you won’t find any in your change. Since 1965, U.S. coins have had no silver in them. Remarkably, Gresham’s Law happened again with the pre 1982 copper penny. No copper in the new penny. It’s actually zinc with a thin copper clad. None of the old ones circulate. Anyway, then to finance Rome’s profligate ways (policeman of the world, over spending, corruption and moral turpitude just like today) Caesar took to melting and debasing all the coins with a mix of cheap copper.
Roman bread giveaways and a gladiator circus for the masses down at the coliseum have morphed into today’s Food Stamps, mindless TV programing, electronic gaming and a spendthrift welfare state. A weak Rome collapsed and was sacked by the barbarians. Not many know Roman Emperor Constantine kept the gold florin coin honest when he moved the seat of the Roman Empire to Constantinople (now Istanbul, Turkey). That part of the empire lasted anther 500 years until it fell to the Moors.
With Socialism ruling the world under the likes of President Barack Hussein Obama, a one-world-government/new-world-order “Big Brother” world may be in the cards. Stand up for LIBERTY and FREEDOM and FREE MARKETS now, or you will be told what to do, where to work and what to think. Inflation opens the door to demigods.